Wrong data wrong results

In the previous century, if you wanted to be an independent market player you either worked yourself up on the floor of an exchange or had a professional trader as a mentor. Then market participation got expanded towards the internet. You still had to spend thousands of dollars for live trading courses, books and videos to acquire some fundamental knowledge. However, today the whole body of trading educational materials is vast. Education is readily available, yet one thing has changed. New traders aren’t willing to spend the money for a solid education. It is believed that all data is available for free on the internet. Trading is a very visual art form requiring charts. This makes YouTube the main information data provider for self educators. Here however, principle based data gets lost! We are not referring to the quality of date. We want to point out wrong data wrong results

The false lure

Algorithms on YouTube for their sidebar selections aren’t programmed on the basis of clicks. Meaning, once you search for a specific topic, you do not get rated references of other related products offered in the sidebar. YouTube has complex algorithms that are based only on one goal: maximizing the customers view time. You watch a dog video you simply get more dog videos offered. This in the hopes you are not changing platforms but rather continue watching for extended time videos on YouTube.

The result is that you might seek information on a specific analysis technique and try to learn if this approach is useful or not. But you end up becoming a fanatic about your specific choice of interest since all you get offered is an endless array of the same content. The mere volume of the same content feels like a confirmation that you have found the holy grail.

Silver, Weekly Chart: Wrong Data Wrong Results

The weekly chart above shows the last trade we executed on silver. The entry setup was posted ahead of time in our weekly chartbook. (Entry 5/1/20 at US$14.73, Financing target 5/7/2020 at US$15.25, First target 5/11/2020 at US$15.60, Final target 5/18/2020 at US$17.25)

All entries and exits were posted live in our free telegram channel. We used our quad exit strategy. The final target produced a return of 17.11% in less than three weeks time.

When self educating, it is helpful to model people who provide simple but precise data. Core principles of market behavior have not changed throughout time. Consequently release date of a book or technique is of no influence to its value. If anything, older materials can be more often principle based.

Most educators try to brand their teachings by renaming standard patterns to their own classifications which does nothing else but confuse and delude. Trading is already an art form meaning chart interpretation is tricky and not precise. As such precision in the rudimentary principles and basic commonalities is essential. Only then you can expand from there to create true edges!

We encourage to read core materials even if these books do not come cheap.

Here are our Top 5 books for beginners:

• Mark Douglas – Trading In The Zone
• Edwin Lefèvre – Reminiscences of a Stock Operator
• Van Tharp – Peak Performance Course for Traders & Investors
• Jack Schwager – Market Wizards: Interviews with Top Traders
• Ari Kiev – Mastering Trading Stress

We also invite all new traders to ask questions in our free Telegram channel. Without clarity on what makes markets move, a new market participant finds him- or herself in a house without any solid foundation and as such quickly under a collapsing roof.

Silver, Monthly Chart: Range Versus Direction

The monthly chart above shows how silver prices have faster than usual cut through their typical sideways range (US$13.50 to US$18.75). This allows for speculation that a range break to the upside has a higher probability than the usual approach of the US$18.75 resistance zone. Especially as “V” shaped recoveries have a high likelihood to temporarily trade sideways and advance in their direction after a brief dip.

Range versus direction

This is one of the absolute core questions rarely answered. Seeing clearly if a market is ranging or in a trend seems an easy task but eludes most. It determines more than 70% of ones trading rules. Anticipating range breaks or trend reversals determines if indicators or oscillators are to be used. It is also the decisive factor which exits and entries are valid to be executed. One rarely finds this addressed in modern YouTube videos. Principle based answers to this core question are an essential asset for the astute market participant.

Silver, Daily Chart: Wrong Data Wrong Results – Keep it simple

The daily chart above shows an entry opportunity coming up to add to larger time frame positions. With a directional move in play and three legs up so far, a retracement here is a possibility. This would allow for an entry for a final 4th blow off leg.

