August 11th, 2020: Gold – The 2020 Gold Rush Is Temporarily Over

Today’s morning update:

https://surfcity.co/2020/08/11/surfs-up-324/

From the Weekend:

https://goldtadise.com/?p=472727

Last Weekend’s update.

My Classic TA and Cycles site covers:
1) Gold, Silver, GDX and the USD
2) Energy (Crude Oil, Natgas, & Uranium)
3) Stocks & Bonds
4) Marijuana Sector (not bullish right now)
5) Bitcoin & GBTC

Every TA methodology, except Cycles, focuses exclusively on Price action. Cycles are the only approach that combines “Time with Price” to help me enter & exit my trades plus set my stop levels.

Here you go. Enjoy! 🙂

https://surfcity.co/2020/08/09/gold-the-usd-weekend-update-63/

When it counts

It always counts! That’s the problem. There is never a day off. Michael Jordans’ secret was to play each game as if it was his last. A consistent eagerness to win. This got him into a lot of trouble with management where political, strategic, and resource allocation decisions are made. In trading, Jordan would have been a champion as well. Since individual trades are meaningless and random in the outcome, while sample size trading, thinking in probabilities, is everything. But that requires consistent execution. You can´t think after a string of losers the next trade to be a huge winner or a huge loser and act differently. You simply need to execute focused and unemotional. Sounds easy? Far from it. When it counts.

There are no sick days, there is no playing hooky – you can’t take a day off or allow yourself to slack otherwise you skew the outcome of your game. Rest assured if you make mistakes they are always made at exactly the worst time. 

Silver, Daily Chart: Cashing In

Silver in US-Dollar, daily chart as of August 5th, 2020.

On Wednesday, August 5th we cashed in our recent reload trade runner (see our quad exit strategy) triggered by an intra-day double top. With an entry on 7/28/20 at US$22.60 and an exit at US$26.95, this runner generated a profit of 19.25%.

We are still holding runners from entry levels of US$11.97 (3/18/20), US$12.52 (3/23/20), US$14.01 (3/31/20), US$13.95 (4/1/20) and US$19.33 (7/17/20). Without this additional exposure, we would have not exited this specific position. Due to the fact of Silver being in an extended up move at these levels which increases total position exposure risk versus runner reward, it was sensible to lighten the load. This frees capital for reentries at lower price levels.

However, we have not sold any of our physical Silver holdings! Even though only talking partial exits here, the complexity of trading comes to the forefront. It illustrates that one always has to step up when it counts. And it always counts.

Silver, Daily Chart: Extended Move Struggles

Silver in US-Dollar, daily chart as of August 7th, 2020.

We post all our entries and exits live in our free telegram channel and, typically, worries come alive within the group when moves are extended. Specifically where to exit and even more where to get in again. Speculation is high when and how deep retracements might be.

Opposing principles are at work:

• from a trend perspective, one has a directional advantage and can expect far more shallow retracements since greed steps in aggressively and buys every dip.
• from a mathematical perspective the further away from the mean and extended a move the larger the retracements and a return to the mean

These aren’t the only forces in play but it shows again that there is no time for debate and guesses. It counts especially in these times of friction and emotions triggered to perform rule-based and clear-headed.

Your choices are:

1. taking partial profits (since a larger retracement might be expected)
2. enter a reload trade at a low-risk point of a sideways channel in a smaller time frame with smaller position size (the market holds and doesn’t provide a larger retracement)
3. enter a reload trade at a low-risk point of an average or typically larger retracement

What we do not encourage is breakout trades as those typically tend to be higher risk – especially in extended moves as we are seeing in Silver right now.

Also, we do not encourage stop adjustments since they typically underperform target exits in extended moves. In this case, a stop on a runner position should be generously wide to sustain a large retracement.

Silver, Weekly Chart: When it counts, Forecast

Silver in US-Dollar, weekly chart as of August 7th, 2020.

Intuitively it might feel that the precious metal sector is overbought and due for a correction. This might be the case in a typical environment but with fundamentals pointing towards a future littered with crisis scenarios, one shouldn’t make a bet on this. As such we discourage for reducing entry options only to large retracement scenarios. Many expect as such from a typical seasonal approach and other usual trading behaviors of Silver. We dare to take a stand that we do not find ourselves in a typical cycle of Silver. Therefore, we rather focus on low-risk entry points of temporary sideways channels.

Being flexible is one of the aspects to be prepared when it counts. It is imperative to have various entry approaches.

When it counts

It magnifies when it comes to exits. There we are so strongly conditioned to do instinctively the absolute worst. Cashing in too early and trailing stops too early. You need to have your routines down and cultivate an especially good exit strategy both from a psychological perspective as well as a well defined strategic approach. Our quad exit strategy comes in very handy if your own system development hasn’t come to a satisfactory stage just yet. We also suggest a multi-dimensional trade approach like you can observe with the various entries mentioned above, where runner positions are now in the triple-digit percentages. Trading various time frames and various trades at the same time allows for choices both in entries and exits. Resulting in a toolbox that accommodates the variability of the complex markets.

Performing each time when it counts (consistently!) might be the most defining aspect why Michael Jordan is the only billionaire among millionaire NBA players.

We post real time entries and exits for the silver market in our free Telegram channel.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

Lagging Gold Miners Signal Interim Top

When in doubt, zoom out

Once the US$20 mark woke up the world and the seven years sideways zone was penetrated everybody asked where to get in, where to take profits and the typical headless chicken scenario unfolds fueled by the news and everybody having an opinion. This isn’t the time when you want to make a plan for a trade or a plan on where to exit a trade. This is the time when you want to be already positioned and simply follow your exit strategy that is set in place long before these scenarios unfold. We see this time and time again that when major levels are broken or approached, participation on our free telegram channel soars and interest is spiking. Should you find yourself in this unfortunate situation to not have been low risk positioned already and feel tempted to participate or change the trade or wait for this retracement that in most cases doesn’t appear, then the best advice is to revisit your system and/or investing approach. Or, when in doubt zoom out.

If you are unclear about the markets, one simple yet extremely helpful advice  is to step a time frame higher.

Silver, Monthly Chart: A Clear View

Silver in US-Dollar, monthly chart as of July 30th, 2020.

As indicated in the last silver chartbook release, we have broken through a seven years sideways zone (white box). From a higher time frame perspective (monthly chart) there is possibly quite a lot more room for price to go. This means you want to be focused on weekly and monthly charts and not get swallowed by daily chart time frame volatility that has been pushed from lower time frames up and suggests emotionally you get in our out. Volatility can be used for exits that are set in place already but are rarely a low-risk opportunity to get into a trade. The mind needs to be restful and very calm at the time of execution.

News should be the last driving force to awaken the executioner in your personality. Too often at the situation of silver right now investors ask themselves questions as to where to get out or where to get in on the next retracement to only find that these retracements aren’t as deep as they hoped for. Fear of missing out can be a true challenge.

Looking at the monthly chart above it needs to be clear how you want to participate in the directional move now set into motion. You want to be prepped and not find yourself in an emotional reactionary state towards the price behavior.

Silver, Monthly Chart: Time Relativity Error

Silver in US-Dollar, monthly chart as of July 30th, 2020.

