Balancing the trends for gold and silver outside of the short term Fed driven volatility
There is no doubt we will see some volatility on the back of the Fed statement and Powell’s press conference. However it is important to understand the major trends and drivers in any market.
Jordan Roy-Byrne and I look at the longer term charts for gold, silver, and gold miners to get a handle on what the next few months will look like. These metals have been a great run due to central bank easing expectations. However over the past couple weeks the bond market has experienced a major shift along with some inflation data that has investors pairing some of these extreme expectations. We discuss all of this while focusing on gold and silver.
Regulators Expand Already Massive Precious Metals Manipulation Probe To Other Markets
RICO>>>>
So far, the increased focus on spoofing has resulted in federal prosecutors bringing a total of 13 spoofing cases against 19 defendants in the past five years. Of those, eight have pleaded guilty, while seven are fighting the charges and awaiting trial.
Following the indictment of three J.P. Morgan precious metals traders on Monday, Assistant Attorney General Brian Benczkowski said that the Justice Department is not finished with its probes.
“Our investigation is ongoing, and we’re going to follow the facts wherever they lead whether it is across desks here or at any other bank or upwards into the financial institution,” Benczkowski said.
Jordan
There is a sea change occurring in the precious metals markets that is not reflected in your charts.
That sea change is clearly reflected on the gold charts that I look at. The quarterly chart in particular.
Matthew
You have your chart upside down.
Robert, the quarterly chart is unambiguously and unequivocally bullish. The breakout to multi-year highs is as well. Shoot the messenger if you must, most do.
Matthew
I have a lot of respect for Roy-Byrne – he is one of the few chartists I take seriously anymore. But he was predicting a pullback to sub 1400 based on previous runups. I’m just questioning if past is prologue. There seems to be a change of sentiment out there.
Robert, I respect him too but I also do not see sub 1400 happening.
I don’t often make predictions in this forum, because people scoff at them.
About a week before the Fed interest rate cut in July, I predicted a 0.25% cut in July, followed by a 0.25% cut in Sept. I don’t expect a cut in October.
I do expect to see gold touch $1,700 in about 4 months.
If nothing else, golds reaction to the latest interest rate cut on top of its reaction to interest rate rises in the past indicates that sentiment and technicals over rule fundamentals. Its slightly weird but not surprising.
Jawboning and hypothesising seems to be the most affective tool in shaping markets in the short term without committing to an actual cause.
Agreed about FED jawboning being their main polity tool left (besides these meager and expected rate cuts).
policy – no polity – although I may have been thinking their policy belongs in the potty.
Haha yes that is true Ex. PMs holding up well at the moment. This correction was needed in my eyes as its the first one since our price breakout back in June.
Agreed Ozibatla. The PM sector was getting a bit frothy towards the end of August and early September, and the sentiment readings in Gold & Silver were in the high 90’s (as Bob M. noted), so a pause that refreshes was in order.
Both Jordan and Doc believe this correction may last a few months, so that is worth noting… but even if that plays out, what’s a couple months in the larger pattern unfolding?
Personally, I was interested to see if Gold could break up into the $1600’s before rolling over, and wanted to see Silver break up through $20-$21 before taking a larger break. Regardless, the move up in PMs out of the 2018 intermediate low in December during tax loss selling, (and in particular, the move up that played out since May), has been very encouraging.
As we discussed so many times, Gold taking out the 2016 high of $1377.50 and putting in the next impulse leg to a higher high was the key for 2019, to prove to the bears and even reluctant bulls, that the bear market ended in Dec 2015 and has now moved up about $500 off that bottom.
2019 has been a bullish year for the whole PM sector any way you slice it, and many of the mid-tier and smaller producers moved up 50%-200% off their lows, so that’s good action no matter what sector an investor is involved with.
Ever Upward!
As Excelsior stated, the cuts were expected. I can’t think of anyone who doubted them.
An October cut is just the opposite; few expect a cut unless there’s a market dislocation.
Only 3 Octobers in the last 20 years have seen rate changes: 2001, 2007 and 2008. December meetings are more likely to deliver action as they have 9 times in the last 20 years.
Good point Matthew. An October “surprise” cut would catch many investors wrong footed, and December has been a consistent month for Fed tinkering.
The first fed raise after an 8 year lull was Dec 2015, there was another rate raise in Dec 2016, a rate rasie in Dec 2017, and then back to a rate cut in Dec 2018.
If the Fed cuts again this December it will just be more of the same playbook….
Well stated Ex, couldnt agree more. I did become cautious when I saw such sentiment readings but it was to be expected as very few could have foreseen the move in gold from May through to end of August. Hence not only is the pullback good to see but is necessary for moves higher in the future when one looks ahead.
I personally was hoping silver would touch $20 before retracing, but the $19.60 mark is close enough. I was a reluctant bull and even when $1377 was broken in gold, I still remained unconvinced. However to watch it continue higher initially through the $1430 region and then correct back towards $1377 without falling through that area was a very positive development in my eyes. For several years, this $1360-$1380 area acted as stiff resistance and once gold went well past that area the acid test was always going to be whether this region could now act as support if this was indeed to be the next impulse leg higher. And so it did, touching the $1380 area twice before resuming higher again.