As of right now we find long term ownership of silver and gold to be the most valuable asset of wealth preservation. This does not require in depth knowledge of advanced low time frame trading principles. A top down approach in time frame is essential.

One of the main problems with trading is the fact, that it is counter intuitive.

It isn’t technical analysis that is the core of financial success. It is psychology and money management. New market participants are lured by holy grail offers, mathematical solutions to beat the game, and an endless array of false promises of all sorts. The typical route of a new trader is underestimating the time necessary to find an edge in the markets. He embarks on a multiyear focus on creating a good entry strategy. The logic behind is simply that entries come first. Truth of the matter is that it is exits that determine profitability much more. And as pointed out, psychology and money management supersede that by far. In the light of this, a business plan is the basic foundation of a good starting point.

Wrong data wrong results

The less educated crowd of new market participants has always been lining the pockets of the professionals. The learning curve has been always a steep and costly one in this specific profession. Easy access with the simple push of a button on a computer was a lure at the turn of the century. It allowed access to the money of the masses. There to be quite a difference between a lure and pure manipulation.

In today’s world it isn’t even talked about anymore that trading is a profession. Consequently requiring in depth knowledge, time and education. Millennial’s are burdened with an expectation to be millionaires before the age of 25. Operating systems have switched from alphabetic searching to manipulated swiping on screens. The underlying intent is subconscious branding and sales. Algorithms reroute our choices. You still falsely belief to have a library at your feet. In the end, there is nothing wrong with watching YouTube videos as long as you don’t think that spending money on trading education is stupid and reading is only for old folks. Just be careful by using YouTube´s sidebar to not get dragged down the rabbit hole!

Silver, Daily Chart: Just As Planned

In our Silver chart book from May 1st 2020 we anticipated a long entry in Silver. Shortly after the publication all entry criteria were met and we posted an entry in real time in our free telegram channel. Since then we have reached the first two exits of our quad exit strategy. The quad strategy being one of our first five rules that we adhere to religiously. This way of approaching exits does not only allow for minimizing risk and maximizing profits but most of all allows through its variability of choices in target exits for an ease of execution. A much needed psychological element of successful trading.

 

---

[the_ad id=”8026″]

---

 

Silver, Daily Chart: A Simple Exercise To Make Money, Avoid Rule Conflicts

If you look at the chart above you will identify the recent reversal to be a “V” shaped recovery. This being statistically a very strong bottoming pattern. While our rules typically state that short trades are only valid after a sideways period, in the case of a “V” shaped pattern we do not short at all since this is from a probability perspective a high risk trade.

Most traders find themselves in situations where they violate their own rules and blame themselves for a lack of discipline. The underlying truth though is that the refinement of their rules and sub rules isn’t detailed enough. It takes them already very long to extract a true edge and once found there is an itchy trigger finger. Unfortunately, this causes system development to be abandoned way too early while execution suffers by the lack of degree of sub rules. Many rules might be conflicting and lacking a clear hierarchy. The devil is in the details, but once these kinks have been worked out execution will be a lot easier. Another reason for rule violation might be psychological in nature like the acceptance of risk. In that case, trade smaller and again this just points towards the lack of rules in the area of money management and position sizing.

Silver, Weekly Chart: Time Relativity Errors

One area of rules where trading losses often occur as well, is a misuse of time frames. Time frame relativity errors can be very costly. A simple exercise to make money, is not to loose any.

At this point in time we are extremely bullish on silver. We pointed out various reasons for this in our last silver chart book publication. It is still extremely important when and on what time frame to engage in the silver market. While the monthly and daily chart provides ample opportunities, the weekly chart (see above) is at a high risk zone right now.

We had a great bullish bounce, but are from a weekly perspective entering the middle of a sideways range which in addition is a strong resistance zone. This is from a trade entry risk perspective not a place where you want to initiate a trade.

A simple exercise to make money

It is only fair for us to share our number one rule with you. We have, what we call, the 80/20 rule. This means 80% of our decision making process is rule based trading versus 20% being discretionary.

