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Gold & Silver in a LT rally

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So Gold (and Silver) did not drop as far as I had thought they might but the price action is positive for my overall assessment for a long term rally on Gold and Silver.  And now Stocks are potentially beginning that Bear (let's see).  However short term I think precious metals are responding more to USD weakness, or some other intrinsic factors rather than front running stocks (or maybe they are, who really knows..?).  And it doesn't really matter, what matters to me is that the price action is bullish and consistent with my scenario of a strong rally.  This was, for me, a set up worth trading Long on the breakout of the down channel back in early October.  I had actually taken a cheeky spec Long on the bullish pin bar at wave 2 (pink) but the breakout of the channel was the safer bet.  It did get a strong retest, which is all to the good as you don't want these LT rallies bursting out too quickly.

In terms of the Technical set up:

  • The EWT counts are a series of 1-2 retraces after the Pink 2 (itself a very large scale retrace)
  • There is a credible Head & Shoulders set up (see previous posts) to signpost a macro trend reversal
  • There is PMD at Pink 2 and Green 2.

Once we get a break of near term resistance there is really nothing to stop the rally until it hits the potential H&S neckline (around 1,360) although I might expect a halfway flag consolidation, which would confirm how far the first rally phase will go.  If this is to be a long term rally we will get a big retrace bearish move to prime that pump.  Watch USD and Silver also for signals of trend direction for Gold.  "As goes Silver so goes gold".

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Looking at the short term movements, pending longer term breakouts, I find Silver may offer more insights than Gold just now.  On the hourly chart there is an unclosed gap, which I think must be closed before the next rally phase in Silver (and Gold) gets going.  I think a retrace to around about the Fib 50% is likely, which is just below that gap.  After that we would need to see a bounce off this zone.  There is a similar set up on Gold, albeit the unclosed gap is arguable.  Or could precious metals just respond to USD?  Worth watching whether and when DX & EURUSD turn.

 

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Silver did indeed close the gap and has bounced off the Fib 50% just below the gap, as projected, and is now rallying away.  A break of the overhead resistance is the next target (circa 1465) and then there isn't much standing between this and 1750.

Gold was a bit me bullish and has now put in a higher high, fast coming up on the magic 1245 level (similar to Silver's 1465).  Again nothing standing between this and the potential neckline (circa 1360).  While stocks remain weak and USD stays in a retrace bearish move the outlook is set fair for a strong rally in precious metals.

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Correction, 1500 is the Silver equivalent to 1245 on Gold.  1465 is an near term resistance level only.

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Silver still has a bit to go to make the breakout but the EWT count is set fair for a strong rally (a wave 3 or 3).  A higher high over the recent high at circa 1465 should seal this move and a break of Daily chart resistance (circa 1500) confirms it.  If this all emerges then I expect a strong rally to the 1750 level before any major retrace.  The only thing that could appear is a consolidation phase, roughly half way up to the 1750 level.

In terms of Gold the picture is even more bullish (interesting as this would mean Silver is a bit behind, possible being restrained by the more industrial nature vs Gold and if economic slow down is coming then industrial commodities will take a hit, at least until they get ridiculously cheap).  Gold has made a higher high and is breaking through Daily chart resistance with a strong single daily bar move on Friday.  A continuation move (opposite to stocks drop) o Monday would be very bullish indeed.  The only fly in the ointment is a last minute USD rally on Friday night but either this will reverse (likely in my view) or precious metals detach from USD correlation as stocks drop through key resistance.  Note also that as with Silver, the EWT count shows 2 retrace moves within consolidation after a major turning point (pink 2 on Gold, Purple on Silver), which is why my assessment is for a wave 3 of 3 (a very strong move  - rally in this case).  If this holds then there will be no further retraces until perhaps a consolidation flag.  This will be important as it will give clues as to the length of this rally phase before the next counter trend retrace, which could be quite significant and would set up the market for a much, much bigger rally to come, but let's worry about that as and when...