This monthly chart depicts what most often can happen if you trying to chase price. Having missed low-risk entries on the first leg, once the whole world is looking at the results of the first breakout at a specific instrument or market, traders try to get in. Fear of missing out drives aggressive market participation at exactly the wrong time. Even if they get the entry right they most often cash in way too early shortly after? Most importantly they are not aware of what time frame they are trading. They find themselves soon again without a position and in desperation on how to get in again. The result: stress and small winners at best. After some time they ask themselves, why didn’t I just buy at twelve and hold the position towards fifty. That isn’t that easy either but with a detailed plan and pre-prepped clarity on what to trade and in which timeframe, results might improve.

You see to the right the various plays possible (among others). We also made approximate profit results shown on silver specifically for comparison. In this specific case, we were able to participate in each variant of these setups. We posted all entries and exits live in our free telegram channel. The isolated trade: “time relativity error trade” is a valid trade which we call a “reload”. This only if traded in addition to other setups.

Silver, Weekly Chart: When In Doubt Zoom Out

Silver in US-Dollar, weekly chart as of July 30th, 2020.

The weekly chart shows how far prices have stretched upwards. We have left typical standard deviation levels. Prices also have penetrated the upper boundary of the trend channel. A distribution level near US$26 has prices temporarily rejected. Nevertheless, the underlying tone remains very bullish and the trend could already continue from here. Alternatively, a double top forms as the second most probable likelihood and only on position three from the statistical percentages we might see a deeper retracement from here. For this scenario, both upward trend channel lines are low-risk entry points, as well as slightly above the round number of US$20 and the seven-year channel breakout line of US$19.

When in doubt zoom out

Our quad exit strategy provides emotional relief when in doubt about where to exit through its pairing out methodology. One excellent way to gauge the market and even more one’s emotions is to assume a contrarian position. A way to zoom out from one’s emotions.

Easier said than done since one is emotionally biased holding a position. This needs a bit of practice. We recommend daily exercise to spend a few minutes before each trading session. Assume after glancing at charts of how it feels to be either long or short or out of the market. Truly evaluate how each of these three positions makes you feel. If it feels good to have a contrarian position to the one you are holding take some partial profits. If not just relax and hold on to your position for a bit longer.

We post real time entries and exits for the silver market in our free Telegram channel.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

Enjoy! 😉

https://surfcity.co/2020/07/23/usd-update-16/

Silver, Daily Chart: Statistics, Where The Rubber Meets The Road

Silver in US-Dollar, daily chart as of July 23rd, 2020.

Since mid of March, we have been pounding into the Silver market aggressively with thirteen entries. Nine of which were winning trades, two losing trades, and two break even trades which results in an 81% hit rate. We still have four trades due to our quad exit strategy, with runners exposed to the market. With the start of these live entry and exit postings in August of 2018 we now have a total of 50 trades with a hit rate of 89.40%. The average runner return is at 4.76% per trade and average risk exposure at just 1%. Keeping it honest is one necessary way to support this hope. But of course, one cannot trade on hope alone.

Silver, Monthly Chart: First Successes Are Just So Sweet

Silver in US-Dollar, monthly chart as of July 23rd, 2020.

The monthly chart shows why we are so optimistic. Just as presumed in previous chartbook releases Silver prices finally broke through the sideways range established since 2014. This provides now for a significant long term bullish scenario and allowed for the first significant profit-taking into this breakout liquidity.

Silver, Monthly Chart: Start With Hope

Silver in US-Dollar, monthly chart as of July 23rd, 2020.

The monthly chart shows our next target for partial profit-taking at US$24.217. We want to emphasize that we do not take any profits in our physical silver holdings at any of these levels so far. We urged physical participation at the March lows and expect from a long term view a possibility of three-digit numbers for the Silver market.

Start with hope

It does not matter if you have been trading for five, fifteen, or fifty years, confidence in one’s ability and a determination to succeed is necessary for an elevated outcome. Henry David Thoreau worded it best: If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.

We post real time entries and exits for the silver market in our free Telegram channel.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

Video: Gold & Silver Upside Targets & Overbought Indicators for GDX

Silver, Daily Chart: More Entries

Silver in US-Dollar, daily chart as of July 15th, 2020.

After last weeks Silver chartbook release where we took partial profits into the daily time frame breakout (red down arrow), we had yet another long entry (bright green up arrow) on the 10th of July 2021. On the 15th of this month we took again partial profits from this entry (see our quad exit strategy). With an entry at US$18.55 and an exit at US$19.43 for this part of the trade, a 4.74% profit was achieved.

Silver In US-Dollar, Weekly Chart: No Need For Greed

Silver in US-Dollar, weekly chart as of July 15th, 2020.

The weekly chart shows why we took profits again. With a move from US$11.639 we enjoyed quite a run. Last year in September this distribution zone (red horizontal band) was strongly rejected by price. Consequently, a temporary retracement towards the supply zone (green horizontal band) is likely. This again would provide for low risk entries.

Silver, Hourly Chart: Creep Up – The Strongest Form Of Trend

Silver in US-Dollar, hourly chart as of July 15th, 2020.

Lower time frames are often a good source for what is going on in detail. The hourly chart provides data with its  market profile representation that we are in a creep up scenario for the last week’s sessions. “Up creep” being the strongest, meaning most sustainable type of trend. Prices closing at the end of the session (vertical blue lines) near or above the point of control (POC) which are the horizontal red lines indicates strength. It is this strength that warrants us for our aggressive reloading behavior and has so far rewarded our style of trading.

Pain avoiding, pleasure seeking

Money in itself has no value. It can be attributed to positive as well as negative spending. This makes goal-setting so important for the market player since money is the only product gained from speculation. You are not in the news, have no skill or product to show off to the world.

The focus needs to be on pleasure seeking goals. If those are of material value only like a debt paid, a vacation taken, a house bought, than a trading career is easily limited. Once these landmarks have been reached it is not unusual for self sabotage mechanisms to kick in. Consequently, traders often lose or give back an enormous amount of hard earned capital.

Only stating you want to be rich (pleasure seeking) won’t cut it. Or worse:”I don’t want to be poor anymore”(pain avoiding). To avoid giving back money to the market, sound goal-setting, that is in alignment with ones beliefs and life style, and that reflect ones values, is necessary. Trading is a business and all aspects of a business need attention with care. Sound business planing involves clarity of this aspect in detail. You want to map out a detailed road of goals, celebrate milestone moments where you spend some money on yourself as a reward and map out a road that is in alignment with your personality.

We post real time entries and exits for the silver market in our free Telegram channel.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

Gold has a longer-term Intermediate Cycle that, on average, makes a major Intermediate Cycle Low (ICL) every 22-28 weeks measured low to low (or around 6 months). Within its longer Intermediate Cycle, Gold has 3 to 4 shorter term Trading or Daily Cycles that last, on average, 23-29 trading days low to low.

With that as background, I took profits on my leveraged NUGT position late last week as it was getting late, in terms of Time, in short term Trading Cycle #3 (TC3) for both Gold and GDX. You see, last Friday was Day 24 for both Gold and GDX, so yes, it is getting late. Attached is a link to my Weekend update along with a chart on GDX from today’s close that signals that GDX is now likely moving into TCL3. If correct, I have what should be strong support near, or just below, the 50ma where I am expecting TCL3 to form so we shall see.

https://surfcity.co/2020/07/12/gold-the-usd-weekend-update-59/

Note that GDX formed both a swing high and closed below it’s 10ma and my TC3 uptrend line. The combination of these three events this late in a Trading Cycle is usually a very strong signal that a short term Trading Cycle has topped.