The market is a living entity, far too complex to be tried to be compressed into an exclusively left brain rule based system. Nevertheless it requires a minimum of 80% rules based trading to be strongly guided. This allows for the creative discretionary decision making side to make trading decisions as well. These approximate proportions can lead to truly outstanding performance. 

One way to assure such performance, is to allow the hierarchy of the top five rules to change throughout ones trading career – even new rules replacing old ones. The general guideline here is, that mastery is only achieved if the process feels easy. In case there is some friction it is time to analyze and find the culprit. Problems need to be solved before continuing to execute trades.

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 To Silver Ratio, Monthly Chart: Out Of Balance

This isn’t even close to the typical ratios we have found consistent for more than thousand years. This is way off. We find ourselves in extreme times of change and the markets are always reflective of the worlds state. Market crashes are not sustainable neither are pandemics or anything truly extreme as well. So in our humble opinion these imbalances will find a mean again in the future. When the extremely undervalued silver prices (which currently require over 110 ounces to purchase one ounce of gold) bounce back, a person who owns silver will wear a big smile.

Gold, Monthly Chart: Overbought? May Be Not

Looking at the monthly gold chart one could think, that one way to take advantage of this scenario is shorting gold. We are approaching a double top formation = resistance. If you think of it though, this might not be your best bet. Fundamentally, gold is getting stronger by the day since governments in unison seem to be running the printing presses in full speed. That means the underlying fiat currencies get deluded. The strength we see on a daily basis on how this precious metal is traded with its shortages on physical deliveries rather suggest an additional edge. We do not see gold as overbought just yet, so a catch up scenario is likely. Meaning when prices of gold should rise, silver has to catch up even more.

Silver, Monthly Chart: The Other Side Of The Coin

If you glance at the monthly chart of silver you see the other side of today’s principle observation. Silver on the larger time frame is trading very close to its mean (yellow line). This is its balance point and means that it has room to move; it can get out of balance. It did just that at the previous market crash 2008. But we see today’s extreme far more significant than the world’s situation in 2008. That being said, we could make the bold assumption that silver could get way more out of balance than it did 2008. We could see a true run up. We discuss principles, edges, market behavior and trading execution timing on a daily basis in our free telegram channel and invite you to these discussions.

Out of Balance

Human behavior repeats itself and as such historical cycles tend to repeat themselves. What is an even stronger force to rely on is natural laws. Extremes are simply not sustainable for the long term. Today’s chart book isn’t a fine precision opportunity in regards to timing, but in times of such extremes, where the future of next generations are endangered, long term planing ahead is vital. We do not know if our children will find a world as free as we have inherited it. We do not know if fiat currencies will survive. There is no certainty that governments can guarantee our retirement. We are at the cusp of great change in many aspects. But we can do our best to combine natural laws like compound interest and today’s topic to create financial abundance for our children´s future and our retirement. Owning in parts some physical silver seems to be such an opportunity to make a prosper future a reality.

Earlier this week in  response to a question regarding cup and handle formations, I made reference to this chart and a piece I wrote last year.  I didn’t expect to be posting this so soon, BUT I STRONGLY BELIEVE SOMETHING HUGE IS ABOUT TO HAPPEN! It lines up with my two postings this week regarding an inflection point for the stock market’s recent rally, especially the over valued largest mega cap stocks and the possibility of a precious metals default on commodity exchange(s). I believe you don’t want to be left behind, IF, something happens over this weekend! Take a position in your favorite precious metal(s) vehicle.  Again, mine is CEF. Not a lot of downside risk, unless we witness a repeat of what happened during the March selloff. I am willing to bet, and am, that this drop in the market will see an upside explosion in gold and particularly SILVER! Even if I am premature about this weekend (my calls are often early) let me close with the quote I just saw again the other day. “Better even three hours early, then  one minute late”!

Caught again just right

In our last weekly silver chartbook we showed projected scenarios on how to produce great gains with only small risk. That didn’t mean that this excludes other ways to make money in between. On the first of April the market offered such an additional income producing opportunity and we took that reload opportunity. All our entry and exit points are being posted live in our telegram channel. Caught again just right.

