Is It Finally Gold's Time To Shine?
Gold prices have been teasing market participants this last month or so, as it has traded sideways in a flag like consolidation moving ever closer, to the downtrend off the April high. The question is, does it break higher or lower?
A few things stand out to me in the precious metals right now. Silver saw a new low in September which Gold did not confirm, often an event that occurs at significant lows. Silver also shows bullish RSI divergence, a potential inverse head and shoulders pattern, all of which is occurring at the bottom of wide trend channel that began in November '16.
To add to a potential bullish scenario in the metals, commercial hedger positioning (i.e. the smart money) is at historical extremes. Should a rally occur, those on the other side of this trade will find themselves scrambling to cover their short so price could be set for a helluva squeeze.
Lastly, the extreme level of the Gold/Silver ratio which has rarely been seen at such high levels, is suggesting out performance of silver is a strong possibility.
Silver outperforming gold is characteristic of a precious metals bull market. The below chart shows this relationship. The red line is the Gold/Silver ratio which looks to be failing around historic highs (more easily seen on a daily chart). The blue line is the inverted price of Silver. The potential reversal of this ratio from an extreme suggests we are looking at a significant low in the precious metals with a strong rally to follow.
Price action is yet to confirm any of the above but given where Gold is trading, we could see a break in either direction, very soon.
Gold is so overdue for a move
Totally agree. Commercial hedgers have almost historic levels of long's meaning a lot of short covering the other side of that trade. Miners starting to set up. I have a couple of posts on those already. Another to look at now and keeping an eye on the space for long opportunities. Miners can rip when they catch a bid!
excellent..appreciate your work..
thanks! you're welcome.
We just moved over a substantial part of our asset holdings to gold. The markets are manipulated by software & media, and in a society that is so fickle I think a safe haven asset like Gold is best. Of course as more investors decide that move to be prudent, we can only go up. Hoping to see the breakout you are referring to in the coming days & weeks.