Short-Term Risk Rising but Trend Remains Very Bullish

Gold, Monthly Chart: A Leading Indicator

Gold in US-Dollar, monthly chart as of July 9th, 2020.

The monthly chart above shows how prices have moved through the US$1,800 resistance zone of Gold. Generally, Gold is leading Silver. This is a significant event since now 2011 highs are looming just US$80 above. It is advisable to always have an eye on the precious metal sector leader Gold to pick ones entry and exits points on Silver in alignment to this force.

Gold, Daily Chart: Partial Profit Taking

Gold in US-Dollar, daily chart as of July 8th, 2020.

The daily Gold chart above indicates our partial profit taking (red down arrow) since we are getting from a monthly perspective into the “end zone” (US$1,800 to US$1.900). This even though from a daily perspective we just broke through a distribution resistance zone.

Silver, Daily Chart: Using Liquidity

Silver in US-Dollar, daily chart as of July 8th, 2020.

The daily Silver chart has a mutual breakout scenario like the daily Gold chart. The crowd thinks “breakout”, meaning they either have entries or are chasing this trade. We took partial profits to use this liquidity for good fills. We were fading the crowd because we are thinking from a larger time frame.

Silver, Monthly Chart: Room To Catch Up! Time, Think Again

Silver in US-Dollar, monthly chart as of July 9th, 2020.

The bigger picture is unchanged. The monthly Silver chart shows how undervalued Silver indeed is. There is a lot of ground still to be covered. Silver will eventually have to catch up.

An important aspect to overcome stress, which allows for improved execution of trades is practice. First paper trading for a long time on simulators, and following real execution with extremely small positions size, is the way to go. For this you will need a lot of trades to be happening to get better in ones practice and smaller time frames are ideal for achieving these goals. Beginners often are too impatient and step into the arena at an too early time with too large position size.

Time, think again

The biggest culprit for failed trading events is trading underfunded. You are under stress if losing money you can’t afford to lose. No beginner likes to hear that fact. They want in. It was hard enough to save the initial stake and often motivation to pick up this profession is to get out from under.

They literally have no chance to win the game. To overcome such a dilemma one needs to find a market that allows one to trade that small, that the individual outcome of a single trade is absolute meaningless to ones psyche. Many markets do not fit too small account sizes due to the smallest trade able increment being too large or a commission rate basis in relationship to single execution being to expensive. They simply at the beginning need to be avoided.

Thinking in monetary terms is the wrong approach. Too many hype stories are published of how a five thousand dollar account has ended in millions. The true route to riches is to follow sound principle based advise and let time be on your side. It might take a little longer, but the heartache of multiple small accounts wiped out can be avoided if walking away from a gambling approach with a naive expectation to outwit a for millennia conditioned, deep rooted fight flight mechanism.

We post real time entries and exits for the silver market in our free Telegram channel.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

On Crude Oil, Crude Producers, NatGas and Uranium is a freebie this weekend. I am expecting lower lows in all three over the coming weeks. This weekend’s updates are featuring a long term look across all markets.

On Gold, I will cover its 4 Year Cycle this weekend as this is the longest that I track. Some say Gold has an 8 Year Cycle but that is simply two of its 4 Year Cycles.

https://surfcity.co/2020/07/05/energy-crude-oil-natgas-uranium-mid-week-update-8/

Added: From the question in the comments section, Descending Triangles with Flat Bottoms are normally Bearish in an uptrend but there are exceptions. Falling Triangles (or Bull Flags) in an uptrend are usually Bullish (there is a subtle difference between the two). See attached GDX Weekly chart that shows both a Descending and Falling Triangle. My second chart is for the Current Gold Intermediate Cycle where it formed a Descending Triangle but broke to the upside so there are exceptions to the guidelines (there are no absolute rules with markets as that would be too easy). 😉

Early Signals of What’s Coming in Juniors

Silver, Daily Chart: Low Risk Reload Entry Points

Silver in US-Dollar, daily chart as of July 2nd, 2020.

The daily time frame shows how clean the trend on Silver has been trading. This allows for very low risk reentry points (green up arrows) to build up a larger position. We let our runners ride and transfer them to larger time frames if applicable (see our Quad Exit Strategy).

We prefer this low risk strategy and the chart illustrates nicely how a breakout strategy from the yellow marked pennants would pose much more risk.

With the larger picture in mind one can undeterred from distracting news items observe smaller time frame charts and use technical analysis to produce desired results supporting ones larger picture goals.

Weekly Chart, Silver The Latest And The Greatest

Silver in US-Dollar, weekly chart as of July 2nd, 2020.

If you take a look at the solid red resistance line you can see in what beauty of precision Silver is trading. This allowed for precision partial profit taking after the recent breakout attempt from the yellow marked pennant.

A multiple time frame approach with these reload purchases will also allow to see an accurate stand of events in the Silver market since charts never lie. Therefore it provides a much more accurate reflection of where the future is heading. “Thinking exits” at some point will be crucial, too. There were times in the past when countries faced critical situations like the one we forecast, where a small bag of Silver coins bought you a single family home.

Silver, Monthly Chart: Bigger Picture – Thinking Exits

Silver in US-Dollar, monthly chart as of July 2nd, 2020.

The monthly chart above is a projection of possible partial profit taking targets. The “Runners” (see our Quad Exit Strategy) we recommend to accumulate, meaning we would not cash in physical holdings even in part before silver prices of US$93 or above!

The momentary picture of Silver is bullish and we continue to reload our long term positions. This counts especially for our physical holdings. 

It is this approach of consistently expanding on our long term holdings through low risk small size additions, that will lead to the protection necessary once the day arrives where a 100k deposits might suddenly be devaluated to 10k. Do not try to time a single conversion operation, assuming it will be obvious to do shortly before these drastic events manifest. Governments around the world will smartly try to cover up their tracks and won’t reveal such actions in advance. Even if they would, physical precious metal availability at that point will be depleted to zero.

Silver the latest and greatest

What we mean to drive home is that one shouldn’t belief everything one reads in the media. That isn’t a big new insight, but when in doubt it is not unusual that one tends to be more naively hoping for truth from media. In this specific case, manipulation from media sources might dramatically increase. Building a battle plan can be quite helpful to not be distracted when data overload comes around the corner again. Building up physical silver accumulations over time does not only help to reduce ones exposure of ones fiat currency holdings, but is also one of the most lucrative investment hedge strategies available to the future world economic scenario.

We post real time entries and exits for the silver market in our free Telegram channel.

If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.

Gold – Breaking Out Towards US$1,800 And US$1,900

Gold closed the week at US$1,770 almost US$20 higher than at the closing price on June 19th. The bulls not only pushed prices to a new eight-year high at US$1,780 but have once again responded with great strength to a bearish attack on Friday. Every dip, no matter how small, is bought immediately. Gold – Breaking Out Towards US$1,800 And US$1,900.