What is our definition of an aggressive market participation opportunity? Low risk.  Let us have a look at this specific trade. Lets’ see why we fearlessly took advantage of this highly volatile environment, while most were simply nervous.

Silver Daily Chart: Caught Again Just Right

You will notice at the right green arrow, that on the day of entry, April 1st, the daily range was very small. That promises a range break in one of the consecutive days as a first edge. You will also be able to make out that on the prior days a supply and demand zone was created (see the yellow line). This provided for a tight stop. Another hint, that the market gave away, was the fact that three days prior a similar situation was presented. The break to the downside never gained momentum though. It stopped dead in its tracks slightly below $14.

“Luckily” prices moved quickly upwards right after our entry on the following day. We booked profits by exiting half of our position based on our quad exit strategy. Even more importantly, with this exit we erased the risk.

Silver Daily Chart: In The Making..

The market has moved according to our plan choosing scenario number two. At point A we did not have an entry since other required edges, besides a conducive entry zone, were not present. At the time of writing this chart book a double bottom (yellow horizontal line) is forming which might provide for another long entry soon to come. It will depend on how price is acting in the green marked zone.

Silver Weekly Chart:

The interesting part will be how prices will be acting within the red resistance zone. Should we penetrate the US$16+ zone it can be expected that what was resistance will become support. That would be ideal. The higher likelihood is that we will see a temporary decline. That would allow for a possibly low risk reentry. Nevertheless, we are positioned from our April 1st reentry opportunity. A great protection in case greed should prevail.

Silver Monthly Chart: Why So Aggressive ?

The monthly chart supports the reason of why we are so aggressively trying to build a core long term position. Markets have a tendency of repeating cycles. After the crash of 2008 with the FED adding to their balance sheet, silver prices quintupled. We are again presented right now with an asymmetrical bet and find it worthwhile to put our money towards an outcome that can see a staggering increase in silver prices.

Caught again just right

As a market speculator one needs to be constantly on ones toes. As much as monthly, weekly and daily planing of possible scenarios and outcomes is vital, there is never time to not pay attention. Opportunities are nearly endless in the market and as such if they fall within the low risk category of one of your systems it is mandatory to partake.

A random choosing of emotional based market participation however would lead to a negative outcome. Focus, diligence and an alertness of market and price behavior is vital. It allows for catching moves just right and creating consistent results.

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

All of us precious metals believers have been scouring every bit of fundamental and especially technical info to see when the upside is confirmed and ramps into an accelerated stage. Just an anecdotal observation that we are very close. Over the past year gold is up 33% and silver only 2%. However, the tell that we are close is that over the last month gold is up 5% and silver 6%! Silver is about to take the lead and the upside acceleration is at hand.

Breakout from a 7-year base is really significant.

A Potentially Historic Breakout in Gold Mining Stocks

Not only did the 11 year Bull market end in Feb. but I believe we are at a major inflection point. Similiar to the market tops in 1972-73-Nifty Fifty, 2000- Dot Com, and 2007- Real Estate Bubble, the extreme concentration in the FAANGS + MSFT, TSLA etc. has led to the typical over valuation in a small number of stocks usually seen at major tops.  Regardless of whether the market just tests the March lows or continues lower in a grinding Bear market, there should be a major change in money flow going forward. I believe the out performance by the top largest cap stocks has ended and they will now see a steady relative decline in performance compared to  dividend paying value stocks and eventually, smaller cap stocks as well. My preferred way to take advantage is to Buy PSQ, the ETF that is the inverse of the QQQ’s. If we do get a test of the lows, I have a few high quality dividend payers that I want to accumulate for the best total return prospects over the long term.