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Silver is showing an interesting set up just now, having been contained within near term resistance but potentially poised to rally sharply through it after the short term retrace drop.  There are 3 overhead resistance zones for Silver to get through but the nature of this market is one of fast breaking moves so this is eminently possible and would signal a strong wave 3 move consistent with my projections and support the target area of 1750 as an initial "let's see what happens there" focus of interest.  Currently I am expecting a strong retrace from this area but a fast breakout would be a credible alternative scenario.  With Gold having already broken through near term resistance on a similar set up the odds are favouring a strong rally from here.  Add to this USD gearing up for a bearish phase (still unconfirmed but the case is improving) and Stocks on a down trend.  IF Stocks have made that final high and are in a long term decline in an initial wave 1 down (we can expect a counter trend relief rally at some point and a similar counter trend bearish move in precious metals) then now could be a great time to go Long precious metals (another strategy could be to wait for the retrace move and get Long at that point).

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So Gold and Silver both made higher highs and then promptly reversed (a typical risk) in line with both a similar reversal on stocks and a rally in USD.  One thing to note, people often talk about correlations between markets as one driving another but for me this is more about data and signals rather than cause and effect.  There is something driving all these markets but I am less concern with what it is when conducting technical analysis than the fact of the correlation itself as portrayed in price action and what signals it might give me between markets.

I am now expecting a retrace bearish move on precious metals, which continues to align to a bullish retrace in stocks and a rally in USD.  Being mindful of the regular risk of such a reversal on the making of a fresh high (in particular the price action set up we can see on both precious metals and stocks - i.e. a 1-5 wave completion) I closed out all my short term Longs (Shorts on stocks) holding only my longer term trades located much further away from the price coalface.  I will seek to reenter after the current retrace moves complete and turn back.

Using Silver (a more active and therefore easier market to analyse sometimes than Gold), on the 1 hour chart we can see the current move up.  The recent top is a secondary wave 1 (brown) and next we may get a retrace to any of the suitable support points below after the initial A-B is concluded before a rally away.  But looking at the 4 hourly chart I could construe the whole of the move up from 30 Nov as one wave, in which case the red labels could be correct.  So if the brown labels are correct then there are several turn points as detailed on the 1 hour chart and if the red labels are correct then I would be looking in the first instance at the Fib 62% (red fib drawing) around about 1430 (although with Silver being so volatile it could go lower than that).  I see a similar picture on the Gold 4 hour chart.  One thing remains clear to me, until Silver breaks out above 1500 and Gold 1250-60 anything is possible so I will be holding my long term Longs stop protected at break even and waiting to see how all this plays out before considering another Long (I would not be going Short precious metals at this juncture).  I will also be watching stocks and USD for turning point clues.

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Precious metals did not retrace much, at least not yet but I have stayed out with my turning point Longs stop protected far below.  I am waiting for another retrace to begin a buy-the-dips campaign that I expect to correlate to either a period of Stocks bearishness (i.e. even more than we have currently had because I don't believe the market has yet fully woken up to the idea of a major Bear on stocks) AND/OR a period of USD Bearishness.

Using Silver to illustrate the technical picture right now I have a sharp turn On Friday off a potential H&S neckline with strong medium term resistance (circa 1500) above.  I have NMD present on both Daily and 4 hourly charts at this turn and USD rising.  If this pans out I would expect to see an A-B-C form for the retrace to a good turning point back into a Rally, maybe on USD turning Bearish or Stocks turning full Bearish or both.  I have used the Fib 62% as a working hypothesis but the Fib 76/78% looks looks stronger support but I will let price action be my guide.

On Gold I have a similar set up but without the nice potential H&S formation.

I will await events and seek a Long opportunity buying into the dip at an appropriate support zone with other indicators in support.  I will also watch out for a short term reversal and strong rally through over head resistance, especially aligned to correlated moves on Stocks and/or USD.  With Stop protected Longs already in lower down I can trade Long in a pyramid strategy with confidence.

Note: I am fully Bullish precious metals having identified a variety of turning point technicals, including COT data (see my recent COT posts on a separate thread).  For me it is only about when to add to my Longs not if this market goes Bullish as I believe it already has.  Once we see breakouts from resistance zones it will become all about managing the trend.

