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Gold & Silver: The Range Trade

  1. Gold is at a point where most of the horrific Corona crisis news is priced in, the US economy continues to strengthen, and not enough government handout money has been spent by Main Street to create inflation.
  2. As I’ve been saying for several days, gold is likely to enter a range trade and stay there…
  3. Until the risks of inflation become more of a concern for big-name money managers.    
  4. Please click here now.  Double-click to enlarge this December futures gold chart.  The $2090 area is likely to mark the top of the range, and there is good support at $2000, $1950, $1850, and $1800.
  5. Any one of these support zones could mark the low of the range. 
  6. Tactics?  I’m a buyer of high carat (22 and 24) gold jewellery here and at $1950.  Gold bars, coins, and ETFs can be bought on a deeper dip to $1850 and $1800.
  7. The lower end of the range is likely to be created by Asian physical buyers.  While leveraged Western hedge funds trim positions to meet margin calls, the current “price sale” will see fearless Asian power buyers move into the market.
  8. Tactics?  I’m a buyer of high carat (22 and 24) gold jewellery here, and at $1950.  Gold bars, coins, and ETFs can be bought at $1850 and $1800.
  9. It’s not as emotionally taxing to hold jewellery as it is to hold other investments in gold.  Simply put, the main reason Indians have been able to accumulate so much gold is because of their focus on jewellery.
  10. Please click here now. Double-click to enlarge this interesting silver chart. Technically, “hi ho silver” looks much better than gold. 
  11. A Biden win in the US election would likely see enormous spending on clean energy, and that’s good news for silver price enthusiasts.
  12. Even if he loses, the 5G systems being rolled out globally should increase demand, while mine supply growth remains modest. 
  13. Incredibly, silver could keep rallying to fresh highs even if gold dips to one of my lower support zones.
  14. Regardless of whether the republicans or democrats win the US election, the real winners are more debt, more money printing, more spending, and more scapegoating that could become outright war mongering.  All of that is great news for both gold and silver.
  15. Please click here now. Investors need to stay focused on the big picture, which is the obsession of government with solving every crisis with scapegoating, more debt, and money printing.
  16. This insanity is most obvious in the United States, but it’s also a global horror.  Since 2008, most of the Fed’s printed money has gone to government and banks, but now it’s starting to flow to Main Street. 
  17. That will create a vicious inflationary shock, but significant investor patience is required.
  18. Please click here now. Double-click to enlarge this important GDX chart.  Mining stock investors must stay focused on minor trend highs and lows.  Almost everything else is just technical noise.
  19. Uptrends are defined as higher minor trend highs and high minor trend lows.  When the nearest low is tested and violated in an uptrend, which is happening with the $41 low price now, investors can book some profit and await a deeper pullback before rebuying.
  20. The other strategy is to wait for the price to start making fresh minor trend highs again.  Some individual miners will keep making highs if bullion and the ETFs swoon, while others will experience corrective action.
  21. Please click here now. Double-click to enlarge this DIA (US stock market) chart.
  22. As real yields stabilize, temporarily ahead of inflation, the Dow is likely to crush the Nasdaq, much like silver can outperform gold.  Bank stocks can also catch a bid in this environment.
  23. Please click here now. Double-click to enlarge this silver stocks ETF daily chart.  The current uptrend is still in force as long as the $46.50 minor trend low is not violated.
  24.  A dip under $46.50 calls for profit booking and then some patience to see the uptrend re-invigorated with a fresh pattern of highs and lows.  Hi, ho, silver!





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