This is my initial post, as I too just registered upon seeing this morning’s invitation to do so. I have enjoyed the many postings, opinions and comments and hope to occasionally have something to contribute. Chartsmaster                                                                               I first got interested in precious metals and in particular the miners in the late seventies. Homestake Mining and Campbell Red Lake come to mind.  I came across a vehicle back in early 2001 that I researched and began recommending at $4 per share. I have continued to this day to advise anyone seeking to protect their wealth from dollar debasement and loss of purchasing power to make this vehicle a large part of their portfolio.  Unlike paper derivative ETF’s or mining stocks, CEF provides direct exposure to physical gold and silver. The Sprott Physical Gold and Silver Trust (formerly Central Fund of Canada) holds 50% gold and 50% silver bullion. You get the benefit of gold’s usual upside leadership and eventually the added kicker of a late stage rocket booster when silver usually takes over and out performs as a precious metals bull market develops and progresses.  You won’t make the outsize gains of a mining company when a bull market is raging, but you avoid all the inherent risks that owning miners entails.  I love the benefits of owning a great major like NEM and the exciting potential of an explorer like MAG, but every investor can benefit by holding a core position in CEF to balance their portfolio.

Since my last analysis spot gold and GLD indeed sold off down to US$1,450 and US$136.12. However, thanks to worldwide “whatever it takes” measurements by central bankers and governments spot gold prices quickly came back roaring up to US$1,747 just last week. Even though this unprecedented money expansion will spark inflation and probably even hyperinflation down the road, my initial short-term skepticism has even increased over the last few days. I think gold is more likely to start a correction or consolidation for the next few months instead of running directly higher towards its all-time high. Gold – Trend Reversal More And More Likely.

Review

Since the last important low at US$1,160 on August 16th, 2018, spot gold was able to rise up to US$1,747 within just under 20 months. From the low point at that time to the recent high point on April 14th, 2020, gold was thus able to gain US$587 or 50.6%. In theory, this corresponds to a breathtaking annual return of over 30% p.a. In the long term, however, the price of gold “only” rises by an average of around 7-9% per year. The last one and a half years have thus seen an exceptionally strong gold price.

Over the last 20 months, only relatively few price pullbacks have been observed overall. In most cases, the need for a correction was primarily worked off over the time axis in the form of prolonged consolidations. Only since the end of February the gold market is facing much sharper pullbacks and much higher volatility. The high of February 24th at US$1,689 was followed by a sharp pullback of US$126 down to US$1,563. Starting from the next high on March 9th at US$1,703, the corona panic led to an even more severe pullback of US$252 down to US$1,451. Since this sell-off, however, the gold price has again risen sharply and reached a new high of US$1,747 last Tuesday.

Since end of February gold faces a brutal rollercoaster

Towards the end of last week however, prices on the spot market have already fallen back again by US$75 and closed the trading week at US$1,672, well below the psychological mark of US$1,700. All in all, the gold price has thus been going through a brutal rollercoaster ride for almost two months now. Investors who have invested in physical gold early on can easily ride out the current price caprices and are even enjoying the exploding premiums on their physical holdings.

Those who have not yet invested have little chances of making a reasonable entry into the precious metals in this environment. Nevertheless, regardless of price, every investor should hold at least a minimum of 5% of his assets in precious metals as insurance. On the other hand, anyone speculating on the gold price with leverage and paper products during this overheated cycle is playing with fire and, especially on the long side, is now taking incalculable risks. In any case, the sharp rise in volatility does not inspire confidence, but should rather be seen as a clear warning signal.

Technical Analysis: Gold in US Dollars

On the weekly chart there are two uptrend channels that support gold prices. The first one, in dark green, has been moving up relatively flat since December 2015. In September 2019, gold tested its upper edge for the first time since summer 2016. Since the beginning of the year, the gold market has been struggling at this upper edge, which has recently led to these highly volatile swings. Despite the temporary pullback in the meantime, the bulls have been able to break out of this channel in recent weeks, so that gold is currently trading clearly above the upper edge (currently approx. US$1,590 – 1,595) of the uptrend channel.