Review

Since their highs at US$1,747 and US$164.42, spot Gold price and the SPDR Gold Trust ETF (GLD) have been consolidating sideways for two months. During this period, bulls and bears were regularly taken for a ride, as there was a new high at US$1,765 as well as repeated pullbacks well below US$1,700.

All in all, however, the gold market has never lost its bullish tone despite the tenacious confusion. Time and again the bulls were able to quickly recover and reclaim lost ground. Therefore, in the last four weeks I have gradually completely abandoned my rather skeptical stance, which I had been taking since the end of February. I am now fully focused again on the opportunities on the upper side.

The last pullback catapulted gold to new to a new eight-year high

Most recently the price of gold slipped back down to US$1,670 on June 5th. However, here too, a strong countermovement up to US$1,745 quickly followed. And the subsequent pullback already ended above the psychological mark at US$1,704. Since then the price of gold has risen considerably and reached a new 8-year high at almost US$1,780 on Wednesday June 24th.

However, the bulls have not (yet) been able to maintain this level in the last few days, but prices closed the trading-week only slightly lower at USD 1,770. The breakout above the resistance zone at US$1,750-1,765 has thus been more for less accomplished and the end of the ten-week consolidation is probably sealed. Prices around US$1,800 are within reach.

Technical Analysis: Gold in US Dollars

Gold in US dollars, weekly chart as of June 26th, 2020. Source: Tradingview

Since December 2015 the big picture in the gold market is based on a bullish trend. According to the dark green uptrend channel in place since December 2015, the bears would need to push gold back towards and below US$1,300 to change the overall bullish trend!

And despite the recent multi-week consolidation, the bulls were effortlessly able to hold prices above the light green uptrend channel that began in August 2018. Together with the new eight-year high at US$ 1,780, the door to higher prices is now wide open. The first immediate price target is the zone around US$1,800. The bulls failed at this round mark three times in 2012 and 2013. The round psychological mark should therefore not be underestimated as potential resistance.

Gold – Breaking Out Towards US$1,800 And US$1,900

Even more important, however, is the all-time high around US$1,920. With a very high probability, prices will be magnetically attracted by the round number of US$1,900 as an overriding price target. However, a direct breakout above US$1,900/1,920 is not likely. Rather, larger profit taking is to be expected at this level. Despite the overbought situation on the weekly chart, the bulls could thus continue to fight their way up to around $1,900 before a larger and healthy pullback could occur in the gold market towards the fall.

All in all, the gold price seems to have moved out of the week-long sideways range. The weekly closing above US$1,750/1,765 confirms this. The next two price targets are thus activated at US$1,800 and around US$1,900. In terms of timing, the US$1,900 mark should be reached in the next one to two and a half months.

Gold in US dollars, daily chart as of June 26th, 2020. Source: Tradingview

On the daily chart, the bulls began the last week by bending up the sideways running Bollinger Band. Ideally, they will continue this process in the coming week. Otherwise, the likelihood of a prolonged consolidation is gradually increasing.At the same time, the overbought momentum in particular not only on the monthly and weekly charts, but also on the daily chart reminds us to remain careful. Even though being bullish, a good risk/reward ratio for gold is not present. Silver, on the other hand, looks much better. Buying at prices between US$17.40 and US$18.00 is still more than justified. Nevertheless, the market characteristics also speak for further price increases in gold, as the stochastic has changed to an embedded bullish state last Thursday. This means that the uptrend has been locked in for the time being.

In summary, the daily chart is bullish after weeks of consolidation. The bulls are rehearsing the breakout to the upside. The weekly closing at US$1,770 could spark new momentum in the days and weeks to come. Looking ahead over the next two and a half months prices around US$1,900 are realistic! Only a daily closing price below US$1,745 would feed the bears and strongly question the breakout.

Commitments of Traders: Gold – Breaking Out Towards US$1,800 And US$1,900

Commitments of Traders for Gold as of June 22nd, 2020. Source: CoT Price Charts

The Commitment of Traders report for the Gold futures market has gradually improved since mid-February. On February 18th, commercial traders held a gigantic short position of 385,612 futures contracts at a gold price of around US$1,601. And one contract at COMEX moves 100 paper ounces! Just shortly before the “corona crash”, this professional group of traders had thus sold short 1,200 tonnes of gold, or more than a third of the total gold annual production, without directly owning the physical material.

With the corona crash and the enormous rescue packages and especially the worldwide lockdown, this short position, which was already under water since the summer of 2019 anyway, came under even more pressure. In Switzerland, all major precious metal refineries were closed. Likewise, numerous gold and silver mines had to temporarily reduce or completely suspend production. This supply and demand shock quickly led to an enormous shortage and sharply rising premiums on the physical metals still available.

At COMEX, the spread between the futures contract and the spot price climbed to record levels between US$70 and 90. As there was not enough physical material available for delivery, the exchange supervisory authority CFTC was only able to save the futures market with a dramatic change in the rules. Since then, the gold futures market has been on the brink of collapse, as the paper charades of the past decades have now become openly visible to everyone. Some banks like Scotiabank have obviously gambled themselves into huge losses and are now withdrawing from precious metals trading.

Commitments of Traders for Gold as of June 22nd, 2020. Source: Sentimentrader

It is therefore not surprising that the commercial short position has gradually decreased over the past two months despite the sideways moving price. With currently 258,020 contracts sold short, the commercial short position is still high by long-term comparison. The last time such orders of magnitude were seen was in mid-June 2019. At that time, the price of gold was trading almost 400 US$ lower! In this respect, the futures market probably no longer poses the danger we saw, especially in the bear market years 2011 to 2015.

All in all, however, the CoT report still provides a sell signal for the gold price. A promising contrarian bottleneck is not present by any means. This would take at least a commercial short position below 100,000 contracts.

Sentiment: Gold

Sentiment Optix for Gold as of June 22nd, 2020. Source: Sentimentrader

Thanks to the efforts to break out above the resistance zone between US$1,750 and US$1,765 USD, optimism in the gold market has also risen again. The sentiment barometer Optix currently measures a value of 75%. However, this also means that sentiment is not yet too euphoric and further price increases are still possible.

Overall, sentiment analysis indicates that there is currently not a good risk/reward ratio. At the same time, the sentiment is not (yet) overly bullish. Further price increases are therefore likely.

Seasonality: Gold – Breaking Out Towards US$1,800 And US$1,900

Seasonality for Gold in US Election Years as of June 26th, 2020. Source: Seasonax

Usually, gold prices find an important low in June or July and then move into an uptrend towards September. This year, gold seems to have found this early summer reversal point on June 5th at US$1,670. However, the presidential elections are due in the USA on 3rd November. Statistically speaking, in US election years gold often has a hard time from mid-September at the latest, but from the beginning/mid-July as well.

Therefore, from a seasonal perspective gold appears to be well supported into August this year. However, should there be a significant peak either in mid/end July or then in August, e.g. around US$1,900, a significant price correction would be realistic for September and October.

Bitcoin/Gold Ratio

Sound Money Bitcoin/Gold-Ratio as of June 23rd, 2020. Source: Chaia

Currently, you have to pay 5.23 ounces of gold for one Bitcoin. In other words, a troy ounce of gold currently costs only 0.19 Bitcoin. Since the low point of the corona crash, Bitcoin has been able to outperform gold significantly. Since the beginning of May, the ratio has been consolidating sideways. At the same time, the breakout to the upside in favour of Bitcoin is slowly but surely materializing.

