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Precious Metals Update

February 3, 2016
Comments (8)

Here is Peter Brandt’s latest missive and this time it is focusing on precious metlas. Peter is taking a more bullish outlook on the metals and it seems to be focused on the rounded bottom forming since the low in December.

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There are some signs that the 4-plus year bear trend in the precious metal markets is coming to an end.
As I have pointed out always constantly, I hate trading Silver. Silver can move $1 one way or the other and mean nothing technically. Gold is a technically honest market, and usually the leader. All things being equal, I would much prefer to trade Gold rather than Silver.
Gold completed a small compound bottom on Jan 6 and an 11-week cup and handle pattern on Jan 26. Gold has developed very few possible bottom patterns on the daily chart all the way down from the 2011 high. An attempt to complete a symmetrical triangle bottom in Oct 2015 resulted in a classic “end-run.”
Peter B - Feb 3
In more than three years the Gold market has not experienced a single daily chart bottom that has fulfilled the implied price move. This does not surprise me given Gold’s sustained bear trend. If Gold can rally to 1180 to 1190, it will be the first constructive daily chart configuration to reach its target in several years.
Similarly, Silver has also not completed a successful daily chart bottom in several years. The daily Silver chart intrigues me. The daily chart has been trying to bottom for the past several weeks. The chart now exhibits a possible H&S bottom — with two heads and an abbreviated right shoulder. A convincing close above 1470 is required to complete this bottom pattern. The target would be 1559.
Peter B - Feb 3 - 1
Of note is the fact that the weekly charts in Gold and Silver are forming falling wedge patterns. The wedge in Silver has better definition than the wedge in Gold. I must emphasize that the wedge is a diagonal pattern — and diagonal patterns are very unreliable. It should also be noted that falling wedge bottoms typically back and fill for months — often times retesting the apex of the triangle before a genuine bull trend gets started. Nevertheless, these wedges are worth monitoring.
Peter B - Feb 3 - 2
PEter B - Feb 3 - 3
It should be noted that the completion and fulfillment of up-trending daily chart patterns does NOT equal the onset of a new bull trend. Yet, it could be the start of building a more permanent bottom.
plb
Discussion
8 Comments
    CFS
    Feb 03, 2016 03:24 AM

    China’s gold consumption rose 3.7 percent to 985.9 tonnes in 2015, said the China Gold Association (CGA) on Wednesday.

    Gold consumption for jewellery-making – the largest use for gold in the country – had risen 2.1 percent to 721.58 tonnes during the year on an increase in demand for gold jewellery.

    China’s gold consumption is expected to continue positive growths in the future, retaining its position as the world’s largest gold consumer, said CGA.

    In the first half of last year, China’s gold demand had fallen by 1.4 percent, before returning to positive growth of 7.8 percent in January-September.

    In contrast, China’s gold production fell 0.4 percent to 450.05 tonnes last year – the first negative growth for the industry – due to low gold prices, said CGA.

    Still, China is expected to remain the world’s largest gold producer for the ninth straight year last year, the association added.

    – See more at: http://www.bulliondesk.com/gold-news/metals-data-chinas-gold-consumption-rises-4-pct-output-flat-2015-108365/#sthash.m6W3BRkB.dpuf

      Dragonite
      Feb 03, 2016 03:19 AM

      They may talk about the jewelry vendors in the association only. Not every vendors are in the association. A lot are not. China has huge numbers of retail shops who care little about association and sell like a black market. They pay no sales tax either. The real consumption is way higher.

        Dragonite
        Feb 03, 2016 03:21 AM

        Also China tax corporate by sales not by profit so companies usually under report sales. Tax evasion is rampant in China.

      Big Al
      Feb 03, 2016 03:33 PM

      Definitely the “bull in the China shop”. Pardon the play on words!

    CFS
    Feb 03, 2016 03:27 AM

    You’re a couple of months late, Mr. Brandt.

    Chris in Thailand
    Feb 03, 2016 03:28 AM

    GARY called this bottoms months ago and I held my nose and bought the dip.
    I am kicking butt in AEM, the best damn major in the AU business.
    Just swing traded 1000 shares.

    I’m going to buy a Harley Davidson Iron 883 with the profits I just booked.

    Thanks GARY!

      Big Al
      Feb 03, 2016 03:34 PM

      Good for you, Chris!

      Mark Gix
      Feb 03, 2016 03:51 PM

      It’s true!
      Gary Savage called this bottom ( hoping it will hold!!!!!!) before ANY other technicians I know!!!!