The second uptrend channel started with the last panic low at US$1,160 in August 2018. This trend channel is much steeper and has led a strong uptrend in its path over the last 20 months. Here as well, the bulls have been attacking the upper edge of the trend channel for a couple of weeks now. However, apart from several price spikes, they have so far failed to achieve sustainable weekly closing prices above the channel boundary.

First signals of a trend reversal

On Friday, the weekly candle closed with a potentially bearish “shooting star”. The opening and closing prices of the trading week are well below the high. Combined with the upper edge of the uptrend channel as resistance, as well as the obvious stochastic divergences, the gold market may now really have reached its high for this spring.

All in all, however, it is still too early to call a clear top in the gold market for the coming months. However, the probability of a trend reversal has increased significantly with the past trading week. Actually, it is quite possible that the impulsive uptrend has already come to an end at US$1,703 and that thanks to Corona we have been in an ABC correction pattern for over four weeks already. Wave A would have come to an end at US$1,451. The irregular wave B, with a slightly higher high at US$1,747, would have confused and misled all market participants once again. Subsequently, the end of wave C would now be expected with prices below wave A, that is, below US$1,451. The longstanding former resistance zone and current support of US$1,350 – 1,400 would be predestined as the price target for wave C.

From a fundamental point of view, however, this strong correction scenario in the gold market would require either strongly bullish stock markets or a deflationary collapse of the entire financial market. Driven by the enormous expansion of the money supply, a strong recovery in the stock-market, detached from the real economy, seems possible. On the other hand, central bankers will prevent a deflationary total collapse of the financial markets with their printing presses.

A very unhealthy structure has established itself on the daily chart due to the wild swings in prices over the past eight weeks. The originally clear uptrend was destroyed by the sharp pullback in March. While gold was just about to price in the catastrophic consequences of the global lockdown with a brutal sell-off, central bankers worldwide opened all monetary floodgates and flooded the markets. Gold could not help but react to this with a massive spike over the last few weeks. However, the clear technical picture has thus disappeared.

How sustainable the steep up-trending wave of the last few weeks really is, remains to be seen. In view of the heavily overbought situation and the recent sharp drop in trading volumes, a big question mark is more than justified.

In summary, the daily chart is overbought. The stochastic has delivered a fresh sell signal. If the upper edge of the light green upward-trend channel does not hold, the bears should be able to quickly penetrate the next support zone around approx. US$1,620 – 1,640. However, if a significant recovery above US$1,720 is accomplished in the current trading week, the uptrend could still continue towards US$1,800.

Commitment of Traders: Gold – Trend Reversal More And More Likely

Since the breakout above the multi-year resistance zone 1,350/1,375 USD in May 2019, the situation in the futures market has been extremely overstretched and completely unhealthy. Only in the last few weeks a first tentative improvement has become apparent as the commercial short position has fallen to the current level of 280,408 short contracts. However, a contrarian bottleneck is still a long way off. This would be the case at the earliest with a cumulated commercial short position below 100,000 short contracts.

Overall, the clear sell-signal of the CoT-report continues to be valid. However, with the strongly increased volatility in the last weeks, the adjustment of the futures market seems to have begun. In extreme cases, a price decline to at least US$1,350/1,400 is needed here so that the professionals can gradually cover their short bets and hedges into the falling prices. In the case of silver, the temporary sharp fall in prices down to US$11.60 has already cleaned up the future market.

Sentiment: Gold – Trend Reversal More And More Likely

Since the beginning of the year, the Optix sentiment barometer for the gold price has been delivering significantly increased levels of optimism. In particular, inexperienced small investors have been driven into the gold market en masse in recent weeks due to the corona panic. The professionals, on the other hand, have been increasingly cautious as of late. Sentiment has not yet been tilted, but not much is missing. However, the road to the other extreme, a panic mood similar to that of August 2018, would be very long and painful.

The Gold Optix is again giving a sell signal, as optimism is currently way too high. Only when at least the beginnings of panic and fear spread among gold investors will there be meaningful and contrarian opportunity again.