Looking ahead over the next three to six months, such a successful and sustained breakout should logically result in a sharp rise in Bitcoin’s price against gold.

Sound Money Asset Allocation

Generally, buying and selling Bitcoin against gold only makes sense to the extent that one balances the allocation in the two asset classes! At least 10% but better 25% of one’s total assets should be invested in precious metals (preferably physically), while in cryptos and especially in Bitcoin, one should hold at least 1% up to 5%. Paul Tudor Jones holds a little less than 2% of his assets in Bitcoin. If you are very familiar with cryptocurrencies and Bitcoin, you can certainly allocate higher percentages to Bitcoin and maybe other Alt-coins on an individual basis. For the average investor, who usually is primarily invested in equities and real estate, 5% in the highly speculative and highly volatile bitcoin is already a lot!

Opposites compliment. In our dualistic world of Yin and Yang, body and mind, up and down, warm and cold, we are bound by the necessary attraction of opposites. In this sense you can view gold and bitcoin as such a pair of strength. With the physical component of gold and the digital aspect of Bitcoin you have a complimentary unit of a true safe haven in the 21st century. You want to own both!”– Florian Grummes

Conclusion and Recommendation

Since its last low at US$1,670 gold unwaveringly has been moving higher over the last three weeks. Last Wednesday a fresh 8-year high at US$1,780 has been the reward. Despite the overbought overall setup this price behavior is clearly bullish!

Ultimately, the main reason for the rising gold price is quite simply to be found in the extreme balance sheet expansions of all central banks on this planet. These ever-increasing money supply expansions already caused the bull market in precious metals to begin in 2001, but since the financial crisis of 2008, the exponential thrust has been followed by a further increase in the rising trend. This year, the corona crisis has again provided an even greater exponential thrust. Hence, it is quite obvious to expect a further intensification of this trend and thus a further exploding money supply in the coming years.

Only Gold is money – everything else is credit

Gold is and remains the antidote to the worldwide uncovered credit and paper madness. Gold is money – everything else is credit. This is a truth proven over thousands of years. In view of the worldwide monetary disruptions, there can be no more talk of a free market. Rather, it is a never-ending chain of miserably failing interventions by politicians and central bankers. The end result is already clear and unambiguous. The only question is when, or how quickly, a reset or a currency reform will be carried out in the individual countries or on a worldwide basis.

Unfortunately, humanity is always dragging and delaying the inevitable to infinity, rather than bringing forward an end with horror. That is why we must prepare ourselves for a huge crack-up boom in the coming years, in which nominal prices will rise significantly thanks to the constant expansion of the money supply, while the real economy will barely or only partially get back on its feet.

Historical examples are the years 1920 to 1923 of the Weimar Republic in particular. The accelerating intervention spiral may therefore take at least three years to reach its peak. Since it is a worldwide phenomenon, however, five years or more are also conceivable. Gold and especially silver, but of course also Bitcoin, all being assets outside the faltering financial system, will see huge nominal increases and offer the desired safe haven. Larger pullbacks from current price levels are probably no longer to be expected. Too big is already the crowd of those who buy every little dip.

Gold – Breaking Out Towards US$1,800 And US$1,900

Even though I certainly have no crystal ball, here is my outlook for the next two and a half months. I now expect gold to rise to around US$1,900. Thereafter, the approaching US election in autumn could cause a healthy and deep pullback. A correction of several weeks, e.g. from US$1,900 down to US$1,750 or even US$1,700, could create a heavily oversold gold market and a panicking sentiment. Only afterwards, that is, from December 2020, the next wave up towards the all-time highs at around US$1,920 should then set in. This should then cause the breakout in 2021 and would quickly bring prices above US$ 2,000.

Source: www.celticgold.eu

My weekend updates on Energy (Crude Oil, NatGas & Uranium) and Stocks & Bonds are Freebies this weekend.

Every TA methodology, except Cycles, focuses exclusively on Price action. Cycles is the only approach that combines Time with Price to help calibrate cycle lows and highs and determine appropriate stop levels. My update on Gold & PM’s is still in process. Enjoy 😉

https://surfcity.co/2020/06/27/energy-crude-oil-natgas-uranium-weekend-update-10/

https://surfcity.co/2020/06/27/stocks-bonds-weekend-update-53/

Silver, Monthly Chart: Set Your Targets

Silver in US-Dollar, monthly chart as of June 25th, 2020.

The approximate long term channel range from US$14.00 to $19.00 in Silver from a monthly trading perspective is a good example on how long a trader might have to wait for a successful range break. In this case already close to five years (2015 to 2020). It is logical once you find yourself in a  winning trade on this time horizon you do not want to give up early established profits. This doesn’t allow for true trade development and truly great risk reward ratios, that can be expected in this case. Sitting through larger retracement is necessary. A feat impossible if not counteracted by a smart strategy. Plan the trade and let it work itself out. Set the target(s) diligently and adhere to them (do not change/adjust them once in the trade). Drop down to the lower weekly time frame to help support Your emotions.

Weekly Chart, Silver: Low Risk, Earlier Profit Taking

Silver in US-Dollar, weekly chart as of June 25th, 2020.

On the weekly chart a range can be found from US$16.50 to US$18.50. This range being tighter than the one on the monthly chart will make your risk smaller since typically the stop is below the range. You can afford taking an earlier target since you still will come out with a good risk reward ratio. Trading on a lower time frame allows from a time perspective to expect exits to occur earlier. It is easier to trade since you have less long to wait for your reward.

Silver, Daily Chart: Taking Profits Feels Good

Silver in US-Dollar, daily chart as of June 25th, 2020.

A daily time frame is useful for swing trades to satisfy this ongoing need to make oneself feel like a winning trader. Buying dips (green arrows) in a directional market (purple channels) is low risk and provides additional income flow to the long term holdings. Most of all working the market like this satisfies this deeply rooted urge of consistent profit taking (red arrows). From a money management perspective these positions should be small in size. One keeps a steady hand on the market to feel if everything is right. Consequently the satisfaction gained allows for letting the larger time frame trades ride themselves out.

Silver let it ride

It matters little, which approach you use to compensate for the urge of early profit taking. What matters is that you are aware of the dilemma and acknowledge the need of a remedy. Rest assured that the mere awareness of the problem will not solve it. You do need a practical methodology to help overwrite a very strong impulse. Should you choose to ignore such an implementation you will find yourself more often than not violating your best intentions of discipline. Old habits die hard and these responses are reflexes as ancient as time. Taking a quick profit might bring the comfort of an assured small winning trade. It destroys system performance. Moreover watching silver prices to advance much further is agony once being on the sidelines.

What to Look For in Junior Gold Stocks

Silver, Monthly Chart: Neutral

Silver in US-Dollar, monthly chart as of June 18th, 2020

After a swift move through the long term established side ways range on the monthly chart, prices trading sideways to take a breather. Near the US$16.50 price zone  a triple moving average support zone starts to build, providing support for long term investor entries. On this chart the setting for the simple moving averages are 20, 40 and 200 period. Hence, from this time frame perspective we a find a neutral stand of the silver market and its price development.

