Are Gold Bulls In Trouble? Watch This Ratio!
This is the recent post by our friend Chris Kimble over at Kimble Charting Solutions. I really like the way Chris presents straight forward charts, such as this one on the gold to USD ratio.
Click here to visit Chris’s site and keep up to date on the charts that catch his eye.
The precious metals arena has reached important junctures for both Silver and gold. Yesterday, we highlighted an important test of support for Silver.
Today, we look at a “monthly” chart of the Gold / US Dollar Ratio and highlight a similar test of support.
As you can see, this important ratio for precious metals bulls looks to have double topped at (1). As well, a monthly bearish reversal pattern took place at those highs last June at (2).
2013 Deja Vu For Gold / King Dollar Ratio?
After the bearish reversal, the Gold/US Dollar ratio made a low early this year and headed higher. But it failed to make new highs (creating a lower high) and headed lower once more.
Now the ratio is testing important support at this year’s low, marked by (3)… this is also the same support area that gave way back in 2013 leading to a plunge in the price of Gold.
Gold looks to be hanging by a thread at (3). If support breaks, look out!
The 2020 doji at 16 could then be support for a wedge E-point breakout.
Problem with 2013…….
Debt not the same……$15 TRILLION
Today………………….$28 TRILLION… Plus, going to add another $1.5 to $3 Trillion by yr end.
the dollar then and the dollar today…. is that INFLATION Based….
Is the chart showing the real comparison…. just asking…
Right Jerry…That is why it is hard to trust normal trading patterns w gold stuff….butttt i still believe that IF or when the equity blows off and goes down for real…everything gets sold initially….how deep?…look to swings and fibs…could be bad…..imho
glta
On October 1, 2021 at 12:04 pm,
Matthew says:
That chart shows the trouble
finish you sentence…. 🙂
about ratio support chris should ask people, who can sell 200 tons of gold in a moment.
If that chart breaks below [3] where market structure converges the uptrend line, it’s not only bearish, it’s bigly bearish. Gold is at an important spot.
That chart shows the trouble, for sure.
Trouble, yes, but not 2011/12 trouble as implied by price action alone, not even close.
US DOLLAR to GOLD….. humm….
It’s a strange ratio chart, when it makes more sense to just post the gold chart priced in dollars. Gold is presented in US dollars all the time to the marketplace, and in that case, it didn’t make a “lower high” but in fact made a “higher high”.
The $2089 high peak from 2020 was, in fact, higher than the $1921 high peak from back in 2011. There fixed it… 🙂
To be clear, I do not disagree with his look at the ratio since it is very different than gold priced in dollars. For example, gold went up more than 650% during the last bull market but priced in the USD Index, it went up almost 1,100%. Therefore, it could be seen as a bearish nonconfirmation that gold made a new high last year versus the USD but not versus the USD Index. I’ve been looking at the ratio for years just like countless other ratios.
However, among many other big-picture bullish factors, it is noteworthy that when gold hit a new all-time high last year, it was confirmed by a new new high for its monthly RSI(14) reading (in 2011 it reached 79.89 and in 2020 it reached 83.68). And, somewhat surprisingly, gold priced in the USDX also made a new RSI high despite failing to make a new price high (79.14 in 2011 and 81.38 in 2020).
Good thoughts and response Matthew on the divergences noted between gold priced in dollars versus the Gold:USDX ratio.
It is an interesting look at how Gold and the Dollar index relate, but in general, it just seems more instructive to look at the Gold pricing chart in US dollars for the primary trend and direction. That was an interesting point as well about how when gold hit it’s all time high last year that it was confirmed by a new monthly RSI high as well.
Sure, the PMs are in trouble—the chart above is not the only chart showing the PM difficulties. There are others which I won’t get into. I might mention that the all important 20 month MA of the monthly BBs has finally been compromised and gold closed below it in September—-that signifies we will be in this bear move for longer then if that indicator had not been compromised. People might as well get comfortable and relax since we won’t be heading up to challenge the previous highs any time soon. Forget any big move for the rest of the year.
Allelujah Doc. May they pundits and forever hopeful let precious metals R.I.P.
I believe the underperformance of producers even when there is a pop-up in the metals speaks to the expectation of those who produce the stuff. Gotta turn that around.
You probably don’t know it but what you are suggesting is that the miners should never correct. Like all asset classes, the miners move in cycles. Assuming you know that, why would you expect a correction versus dollars but not versus real money? That is all that’s going on here, a correction. XAU priced in gold finally reached its 50% retracement of its post covid crash move this week and also nearly reached a big speed line support. If that support is going to be tested, it’s just 2%+ below today’s close and could happen without a 2% drop versus the dollar if gold blips higher while the miners drop very little or not at all. There’s no currency in such a ratio chart.
XAU:Gold weekly:
https://stockcharts.com/h-sc/ui?s=%24XAU%3A%24GOLD&p=W&yr=7&mn=3&dy=0&id=p12921451709&a=1035677683
It may hit 1780 on this run:
https://saturationtiming.blogspot.com/2021/09/gold-bounce-or-better.html
Just asking how much do you think the money going into the crypto market is hurting the PMs today. Lots of todays investors are into both at this time. Many older are in both and the younger are only in only cryptos. In times like this in the past many would be into PMs only.
Sharp Market Turns Not To Miss
By Monica Kingsley / October 1, 2021
https://monicakingsley.co/stock-trading-signals/2021/10/01/sharp-market-turns-not-to-miss/
September Was A Terrible Month For Stocks. Here’s What You Can Expect In October.
Oct. 1, 2021 – Mark Hulbert – Market Watch
Should You Sell Stocks Now? ‘Gold to shine’ in 2022 – Bill Baruch
Kitco News – Oct 1, 2021
0:00 – S&P 500
4:33 – Debt ceiling
6:25 – Sector preferences
7:46 – Oil
11:35 – Fed
14:02 – Gold
Expect $30 silver price, then $50 soon after, by 2022 – Steve Penny (@SilverChartist)
Kitco News – Oct 1, 2021 #TechnicalAnalysis
“Once silver breaches $30, there would be minimal resistance keeping it back from hitting $50, said Steve Penny, publisher of The Silver Chartist report.”
“Penney told David Lin, anchor for Kitco News, that $50 or even $30 an ounce for silver is unlikely to happen by the end of the year.”
0:00 – Gold & silver relationship
2:00 – Gold/silver ratio
5:40 – Mainstream adoption
7:10 – Silver price manipulation
9:05 – Price performance
11:48 – 1980 silver price peak
12:45 – Catalysts for $50 silver
13:50 – Metals and monetary policy
15:25 – Silver’s monetary role
17:00 – Siler price forecast
Glad to see our buddy Steve finally get noticed by Kitco. Steve is a solid technician, has a great grasp on the macro fundamental drivers, and is a straight-shooter. Happy for him and the growing audience he garners.
I believe he has one of the best free newsletters for following the technical charts in the Precious Metals and Uranium sectors, and he shares plenty of trading strategy ideas and thoughts on how to balance one’s portfolio that are very instructive.
https://silverchartistreport.com/optin-495051751625249654020
Canada/Australia….With the two crazy governments running those places right now, who knows what kind of whacked out decisions they might make that would turn them into less than tier one jurisdictions. What about the US for that matter?
I’m liking Impact Silver a lot more right now down in Ole Mexico, a nice, safe, mining jurisdiction.
That chart shows the trouble with looking at price alone. I have no worries about the perceived bearish implications.