Gold Likely Not Done on the Downside Yet – Silver Doctors

“…goal is 1820, however I’ll look forward to it to cease falling and break resistance to make sure that the underside is in.”

by David Brady by way of Sprott Cash

Gold, Silver, and the miners have taken a hammering for the reason that peak in Gold at 2003 on April 18. Many blame the Bullion Banks, and they’re definitely an element right here, however there have been warnings from a number of conventional indicators that this dump might happen.

First, let’s return to the height of 2079 on March 8. That is the weekly chart for Gold:

There have been a number of alerts {that a} peak was possible:

  1. Prior file excessive at 2089 was performing as resistance
  2. Weekly RSI hit excessive overbought RSI of 70
  3. MACD Histogram matches a number of prior peak ranges
  4. MACD Line is negatively divergent, considerably lagging its stage on the prior file excessive

Since that peak, these indicators have simply been trending decrease and decrease, regardless of the pop in worth to 2003 on April 18. This in and of itself urged we had decrease to go, and now we have seen how that has performed out.

Now the weekly MACD Line is testing its sign and the MACD Histogram is on the verge of falling under zero. This may occasionally present a short-term bounce, however till worth suggests in any other case, the pattern stays down for now.

So what triggered the height on April 18? Maybe Fibonacci can inform us. Under is the every day chart for Gold:

1895, the low on March 16, was the 61.8% retracement of your complete transfer up from 1781 in January to the height of 2079.

Curiously, for the height of the following bounce to 2003…

  • 2009 was the 23.6% Fib of your complete 1781-2079 rally
  • 2009 was additionally the 61.8% retracement of the 2079-1895 drop

So why did it cease at 2003? Effectively, that’s solely $6 away from 2009, and 2000 is a pleasant spherical quantity for resistance.

How low does Fibonacci counsel we might go? If it is a normal A-B-C correction, the place wave C is identical measurement as wave A, then ~1820 can be the first goal:

  • Wave A: 2079 – 1895
  • Wave B: 1895 – 2003
  • Wave C: 2003 – 1819

The height on January 25 at 1854, forward of the low of 1781, might additionally act as help. Then there’s the 200-day transferring common now at 1834 and rising. 1819 would make sense if the market takes out the stops under the 200MA earlier than transferring greater once more.

Nevertheless, if Gold falls under 1781, then it might attain 1700 or decrease earlier than turning up once more. However let’s cross that bridge if and once we come to it. My major goal on the draw back is round 1820.

Different alerts that urged a peak was coming had been sentiment and COT positioning. Sentiment was extraordinarily bullish at 2003, which is usually an ideal contrarian indicator, particularly in treasured metals. Whereas that bullish sentiment has receded considerably, we’re nowhere close to capitulation ranges. We don’t must go that low, but it surely’s doable. It definitely permits for additional draw back.

Now for COT positioning and the Bullion Banks. This chart says all of it:

The “Swaps” or Bullion Banks had been recorded quick on the peak of 2003 on April 18, much more so than at 2079 on March 8. The remainder, as they are saying, is historical past. Solely now, as the worth is falling, are they overlaying their shorts. However they’ve a protracted option to go earlier than getting anyplace close to zero.

Final however not least, actual yields had been clearly a warning.

Gold and actual yields have a near-perfect inverse correlation over the long run. When actual yields rise, Gold usually falls, and vice versa. Whereas the connection typically breaks down within the quick time period, finally it reconnects. Gold didn’t fall as actual yields bottomed out in March and soared to their highest stage since March 2020. Both actual yields needed to fall once more or Gold did. It’s now clear that Gold would take the autumn and nonetheless has additional to reconnect with actual yields.

In conclusion, Gold could also be overdue a bounce right here, however the steadiness of information suggests it has decrease to go but. My major goal is 1820, however I’ll look forward to it to cease falling and break resistance to make sure that the underside is in. For my part, that is all being pushed by the Fed’s tightening insurance policies, and it’s once they have to drag one other 180 to stimulus on steroids—or earlier than—that Gold, Silver, and the miners take off to new highs. It’ll be well worth the wait!


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