Seasonality: Gold – Trend Reversal More And More Likely

On the statistical basis of the last 50 years, the gold price is now in its most unfavorable seasonal phase of the year. Similar to the well-known “sell in may and go away” rule, significant corrective movements in the gold market usually begin in spring and can extend into the mid of summer. In most years, the gold price reaches an important high point in February at the earliest and May at the latest. This is usually followed by a correction, which does not end until June at the earliest and August or September at the latest.

So far, gold topped on April 14th

This year and so far the highest point was reached only recently on the 14th of April. Obviously, this high point has not yet been definitively confirmed. If the presumed corrective movement begins now or in the coming weeks, it will not end before August/September. Until then, one should rather exercise patience. Although there can always be major interim rallies, in view of the sharp rises and the overbought situation on the daily, weekly and monthly charts, one should plan for at least three to four corrective months.

Meanwhile, the seasonality provides a clear sell-signal. However, this component of analysis should always be viewed in a more abstract manner. Moreover, there is no clearly confirmed high point in the current trading year so far. Only when this has become more visible, a possible time window for the next low can be defined.

Bitcoin/Gold-Ratio

Currently, you have to pay 4.2 ounces of gold for one Bitcoin. In other words, a troy ounce of gold currently costs only 0.22 Bitcoin. While the Bitcoin/Gold-ratio at the beginning of February still looked like a breakout in favor of Bitcoin, the emerging Corona crisis caused a clear shift towards gold. The Bitcoin/Gold-ratio fell well below a first important support line and has been struggling to recover since then.

Bitcoin/Gold-Ratio within a large triangle formation

Currently, the ratio is testing the lower edge of the two-and-a-half-year triangle formation. If this extremely important support is breached downwards, gold prices will subsequently outperform Bitcoin dramatically. If, on the other hand, the uptrend line can be defended, Bitcoin would then have the chance to break above the downtrend line which has been intact since December 2017. In this case, Bitcoin would continue its triumphal march. Overall, the ratio has already run relatively far into the apex of the triangle. A decision is expected within the next one to four months.

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% and a maximum of 25% of one’s total assets should be invested in precious metals physically, while in cryptos and especially in Bitcoin one should hold at least 1% and a maximum of 5%. If you are very familiar with cryptocurrencies and Bitcoin, you can certainly allocate higher percentages to Bitcoin 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!

Conclusion for Gold – Trend Reversal More And More Likely

In the coming weeks a first at least rudimentary normalization after “Corona” is expected. The easing rally in the stock market in the so-called “risk on” mode could initially continue. These “Risk-On” phases can currently occur practically out of nowhere or due to important news (e.g. Gilead Sciences Update on COVID-19) very suddenly and quickly. Investors in the standard markets, spoiled for years by rising stock prices, are already celebrating the return to normality! Although the DAX is still more than 3,000 points below its all-time high reached in February (13,817 points), NASDAQ has already made up most of the “corona losses”. Tech giants like Amazon are already trading at new all-time highs. A “Melt-up”, in which the freshly printed money rushes onto the stock markets, is quite conceivable and in some cases already underway.

“Risk-On” phases can harm gold

During such phases Gold is not needed and will most likely come under considerable pressure. Such a phase could initially come as part of the gradual normalization process. Only afterwards, when the markets understand and begin to price in the full extent of the damage, including its consequences and the need for much larger rescue packages, should the price of gold be able to rise further towards its all-time high. In the medium and long term, the distortions of recent weeks are therefore extremely bullish for gold and especially for silver.

In the short term, the gold price has already begun to price in the enormous expansion of the money supply. The rise from US$1,451 to US$1,747 in just a few weeks reflects this. However, the inflationary effects are unlikely to materialize immediately in our everyday life. On the contrary, the speed of money circulation is currently extremely low due to the real economy being kicked down, which means that the overbought precious metal prices are now vulnerable to a correction. From a sentiment perspective, all panic buyers have bought their precious metals at peak prices in recent weeks. However, as soon as the mines and refineries are operating normally again, the current bottleneck in precious metal will presumably disappear relatively quickly. Increased premiums could, however, accompany us for quite some time.