Weekly Chart, Silver: Bullish

Silver in US-Dollar, weekly chart as of June 18th, 2020

Looking at the weekly chart we can identify a weekly range within the monthly range. While the monthly chart ranges from roughly US$13.75 to US$18.50, a sub range in the weekly chart can be found from US$16.50 to US$18.50. This isn’t the only bullish signal though. At a closer look we again find a triple moving average support in the building process and a bullish reversal pattern setting up from a candle stick perspective.

Silver, Make It Your Own, Daily Chart: Bullish

Silver in US-Dollar, daily chart as of June 18th, 2020

A daily view at the market shows the directional price support. This time frame gives a clear signal of bullish momentum as discussed in our free Telegram channel. A fractal support zone near the US$17.00 price level in conjunction of a strong rejection of price from the lower channel support on 6/15/2020, tell the story of the bulls holding the better cards.

Make it your own

It is futile to try finding the holy grail. Not only does it not exist but even if there would be such a cup, one couldn’t drink from it. Each market participant needs to find out whats suits his or her personality. There isn’t a fix recipe or common secret that can be shared and success in the markets sets in motion. We try to share in each weekly chartbook publication a principle. One piece to the puzzle. As a reader you have the opportunity to add these morsels of trading edges to your own approach. Create your own puzzle to build the perfect picture that suits your trading style. We full-hearted believe in “Make it your own.”

Key Support Levels in Metals & Gold Miners

Silver, Monthly Chart: Building A Position For The Long Term

Silver in US-Dollar, monthly chart as of June 11th, 2020.

If you look at the monthly chart above you will find that even the worst fill price for a long position within the red zone finds a risk reward ratio of a minimum of 1:1 in the green bracket. We set that as our minimum standard for trades for our financing target (see our quad exit strategy). As the chart shows there is plenty potential for trade development even if Silver “only” retests its highs from 2011. A target we find quite reasonable.

On March 19th, 2020, we shared with our Telegram members (see our free Telegram channel) that we find Silver, at the time trading below US$12 to be at a good time to acquire physically. Already a few days later the physical price for Silver moved away from spot prices and premiums exploded. We still advised the purchase of Silver to long term investors. To many it felt uncomfortable to pay up such a premium.

However, we were comfortable to pay up to US$19 for well known one ounce Silver coins like American Silver Eagles, Austrian Philharmonics and Canadian Maple Leaf over the following weeks. Why? Because for the truly long term wealth preservation the entry can be a variant. Hence, already now while the spot price of Silver is trading near US$18.00, some of these coins trade near US$30 on the open market. Even if the gap between the actually physical coin price and the spot price should narrow again, the factor that essentially matters is the risk reward ratio. A discrete bank independent insured and audited Swiss vaulting facility can improve your risk reward ratio dramatically as you save yourself some of the premiums and the potential VAT on your physical Silver investments.

We are famous for our extreme low risk approach in regards to entries and their relative stops. It is of utmost importance to realize where the true risk is in these long term physical holdings. Wealth preservation needs to address the risk of the value of fiat currency, which is nothing else but an underlying belief. This is one of the core reasons why we have such a scrutinizing look on Silver, with there being a limitation of products that ensure ones monetary well being in the future.

Monthly Chart, Silver: Projections Of How High

Silver in US-Dollar, monthly chart as of June 12th, 2020.

Let us have a closer look of what the future might bring. For nearly six years range players had quite a ball buying near US$14.00 and short selling near US$19.00.

Once US$19.00 breaks, we could see advances quite swiftly. The white line illustrates how we envision such a price movement. We perceive quite frankly a lot higher price levels for the very long term.

We do not want to evoke greed with this portrayed possibilities. Quite the contrary. We want to emphasize that a small starter position even at a price that on smaller time frames has seen some recent advances, is in context still very conservative.

Silver, Monthly Chart: Projections Of How Long

Silver in US-Dollar, monthly chart as of June 12th, 2020.

Time in itself is quite a different animal and so it is in trading as well. Here is where analysis becomes speculation to a higher degree. Nevertheless we are confident with a certain probability that prices might see within 22 months advances in the Silver market that reflect a 3.5x from our entry point, and about 45 months before we hit our second  monthly target.

How long and how high

In principle the further out in time a guesstimate is attempted the less likely its’ accuracy. Nevertheless as a speculator this task needs to be mastered to the point to be accurate more often than not. So are we still advising to buy? That depends on your risk appetite. If you do not hold any silver at all and if the above mentioned numbers are in congruence to work for you as an expectancy than the answer is definitely yes. With fiat currencies at risk and the highly uncertain future of markets we find risk reward ratios even below 1:2.5 what we typically expect from a trade like this acceptable since in this case it isn’t all about getting rich – it is much more and primarily about wealth preservation.

Healthy, Bullish Correction in Gold Stocks

Silver, Weekly Chart: Silver Near Range Highs

Silver in US-Dollar, weekly chart as of May 31st, 2020.

The weekly chart above shows how prices had reached an important early fractal resistance zone where “extreme alerts” would be triggered. The world would notice and weekend chartists would wake up, they would ask:”Where is my entry?”

For us a trigger to think exits. (One supporting factor on that Friday’s close was , that as much as Silver closed near its daily highs, Gold instead was already trading lower from an intraday perspective. This indicated relative weakness in the precious metal sector. Usually, Silver follows Gold. However, Gold was a giveaway that the steam had ran out.

Silver, Daily Chart: Think Exits Not Entries

Silver in US-Dollar, daily chart as of June 5th, 2020.

Silver in US-Dollar, daily chart as of June 5th, 2020.

While the world was concerned if the resistance zone would hold and where to enter on a possible breakout scenario we fine tuned our exit. The following Sunday on May 31st all the placed buy orders created a gap up opening. The market nearly closed its gap, rallied one more time and as soon as we saw weakness in the market we exited. Our exit was US$18.30. Shortly thereafter volatility set in and after a triple top on the 60 minute, chart prices declined and a two day sell off was in place. Once the dust had settled we went long at US$17.46 again.

This daily chart shows the entire trade and illustrates clearly, that it was exits that made this trade profitable. Market situations can be highly variable and as such a tool is needed to accommodate the markets complexity. Our quad exit strategy allows for variable choices in exit taking. We posted all entries and exits in real time in our free Telegram channel.

Silver, Monthly Chart: Overall Bullish

Silver in US-Dollar, monthly chart as of June 5th, 2020.

The bigger picture, always the most important one, shows that it wasn’t likely that we see a price break of a long established channel. As much as prices have advanced from US$11.64 to US$18.38, after such an enormous move indicating a “V” formation reversal, a quick breather was likely to expect. However, “V” formations are the strongest reversal formations and indicate a bullish note for the future.

Think exits not entries

Most average traders and investors have sub optimal system performance since they consistently ask themselves: “Where is my next entry?”.

The better set of questions would be: “How many of the recent up legs was my system able to participate in?”; “Where does the chart provide good low risk opportunities with attractive risk reward ratios?” This question forces you automatically to look at exits.

It isn’t entries that get you rich, it is exits. Good profit taking and target exiting supports the needed consistency and profitability of an advanced trading or investment strategy.