I hope have not jinxed gold here but this price action looks increasingly positive. So long as this current correction doesnt dip too far further south then all is well I believe.
+1 Well stated on the resistance becoming support and successfully holding in Gold before trucking higher into the high $1400s to mid $1500s.
Fork support for silver at 17.50 held again today (but late day action doesn’t show up on the stockcharts chart):
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=W&yr=3&mn=11&dy=0&id=p32865174826&a=501194637
The gold miners (GDM) also found buyers at a fork support:
https://stockcharts.com/h-sc/ui?s=%24GDM&p=D&yr=1&mn=3&dy=0&id=p65285544745&a=672055134
Gold is in for a dip sooner rather than later if it doesn’t have a good day tomorrow.
(Again, stockcharts does not show late day action.)
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=3&mn=11&dy=0&id=p06606089880&a=652515795
At +3.7%, GDX is performing very bullishly relative to GLD (+0.40%) this week (so far)…
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=7&mn=0&dy=0&id=p62394020743&a=686276584
I have to add that the reverse is true for today: GDX performed bearishly relative to gold/GLD. HOWEVER, SIL performed well/bullishly by falling less than SLV (-2.01% vs -2.08%). Typical bearishness would/should have seen that etf fall 2 to 3 times as much as SLV.
GDX priced in GLD found support at the 233 week EMA today:
https://stockcharts.com/h-sc/ui?s=GDX%3AGLD&p=W&yr=7&mn=0&dy=0&id=p87073420369
SIL has not been weekly overbought since 2016 so it can explode higher if/when it can put those 200 week MAs below it.
The huge volume lately shows a battle between those who understand inflation and those who don’t.
Those who still doubt the bull will disappear when the silver stocks finally confirm the action in the gold stocks since that event will be good for the whole sector.
https://stockcharts.com/h-sc/ui?s=SIL&p=W&yr=7&mn=0&dy=0&id=p87418901852
Tavi Costa – Precious Metals Offer Tremendous Value for Investors
@PalisadeRadio on 17 Sep 2019 #AudioInterview
https://ceo.ca/@palisaderadio/tavi-costa-precious-metals-offer-tremendous-value-for-investors
The yearly gold chart looks fantastic.
-Some obvious resistance recently came from the Keltner Channels (1553) which gold briefly pierced for the first time in many years.
-For the first time since early 2013, price is now bullishly well above Kaufman’s moving average (now 1378). The yearly KAMA is trendless but the quarterly KAMA has turned decisively upward in the last 2-3 quarters.
-The 7 year exponential moving average crossed below the 7 year simple moving average in 2013 and crossed above it in 2019. The last such (bullish) cross happened in 2002.
-The yearly MACD(12,26,9) never gave a sell signal (signal line crossover) following the 2011 top but came closest to doing so in 2018. Among other factors, this supports my longstanding claim that the cyclical bear market happened within a secular bull market.
Yearly Bollinger Band resistance is currently about 1850 and, with the yearly RSI(14) about to go over 70, I bet it will be tested much sooner than almost anyone expects.
Mexico’s Second Largest Silver Mine Shuts Down, Reopens & Shuts Down Again
September 18, 2019 – By SRSroccoY
“In the past five months, Mexico’s second-largest silver mine was shut down, reopened and the recently shut down once again. Due to a new blockade at Newmont-Goldcorp’s Penasquito Mine, stemming from issues with a local trucking contractor, the company has temporarily ceased operations.”
“Unfortunately for Newmont-Goldcorp, 2019 was supposed to be a banner year for gold and silver production at the Penasquito Mine.”
https://srsroccoreport.com/mexicos-second-largest-silver-mine-shuts-down-reopens-shuts-down-again/
BRE-X Joe Grosso ( Golden ERROR ) hangs his head in shame AND SHOULD BE PERP WALKED IN Vancouver in the worst scam perpetrated on shareholders since Bre X 20+ years ago.
Even the short term picture is looking hopeful for the bulls but some resistance remains…
GDXJ:
https://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=1&mn=3&dy=0&id=p60851790914&a=639884069
GDXJ is providing about 6 to 1 leverage to GLD today and is up more than twice as much as GDX.
GDXJ:GLD has already retraced 61.8% of the move that began in May:
https://stockcharts.com/h-sc/ui?s=GDXJ%3AGLD&p=D&yr=1&mn=0&dy=0&id=p93434716864&a=683081133
Barrick is up 6 times more than GLD this week:
https://stockcharts.com/h-sc/ui?s=GOLD&p=W&yr=5&mn=0&dy=0&id=p91418053845&a=666388372
GDX has been capped by speed line resistance this week and Fibonacci fan support (blue) is at roughly 25.40 next week:
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=7&mn=9&dy=0&id=p71922171689&a=685496339
More in the Works………JPM…….
https://www.zerohedge.com/commodities/regulators-expand-already-massive-precious-metals-manipulation-probe-other-markets