US$1,800 still possible but trend reversal is getting more and more likely

Looking ahead over the coming days and weeks, a continuation of the gold rally up to my original price target of US$1,800 is still possible. However, the risk/reward-ratio is now extremely unfavorable at current levels. In addition, the first reversal signals are beginning to appear on both the daily and weekly charts.

In view of the completely ruined financial and economic system worldwide, you should still not give up one single physical ounce of silver or gold. This is your life insurance from now on. Nevertheless, we should be prepared for a major correction in the price of gold in the coming months. Given the many unknown variables, it is not possible to predict how severe this will ultimately be. A healthy relapse in the direction of US$1,350/1,400 would probably be the best thing for the gold price in the long term. Prices in the direction of USD$1,000 however are very unlikely at present. In the best case, gold is already turning around US$1,550. Gold – Trend reversal is getting more and more likely.

Source: www.celticgold.eu

Just my perspective. Please add your thoughts and comments.

https://surfcity.co/2020/04/05/gold-vs-silver-as-a-safe-haven/

…and what could be next

From a Failed Breakout to a Failed Breakdown

Silver Weekly Chart: Brace Yourself

The weekly chart shows good strength (above 0.382 Fibonacci retracement) on this tweezers bottom (yellow circle).

It would come at no surprise recent lows to be retested in the near future. (a double bottom formation in the US$12.50 price zone would be considered a low risk entry zone)

New lows can easily be printed as well.

Silver Daily Chart: Various Scenarios

The daily chart shows three scenarios:

1. If you followed our telegram channel,where we post our trades in real time, you are well positioned and already enjoyed substantial profits (including additional reloads not shown in this chart).
2. Assumes a speculative price advance with an entry zone after a pullback.
3. Anticipates an immediate price decline with a low risk entry zone.

Brace yourself

Last weeks bounce created new technical data usable for reentry points. After the initial three week drop, there is more clarity in charts. Now is the moment to plan for the future. Not at the time when a new down leg in the market is happening and you get bombarded with negative news again. Proactively planing, for example hedge portfolio remainders by collecting double digit dividends in oversold oil stocks in the mid term, can be a passive strategy to avoid disaster. Above all, we believe strongly that silver prices over the long term are one of the finest ways to counteract a multitude of problems financial systems will be confronted with in the future.

Part of these opportunities already show their hand. Simply google e-bay sales prices of physical silver coin and bullion. You will find sales already priced near 100% over its paper value.

When Will Gold Bottom?

In our last publication of our weekly silver chartbook we advised the purchase of physical silver. It was timely since shortly thereafter shortages of physical precious metal deliveries were common. Coins and bullion are now being sold as much as 100% above the cash price. However, it isn’t too late just yet. One can still have services  store physical silver on ones behalf in their vaults at fair prices. It is imperative this storage to be physical silver that you own. Watch out in your research for safe locations like Switzerland for example. Be aware that we are also in a time of fraudulent behavior booming. You may have been deprived of many rights all the way to house arrest in countries that enforced martial law. You are bombarded with negative news and an uncertain future. But this is No time for fear.

You simply can’t afford decisions being made for you. It isn’t easy to keep ones head up. It requires discipline like structuring ones day. Limited news exposure and a commitment to counter a scarcity environment with a positive stance. For some it is yoga and meditation, for others family time with fun and games. Choose entertainment that is filled with humor. Take care of your body and relationships. Do whatever it takes to be able to not be deprived of the most important decisions of your life. The course of your imminent and long term future for yourself and your family.Your wealth preservation and creation.

The Gold/Silver Ratio chart has never been so useful than right now. It clearly shows how undervalued silver is against gold. With a high of 126.43 the ratio hit our projected resistance. Quick action is often met by a forceful reaction. Meaning the same units of silver right now might buy you more gold in the future.

Silver Daily Chart: As Low Risk As Possible