Correcting now but larger setup is very bullish. Especially in GDX & GDXJ.

Textbook Bullish Setups in Gold & Gold Stocks

Patience Is A Virtue

Since mid of March at the panic lows and prices around US$1,450 Gold posted a massive rally reaching US$1,765 just 10 days ago. Anybody who missed this rally might now be under stress since governments and central bankers are doing everything to destroy the purchasing power of the hard-earned currency which is sitting in the bank account paying no interest. Gold instead has done a good job to protect its holders. However, blindly chasing any asset that is in an uptrend is not a good strategy. The key is always to wait for pullbacks and dips so that one can buy low instead of high. Gold – Patience is A Virtue.

Review

Looking back, my last two Gold analyses on March 15th and April 19th were partly a little too pessimistic. Although there was indeed a brutal sell-off down to US$1,450 on March 20th, the unprecedented expansion of the money supply by almost all central banks worldwide then quickly caused gold prices to rally towards US$1,747 within the following four weeks. Since this high point on April 14th, gold prices over all have traded sideways between US$1,660 and US$1,765. Thus, there wasn’t any deep pullback!

However, gold prices haven’t run away either. On the contrary, it must be noted that despite the corona crash and liquidity flooding, gold basically has not made much progress since its first interim high at US$1,689 on 24th of February. Currently, with spot gold trading slightly below US$1,710 prices are up less than US$20 since end of February!

In Euro terms, the results do look somewhat better. Here prices have just recently reached a new seven-year high at EUR1,632 in the past trading week and have also been in a flat up-trend over the last few weeks.

All in all, the price of gold has thus been stagnant for nearly eight weeks.

Technical Analysis: Gold in US-Dollars

Gold in US-Dollar, weekly chart as of May 26th, 2020. Source: Tradingview

On the weekly chart, gold bulls continue to strive to finally leave the uptrend channel that began in August 2018 behind them. So far, they have not yet succeeded in doing so. Should the bulls now run out of steam or do need a breather, a quick pullback towards the mid of the trend channel would be very likely. However, despite weeks of consolidation at a high levels, there is still no sign of exhaustion. But one could speak of a “dwindling bullish momentum”.

It is noticeable that since the beginning of the year gold has been moving primarily in the zone between the 61.8% fibonacci retracements (US$1,586) and the 78.6% fibonacci retracements (US$1,733). These fibonacci retracements relate to the major correction in the gold market when prices fell from US$1,920 down to US$1,045 between 2011 and 2015. Since the final low in December 2015, the bulls have now recovered 61.8% and 78.6% of the lost distance.

Hence, the zone between US$1,586 and US$1,733 is the last place of refuge for the gold bears. If this last bastion can be sustainably conquered, the way to the all-time high at US$1,920 and prices above US$2,000 would be clear. From this perspective alone, the confusing back and forth over the last few weeks is therefore not surprising. At the same time the bears obviously do not (yet) have enough strength to wrest larger space from the bulls here.

Weekly chart is overbought and could take quite some time until being oversold

However, the stochastic oscillator does not look good on the weekly chart. Both lines are still bullishly embedded above 80, but as soon as the momentum starts to turn, the strongly overbought position immediately will kick in and deliver a sell-signal. In that case a multi-weeks to multi-months corrective phase becomes extremely likely. This is in line with our title Gold – Patience is A Virtue.

All in all, gold prices have been treading water for weeks now and seem to be slightly stuck above US$1,700. However, a trend reversal has not happened. Ideally, the slightly disjointed picture will dissolve with a healthy but overall manageable pullback in the summer months. Alternatively this pullback is already happening….

Gold in US-Dollar, daily chart as of May 26th, 2020. Source: Tradingview

On the daily chart, the bulls managed to break out of the five-week consolidation triangle on May 14. With the following spike towards US$1,765 they immediately made it clear who is in charge. In the meantime, however, this actually bullish breakout has already come to an end without any sustained gains, as prices have been falling rather rapidly from US$1,765 down to US$1,698.

Now bulls will have to answer with a bounce and a compelling recovery. However, prices above US$1,730/1,735 might already cause difficulties. Nevertheless, the chances of another wave up into the range between US$1,745 and US$1,765 are pretty good. Especially as the stochastic oscillator he has cooled down considerably on the daily chart and move in the neutral zone. This setup would once again provide enough room for another bullish run.

Silver is still in rally mode and will play more catch up rather soon

Furthermore, the silver price, which had just begun to move two weeks ago, does not appear to have reached the end of its rally yet. Rather, silver could pull the price of gold up again for the next few weeks.

In summary, the daily chart is neutral after weeks of consolidation. Similar to last spring and last autumn, gold prices managed to work off the heavily overbought situation without major losses but only with mild declines. Thus, at least in the short term, there is once again the chance of a rise towards the highs of US$1,765 on the chart. Even a new high at US$1,800 can not be ruled out.

Commitment of Traders: Gold

Commitment of Traders for Gold as of May 19th, 2020. Source: CoT Price Charts

Since the breakout above the multi-year resistance zone at US$1,350/1,375 in May 2019, the situation in the gold futures market has been extremely overstretched and completely unhealthy. With the temporary crash in mid-March, the pent-up pressure was at least partially released, with commercial hedgers covering part of their exorbitantly large short position.

At the same time, however, the supply and demand shock caused by the corona crisis caused even greater difficulties for the paper jugglers on the COMEX. Short-term pullbacks of US$50 can apparently still be arranged somehow, but much lower prices below US$1,500 are not in sight. However, the commercial hedgers would need these prices to profitably cover their cumulative short position of currently 290,174 contracts.

Commitment of Traders for Gold as of May 23rd, 2020. Source: Sentimentrader

Overall the CoT-report continues to provide a clear sell-signal for the gold price. A promising contrarian bottleneck is far away and would be present at the earliest with the cumulative short position reaching levels below 100,000 contracts.

The development in the silver futures market is positive, however. Here the professional players have used the crash down to US$11.60 to cover their short position. From the CoT perspective silver should no longer be threatened by another major pullback.

Sentiment: Gold – Patience Is A Virtue

Sentiment Optix for Gold as of May 23rd, 2020. Source: Sentimentrader

The Optix sentiment barometer for the gold price continues to provide significantly high levels of optimism among market participants. Although the pullback over the last few days has certainly caused a decrease in euphoria, the overall consensus is still clearly in favour of further rising gold prices.

Rarely, however, do markets simply move straight up. Rather, they have to use twists and turns to make sure that the masses do not fully participate in the price increases. In order to refresh the so-called “wall of worry”, a pullback towards US$1,650 or 1,600 would probably suffice.

In summary, the Gold Optix continues to urge caution. Only when mistrust and possibly even panic and fear spread at least to some extent among gold investors, will there be meaningful and contrarian entry opportunity again. Other than that, patience is a virtue.

Seasonality: Gold – Patience Is A Virtue

Seasonality for Gold as of May 23rd, 2020. Source: Seasonax

For the next five to ten weeks the seasonal pattern is not supporting rising gold prices. Typically, June is the month of pullbacks in the gold market, which usually bottom out in July or mid August at the latest. Should a similar pattern occur this year, a good buying opportunity would present itself. By the way, these summer lows often also marked the low for the year.