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From a fundamental perspective we could be gearing up for a good play on Gold. Political uncertainty, Feds interest rate decision, and a broadly slower global growth outlook has sent the wider market running for the gold-nugget-embedded hills of safety.

A weaker USD has also been beneficial.

Will continue to passively watch your discussions and analysis with interest and see if they're backing up the global macro picture!

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I find gold not so interesting to trade. Many factors, but no real news apart from 'risk off' trade appetite. Bores me. Like you said I   think it needs to break 1290 and then would head to 1365.

You know I'm desperate as I'm talking about levels and tech analysis now ;P

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For me precious metals have clearly now turned into that long term rally I have been banging on about since I started this thread.  For the record, I am Long from an early turning point and am now seeking to add further to those longs until the first major (Long term timeline) retrace Bear.  I currently see an interim retrace in the making, which would be a halfway Flag.  This is something I always look out for in all major motive waves.  On my Daily Gold chart I have a pair of parallel channel lines and the market has just hit and rebounded down off the upper one.  On my 4 hourly chart I have NMD and a potential ending Triangle formation, which if broken to the down side may offer a nice short term Gold Short.  More importantly I will be looking for a bottoming out of any retrace to go Long and also I will be waiting to see if a Flag or Pennant forms, the breakout rally of which would also be a good Long opportunity from a purely chartist perspective.

Longer term I am still expecting this rally to make the 1360ish area at the neckline and then we will see whether that stops this particular wave (in temporary retrace) or it blasts through.  But that's for later.  Right mow my strategy is simple, buy the dips BUT need to be careful here as a Flag move could reach the bottom channel line (i.e. a deep dip this time).  Also Flags can contain a lot of whiplash so watch out for that. Similar on Silver.

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Gold and Silver have reached the top line of an up-sloping channel and have bounced back off it.  Gold has broken out of a 4 hour chart Triangle and retested just as the market closed for the down time.  However in the last hour during the Gold down time the FX market has really kicked off with the Yen making a large positive move against the USD and elsewhere USD rallying hard.  Will be interesting to see if this spike in USD translates into a bearish move for precious metals.

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Looks like Silver and Gold (the latter more so) have finally hit the buffers and dropped down but how far will it go?  Gold is showing a credible break through a rising, narrowing, channel and close below (see hourly chart below).  Silver too but less convincingly just now.  Gold has turned back from a zone of significant resistance of the Daily chart (see below).  However my leading scenario is for Gold to go through a period of consolidation or a relatively shallow retrace aligned to stocks retrace rally, which would include fresh higher highs and then a much stronger retrace to set up the big rally coincidental with the big stocks Bear.

In the short term I am looking for a retrace to the Fib 38%, coincident with the unclosed price gap around the 1255 area BUT it is equally possible that this gap will not be closed until the wave 2 blue retrace a few months from now.  So the opportunity is to identify the next turn up and buy the dips for a short term Long trade and swing Short for the bigger retrace and then get long for the big one (or just wait for the big one...)

 

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Nothing much going on with Gold/Silver, the anticipated consolidation period continues.  The competing drivers of USD and Stocks/Bonds movements may be neutralising clear direction for now but in anycase, regardless of the cause, the price action is flat.  I see 2 possible routes out, both ending in an upward trajectory:

  1. a simple breakout rally that takes us up towards the big picture H&S neckline
  2. a retrace to close the price gap before that same rally

My longer term projects remains unchanged, once we complete a strong wave 1 we should see a retrace wave 2 to set up a big rally, which ought to coincide with the Stocks Bear resumption.  In this I am supposing that the main driver for gold becomes firmly a safe haven value store rather than a USD currency cross.

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It rather seems that USD price action is driving precious metals at present with USD weakness supporting rallying Gold/Silver.  Looking at the technicals on both it is simply an end to my anticipated consolidation part way through the medium term rally, which presents as a Flag or Pennant.  In both Gold and Silver we have seen a breakout of this consolidation and in the latter a break through over head resistance.  I expect both these markets to continue to rally for a while to complete the medium term wave 1 before a more significant wave 2 bearish retrace that will set up a very long Bullish trend.

