On one hand we have the US dollar gaining or remaining firm due to covid crisis in Europe and the UK. On the other hand there is a greater chance of a new USA stimulus package before 3rd November. US dollar gains are preventing gold and silver from a rise. Stimulus chances are preventing short term traders from using a sell first and buy next strategy. The net result is range bound price trade.
Last week Comex gold december was unable to break past high of $1939.40 and sold off. Comex silver december was unable to break past high of $2571 and sold off. There were chances of gold and silver to rise like delinking from the US dollar, wild spread of covid in Eurozone and UK, higher chances of negative interest rates in the UK among other factors. Gold and silver both managed to hold onto a hundred day moving average but failed to break past the fifty day moving average. In short gold and silver traded this week between a hundred day moving average and fifty day moving average.
Nickel rose d was the best performer in all metals. Nickel if it rises this week will zoom.
Two question which I need to answer this week
My family doctor asked when to buy a 100gram gold bar.
- Spot gold between $1827 and $1837 is a good for long term investment in physical gold (if prices fall). But do not worry in case gold prices fall to $1753. (I prefer to tell the downside risk before advising any investment).
- You need to be mentally prepared for a twenty percent downside risk if you intended to invest in gold for a period of more than three years. Boom and bust can be there in gold as well in times of drone money.
- Gold investment returns of 2020 will not there every year. There will be years when the pace of rise of gold will be much slower than previous years.
- Physical gold investment is an alternate to cash/currency. I have been recommending to convert fifty percent of not need cash/currency into gold. Cash/currency does not give any return. Value of cash/currency also falls as it purchasing power falls with passing of each day.
- Immediate target for gold is at $2030.80. (by Diwali) and $2169.80 by early January.
- Two year physical gold price target is still more than $2300.
The second question is by a close cousin of mine. He is in physical copper business. He has accumulated around 250 kgs of physical silver (after smelting/refining copper). He can wait till January to sell the physical silver. Should he wait, if so what price to sell. (my cousin does not hedge physical silver in futures.).
- Predicting a silver price target for January is very difficult. I expect spot silver price to crash to $21.66 and $19.96 first in the short term and then rise to $29.89 and may be even $36.00.
- This evergreen silver bull has become cautious in silver for the next one month. Most retail traders and investors are already invested in silver. They intended to use sharp silver price rise to exit their silver investment and switch to bonds and gold.
- Silver needs some big short term hot money. This money can come only if USA announces a big stimulus. The new stimulus is expected anytime. The pace of rise of silver (in 2021) will be much slower than June to August period.
- My advise to my cousin will be to sell thirty percent of physical silver stock on any $2 and more rise in spot silver. For the rest take a chance and decide only after 25th November.
COMEX GOLD DECEMBER 2020 – current price $1904.05
- Gold can see rallies to $1933.30 and $1960.10 as long as it trades over $1875-$1885.60.
- Gold will crash only if it trades below $1875.
COMEX COPPER DECEMBER 2020 – current price $307.25
- Weekly support: $299.10
- Weekly resistance: $315.10
- It is very tricky to give a view on copper this week.
- There are big resistances between $312.40 and $318.10.
- There will very sharp corrections as long as copper does not break $318.10. A break of $318.10 will pave the way for $329.10 and $342.30 and may be even $350.00.
- Copper is not doubt bullish. Mine supply disruptions will support copper at lower prices.
- Copper price will only correct and not crash.
- Sellers will be there below $304.10. But copper needs to trade below $299.10 for three consecutive trading days to be in a short term bearish phase and crash.