Seasonality for Gold in US-Election Years as of May 27th, 2020. Source: Seasonax

This year however, the U.S. presidential elections, which are scheduled for November 3rd, must also be taken into account. This event should determine the second half of the year for financial markets in general. The American central bank FED will certainly do everything possible to prevent the markets from collapsing before these elections. The further expansion of the money supply necessary for this should certainly support precious metal prices on the one hand. On the other hand, however, there is also a statistical pattern which indicates potential difficulties for gold in the second half of the year. In front of the last U.S. presidential election in 2016, gold had gotten stuck around US$1,350 to 1,375 in the summer months and then corrected down to US$1,123 by mid-December.

In conclusion, the seasonal outlook currently recommends a patient and wait-and-see stance. Should there be a pullback within the next two months, it would be a good buying opportunity. If, on the other hand, prices remain stable around and above US$1,700 in June and July, the danger increases that the unfavorable U.S. election cycle will start to affect gold from late summer.

Bitcoin/Gold-Ratio

Sound Money Bitcoin/Gold-Ratio as of May 23rd, 2020. Source: Chaia

Currently, you have to pay 5.15 ounces of gold for one Bitcoin. In other words, a troy ounce of gold currently costs only 0.194 Bitcoin. Since the low point of the corona crash, Bitcoin has been able to outperform gold by a considerable margin. On top, since the second week of May, Bitcoin has been knocking at the upper edge of the large consolidation triangle once again. Thus, the chances of a breakout to the upside continue to rise. Only if there would be another blatant attack of weakness in Bitcoin we would have to prepare for another round of consolidation lasting several months. Otherwise, and that is what it looks like at the moment, the breakout from the triangle is imminent in these weeks until the summer. Subsequently, a sharp rise in Bitcoin prices would be the logical consequence.

Generally, buying and selling Bitcoin against gold only makes sense to the extent that one balances the allocation in the two asset classes! At least 10% but better 25% of one’s total assets should be invested in precious metals (preferably physically), while in cryptos and especially in Bitcoin one should hold at least 1% up to 5%. Paul Tudor Jones holds a little less than 2% of his assets in Bitcoin. If you are very familiar with cryptocurrencies and Bitcoin, you can certainly allocate higher percentages to Bitcoin and maybe other Alt-coins on an individual basis. For the average investor, who is normally also invested in equities and real estate, 5% in the highly speculative and highly volatile bitcoin is already a lot!

“Opposites compliment. In our dualistic world of Yin and Yang, body and mind, up and down, warm and cold, we are bound by the necessary attraction of opposites. In this sense you can view gold and bitcoin as such a pair of strength. With the physical component of Gold and the digital aspect of Bitcoin you have a complimentary unit of a true safe haven in the 21st century. You want to own both!” – Florian Grummes

Conclusion and Recommendation: Gold – Patience Is A Virtue

Gold doesn’t seem to know where it’s going these days. For weeks now, prices have been clearly trading above US$1,700 and trying to break through the resistance zone between US$1,740 and 1,765 only to fall all the way back to and slightly below US$1,700. At the same time, volatility has been on retreat since March 19th. At least things have calmed down a bit in the gold market. But the bulls still have the upper hand. The bears, on the other hand, have been making increased efforts to reverse the trend since the last high point at US$1,765. Apart from a decline to just under US$1,700, however, they have not (yet) achieved much.

Generally, we should always remember that just before the biggest rises in the gold market, all weak hands are usually shaken off. In this respect, a pullback in early summer remains the preferred scenario. This way, gold prices do not have to fall so extremely low. A decline to US$1,650 or to the rising 200-day line in the US$1,600 range would presumably be completely sufficient. Afterwards, gold would be ready for the next wave up, which should then target the resistance around US$1,800 as well as the all-time high at USD$1,920.

If, on the other hand, gold prices can hold steady above US$1,700 throughout the coming two to three months, the probability increases that there will be a more pronounced correction starting in late summer just a few months before the U.S. elections.

Short-, mid and long-term approach

Either way, the risk/reward-ratio for gold is not ideal at the moment. It is therefore advisable to simply remain patient. Wait at least until an oversold setup on the daily chart and ideally also on the weekly chart. However, one should not lose sight of gold! In times of unconditional stimuli from almost all central banks worldwide, any somewhat larger pullback already means a buying opportunity in the gold market.

• Looking forward to the next few months: Gold – Patience Is A Virtue. 
• Very short-term and we are talking one hour and four hour charts, an oversold bounce should take gold back towards US$1,730 at least.
• In the very big picture, gold should be heading towards its all-time high of US$1,920 and then continue its rise further into the mid of US$2,000 region.

Source: www.celticgold.eu

Gold/Silver-Ratio, Monthly Chart: Being Late Is Great

Gold/Silver-Ratio, monthly chart as of May 27th, 2020.

At this moment of time it takes about 100 units of Silver to purchase one unit of Gold. The monthly Gold/Silver-Ratio chart above illustrates that nine years ago it took only 31 units to accomplish the same purchase. Relationships like these rarely stay long in extreme measurements like the two mentioned. Consequently, it is quite reasonable to assume that we will at some point find ourselves near the 200 moving average, a value between those two extremes more likely in the future. Once Silver which is always late and lags, catches up with Gold’s extension, this medium Gold/Silver-Ratio zone will be reached. This means there is a force in place driving Silver prices still higher.

Silver, Daily Chart: Catch Up Game, A Strong Climb

Silver in US-Dollar, daily chart as of May 26th, 2020.

We posted numerous entries and exits live in our free telegram channelin recent weeks. One reason that supports our activity is the strength of the up-move. Not only did we have a staggering above 50% up-leg as a whole, but the give away is the atypically small retracements in price. Looking at the red down percentages in the above daily chart of Silver you will find that bears weren’t in charge for significant profits.

Silver, Daily Chart: Aggressive Reloading

Silver in US-Dollar, daily chart as of May 26th, 2020.

On 5/22/2020 we took a long entry before a holiday weekend. Our first target was met on 5/26/2020. Risk was eliminated via taking off 50% of our position (=financing target) and first small profits were secured in this way.

It is this urgency of Silver to catch up even on the smaller time frames, that leads us to take aggressive entries. Most think after a move from US$11.639 to US$17.629 (a +51.46% move) one would be late to the party. Then again, being late is great. Once the bullet train is in motion there is no reason to be timid. You might not want to be aggressive in your position sizing if this is your starting point with your first position in Silver. But you certainly don’t want to sit and wait while watching prices for a long time running away from you. Our quad exit strategy allows for participation with smaller size while building a sizeable exposure to the Silver market over time!

Being late is great

It seems that in the investment world it is best to be in early. Get data ahead of the crowd. Be prepared early. And all of this is true of course. And then again, in this specific case betting on the less shiny option versus Gold is a grand opportunity. History has shown that Silver more often than not has outperformed Gold in a bull market at a later stage. Gold has already shown its strength and with the fiscal uncertainties (e.g. excessive quantitative easing) fundamentally a continuation is very likely. This means Silver might not just catch up with Gold, but could easily be from a profit percentage perspective the more attractive investment vehicle. We highly recommend ownership of physical Silver as well, for the long term investor.

Now is not the time to buy…

Precious Metals Hit Resistance