My trading strategy is to go Long on the breakouts, mentioned above, watch XAUUSD-Daily_260119.thumb.png.c9cef41d4e25056f836c87432ede2b9c.pngXAGUSD-Daily_260119.thumb.png.d1c43d292fc60da667c78e16aecbe523.pngout for any short term bearish retraces as an opportunity to buy the dip until I see signals of the wave 1 end and then exit all swing Longs (keeping only those I took at the beginning of the rally as long term trades) and wait for the retrace to compete before entering a long term Long buying campaign. 

 

 

 

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41 minutes ago, Mercury said:

It rather seems that USD price action is driving precious metals at present with USD weakness supporting rallying Gold/Silver.  Looking at the technicals on both it is simply an end to my anticipated consolidation part way through the medium term rally, which presents as a Flag or Pennant.  In both Gold and Silver we have seen a breakout of this consolidation and in the latter a break through over head resistance.  I expect both these markets to continue to rally for a while to complete the medium term wave 1 before a more significant wave 2 bearish retrace that will set up a very long Bullish trend.

My trading strategy is to go Long on the breakouts, mentioned above, watch XAUUSD-Daily_260119.thumb.png.c9cef41d4e25056f836c87432ede2b9c.pngXAGUSD-Daily_260119.thumb.png.d1c43d292fc60da667c78e16aecbe523.pngout for any short term bearish retraces as an opportunity to buy the dip until I see signals of the wave 1 end and then exit all swing Longs (keeping only those I took at the beginning of the rally as long term trades) and wait for the retrace to compete before entering a long term Long buying campaign. 

 

 

 

Buy Gold, Long Term sir ?? How far will it be? Help me sir ??

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4 minutes ago, gautamhait said:

Buy Gold, Long Term sir ?? How far will it be? Help me sir ??

Thank you sir

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Hmm, it seems like you are asking for a tip @gautamhait, I don't do tips.  There are some services around that do this if you are interested but of course they charge for the service.

If you are asking how far I think Gold will go I can say that I think (think being the key word here) that Gold (and precious metals generally) will go into a long term Bull run coincident with a major bear market in stocks.  How far, how long?  No idea, I let the market decide that and act accordingly using my trading methodology.  In the short term I think Gold/Silver will continue to rally, which is something I highlighted as a possible scenario early in this thread.  My next targets are 1360 (Gold) and 1750 (Silver), although naturally the markets could fall short of that or push through a bit further.  At some point I expect to see reversal indicators that will signal a bearish phase.  Depending on the price action that emerges I will look to see whether this is an actual trend reversal or just a retrace of the current Bullish trend.  Nothing is certain, the markets will reveal themselves in due course.  However, so far Gold/Silver is playing out according to my lead long term scenario, as outlined in this thread, so I would be foolish indeed to start second guessing myself.  I am focused on 2 things in precious metals markets: 

  1. Maximising the opportunity my scenario is offering in a risk managed fashion - so far so good
  2. Watching out for price action that may call my lead scenario into question - nothing so far...

Let me ask you what you think Gautamhait?  This is supposed to be a discussion forum after all...

 

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On Mon Jan 28 2019 at 04:37, Mercury said:

Hmm, it seems like you are asking for a tip @gautamhait, I don't do tips.  There are some services around that do this if you are interested but of course they charge for the service.

If you are asking how far I think Gold will go I can say that I think (think being the key word here) that Gold (and precious metals generally) will go into a long term Bull run coincident with a major bear market in stocks.  How far, how long?  No idea, I let the market decide that and act accordingly using my trading methodology.  In the short term I think Gold/Silver will continue to rally, which is something I highlighted as a possible scenario early in this thread.  My next targets are 1360 (Gold) and 1750 (Silver), although naturally the markets could fall short of that or push through a bit further.  At some point I expect to see reversal indicators that will signal a bearish phase.  Depending on the price action that emerges I will look to see whether this is an actual trend reversal or just a retrace of the current Bullish trend.  Nothing is certain, the markets will reveal themselves in due course.  However, so far Gold/Silver is playing out according to my lead long term scenario, as outlined in this thread, so I would be foolish indeed to start second guessing myself.  I am focused on 2 things in precious metals markets: 

  1. Maximising the opportunity my scenario is offering in a risk managed fashion - so far so good
  2. Watching out for price action that may call my lead scenario into question - nothing so far...

Let me ask you what you think Gautamhait?  This is supposed to be a discussion forum after all...

What are services??

What are the services??

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Do a google search @gautamhait but research them carefully, there are a lot of snake oil salesmen around.  I can't recommend any because I don't use them.  If you are going to use any make sure they use a methodology similar to yours.

Regarding Gold, it looks to me that my long term road map remains intact.  Precious metals went into a consolidation phase as suggested previously but may now have bounced back into a continuation of the rally phase.  If we see a fresh higher high soon I will be keeping a beady eye on price action as the potential neckline resistance zone is approached.  Currently I am anticipating a fairly significant rejection around this point (+/-) into a wave 2 bearish retrace but this would be just a prelude to a much stronger rally phase.

XAUUSD-Daily_170219.thumb.png.3c2f99c2e268b9137e79e4861f67f7e7.png 

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On 23/10/2018 at 18:20, TrendFollower said:

Have you guys considered Bullion Vault?

https://www.bullionvault.com

I used them during the last major gold bull run well over 10 years ago. 

@TrendFollower Did you do due diligence on the company's trustworthiness?  I have to admit I like their products but before don't want to commit serious cash unless I can be sure there's no circumstances in which management can dip their fingers into my assets.  I'm going through their writeup to determine if you have to buy the gold in lots to be able to collect it (just in case the world goes pear shaped)!

 

Great thread - I was wondering what all your thoughts are about today's move which seems to be a strong move out of prior range.  

Thanks in advance.

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Didn't see your comment until today @psycho so any comments are obviously with the benefit of hindsight.  I had wondered if this rally would make it to the potential Head & Shoulders Neckline up at around 1360 but the market looks to have fallen short of this.  Regardless I was expecting a large time frame EWT 1-2 retrace , which I believe has just started.  This could take a bit of time to play out, although the move down on Silver has been fast.  For me such a move is likely to be volatile and, if it coincides with my lead scenario for indices (a complex retrace) could play out towards May.  Note that on Gold there was a spike on the COT data with the Non Commercials jumping into net Longs just as the market turned.  As a contrarian this is a good signal of the end of a rally, I exited my Longs shortly thereafter.  I will sit this out for now and await a confirmation of a retrace completions before looking to get Long for a Long, Long rally.

BTW: although I have shown Silver retrace terminating at the neckline breakout zone this is indicative only at this stage, as all my road maps are, and I would not be surprised to see the long term supporting trend-line retested on Silver.

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Gold is getting a small bounce but is that on the back of stocks Bearishness, USD apparent strength or something else.  I can't really tell right now and unless Stocks are following my #2 scenario (see USD indices, are we there yet thread) I can't really see this as the end of the larger retrace.  So I remain with my previously posted road map.  This rally will, under that scenario, either trace a wave B from here or give us another small leg down before it does.  After that comes a longer wave C to complete the retrace, possible as low as a retest of the prevailing long term supporting trend-line, which would suck in a lot of precious metal Bears, prior to a long, long rally.  For precious metals I feel it is important to watch USD moves in the short to medium but overall economic and stocks moves for the long term.

The Negative Momentum Divergence is still dominant in the technical set up for me but Stochastic is over sold so a period of bullishness is likely,  remains to be seen whether this will turn back down before a higher high or run up to hit the the overhanging resistance first before any medium term retrace.  This uncertainty means precious metals are not a good bet right now for me.

I am content to hold Longs from way down for the long term, having cashed some on a dual bet strategy.  I am waiting for this current pattern to trace out before looking for additional Longs but I will not be taking precious metals Short nor swing trading in what I expect to be a volatile (whip plash type - not the good type) period and view the set up as too uncertain.  I would rather look to swing trade stocks and main USD FX pairs that Gold/Silver at present.

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Gold and Silver are broadly still following my road map.  I have added what I believe is a strong channel (both upper and lower lines have a lot of price turn touches).  The breakout zone of this channel offers the favourite options for a wave B conclusion (Also Fib 62%), with Fib 76/78% not that much further up this represents a strong resistance zone for me. 

Silver and Gold are showing some strong congruence in pattern with similarity of Channel and breakout.  Wave A looks to be concluded now it remains to be seen how the potential wave B plays out.

I am not really key to trade this retrace as I am waiting for a long term rally signal to go Long and there are better short term trading opportunities elsewhere in my view.  So long as my road map set ups remain intact I am content to track and wait.

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On 17/03/2019 at 20:10, Mercury said:

Gold and Silver are broadly still following my road map.  I have added what I believe is a strong channel (both upper and lower lines have a lot of price turn touches).  The breakout zone of this channel offers the favourite options for a wave B conclusion (Also Fib 62%), with Fib 76/78% not that much further up this represents a strong resistance zone for me. 

Silver and Gold are showing some strong congruence in pattern with similarity of Channel and breakout.  Wave A looks to be concluded now it remains to be seen how the potential wave B plays out.

I am not really key to trade this retrace as I am waiting for a long term rally signal to go Long and there are better short term trading opportunities elsewhere in my view.  So long as my road map set ups remain intact I am content to track and wait.

 XAUUSD-Daily_160319.thumb.png.a514e7caa8da7e99cfcb27b4d2ec1a23.pngXAGUSD-Daily_160319.thumb.png.d1143f8d9f128f1ef421efb55f6b2d02.png

What is gold and silver position sir???

 

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Ok could be the right move if the stock markets crash from here or if you have wide enough stops and are comfortable holding against a large draw down if stocks go on an extended complex retrace through to the Summer, which would fit with my lead scenario for Gold/Silver, as outlined above.

It all hangs on the probability you have placed on stocks dropping heavily and when vs any other scenario and assessment of other drivers of precious metals markets, some of which are intrinsic to the individual markets (i.e. industrial consumption and sentiment).

My view is that precious metals will go on a raging bull run in due course when stocks capitulate and a depressionary recession kicks in that drives volatility in interest rates.

Recent comments about a bond rate inversion are relevant to this scenario because they suggest an interest rate situation that is unsettling (i.e. unstable/potentially volatile) but it is not an immediate trigger to trade (except maybe to cash in shareholdings).  Things usually happen slower than we might expect.

I might expect to see bond prices drop further rather than rise, and maybe heavily, prior to a recession driven recovery.  The key determining factor for the bond market is the yield curve.  So if you believe interest rates will stay ultra low or negative for ever (the new normal concept being pushed by various economists to explain why their models still work...) then bond prices can rise further.  Note: currently they are very high relative to historic levels - past performance does not mean future performance will follow suit, in fact often the reverse is true.  However the received wisdom relationship between bonds and stocks (i.e. stocks down therefore bonds up in flight to safety) is not a secure hypothesis.  The bond market is many times larger than stocks so any funds flow from stocks is not a material impact factor vs other factors such as state of the economy and interest rates (yield curve).

Why is all that relevant to gold?  Well a very experience fund manager I was listening to on a precious metals conference a few years ago stated the following was necessary for a sustained bull market in Gold:

  1. Interest rate backdrop unsettling (Inflation hedge)
  2. Gold rising in all major currencies (i.e. not just a USD relationship driver)
  3. Gold capital growth beating the stock market (SP500) 

So when and if we see yield curves rising (we had a precursor recently) and see the USD/Gold relationship disconnect and see stock markets enter a sustained Bear market we ought to be seeing precious metals in a sustained Bull run.  But are we there yet?

 

 

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