Month: October 2020

Trump’s infection; next key levels for gold, stocks, and the dollar  Kitco NEWS

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Precious metals markets are advancing this week as a massive new stimulus bill makes its way through Congress.

On Thursday evening the House of Representatives passed a $2.2 trillion coronavirus relief bill on a party line vote.

It’s a big deal whenever Congress commits to spending that kind of cash, especially when it’s money that has to be borrowed into existence. These days, though, it’s not that unusual for Washington to dole out trillions of dollars at a time.

The bill in its current form will almost certainly die in the Republican-controlled Senate. Meanwhile, negotiations on a compromise bill are expected to continue. Both the White House and Democrat leaders say they want additional stimulus checks handed out.

Nobody seems concerned about the ballooning federal budget deficit – which is already on track to exceed an unprecedented $3 trillion this year. Perhaps that’s because nobody doubts the Federal Reserve will provide whatever liquidity the government needs to pay its bills.

Stimulus from the Fed has helped pump up the stock market. The S&P 500 rallied this week despite more bad news on the economic front for airlines, restaurants, hotels, and other hard-hit industries.

Also rallying are precious metals markets. And today’s news that President Donald Trump has contracted Covid-19 could add more fuel to the fire.

Gold prices are up 2.4% this week to bring spot prices to $1,913. Gold bounced off support at the $1,850 level. It could face its next test around $1,950. And of course, bulls will be eying $2,000 an ounce. Once prices regain that benchmark, a new wave of momentum buying could kick in that propels the yellow metal back to record highs.

Turning to silver, the market is up over a dollar on the week and is registering a gain 4.9% since last Friday’s close as prices come in at $24.17 an ounce.

Platinum is advancing by 5.0% this week to trade at an even $900. And finally, its sister metal palladium shows a weekly rise of 4.0% to trade at $2,333 per ounce.

The metals have been moving inversely to the U.S. Dollar Index, which fell this week after rising the previous one. The negative correlation is often strong, though not always.

Over a period of years to decades, the dollar’s strength or weakness versus foreign currencies tends not to matter as much as its actual rate of depreciation. These are two very different things.

It’s possible for government officials to actively pursue a “strong dollar” policy against the currencies of foreign rivals while at the same time deliberately debasing the value of the currency at home.

Ever since President Richard Nixon de-linked the U.S. dollar from gold in 1971, government debt has accelerated to the upside – as has the total currency supply.

In the process, the purchasing power of the dollar has steadily diminished. What cost $1.00 in 1971 costs $6.37 in 2020, based on the government’s own Consumer Price Index.

It’s all reflected in gold prices, which recently surged to a record high of over $2,000/oz – 100 times higher compared to gold’s dollar price a century ago. Measured by gold, that’s a 99% decline in the currency’s purchasing power!

Further declines are guaranteed by the Fed’s own avowed inflation-raising objectives and the exploding debt spending by government.

The answer to how all the trillions in “free” money being handed out by Washington will ultimately be paid for is through inflation. All holders of Federal Reserve notes will take a hit on their purchasing power.

Holders of precious metals stand to retain purchasing power over time and increase it during a bull market.

In the very long run it really doesn’t matter what gold and silver’s nominal prices, or exchange rates versus the U.S. dollar, are. As sound money, the metals’ real value can’t properly be measured by any fiat currency.

It’s more accurate to view long-term gold and silver price uptrends in terms of dollars as measures of the dollar’s loss of value.

You can hold gold and silver knowing that regardless of where they trade next year, next decade, or a generation from now in terms of dollars, they will at least retain meaningful purchasing power in terms of real goods and services in the economy.

The same can’t be said for fiat currencies that can collapse, bonds that can default, or shares of companies that can go bankrupt.

Well that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.

Source: Clive Maund for Streetwise Reports   10/01/2020

Technical analyst Clive Maund takes a look at silver and explains why he believes it’s a good time to build positions.

More than a few traders are confused about what is going on with silver here after its recent reaction, but when we look at its long-term chart the situation quickly becomes clear. So we will start this update by looking at silver’s 13-year chart in order to get big picture perspective.

On the latest 13-year chart we see that only broke out of its giant 7-year long base pattern as recently as July. The high-volume surge that occurred upon its breaking out was a sign that it was genuine. What has happened in recent weeks is that it has reacted back to test support at the upper boundary of the base pattern, which is normal. In the last update we were too optimistic in thinking it would continue higher, but the good news is not just that the post-breakout reaction is perfectly normal, but that this reaction back to support is a healthy development that is “recharging the batteries” for the next upleg.

On the 15-month chart we see in more detail a picture that looks entirely bullish with the normal post breakout reaction of recent weeks back to strong support serving to unwind the earlier overbought condition resulting from the breakout as shown by the MACD indicator so that silver is now somewhat oversold. Bullish factors that should contribute to a new upleg developing in due course include a positive volume pattern, with the Accumulation line holding up very well indeed as silver has reacted back and the bullishly aligned moving averages. We can therefore reasonably conclude that we are at an excellent point to increase holdings in all manner of silver investments ahead of the next (2nd) upwave unfolding.

The 6-month chart shows a parallel uptrend channel that seems to be still operative. When silver broke out of its giant base in July it bust out the top of this channel, so that it no longer looked valid, but rather curiously when it broke down from the Triangle perched above the upper boundary of this channel over a week ago it dropped sharply, but the decline halted at the lower boundary of the channel with a bull hammer, which is a strong sign that it has hit bottom. The backing and filling that we are now seeing thus looks like an intermediate base that will be followed by a new 2nd upleg that will take silver to new highs.

The conclusion is that we are now being presented with an opportunity to build positions in silver investments ahead of the next upleg that is likely to be substantial.

Finally the latest silver COT chart shows that readings are still moderate and certainly at levels that permit another sizable rally.

Originally published on CliveMaund.com on September 30, 2020.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Charts provided by the author.

CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

Source: Clive Maund for Streetwise Reports   10/01/2020

Technical analyst Clive Maund charts recent movements in the gold market and what they may indicate going forward.

In the last Gold Market update we had thought that it might break out upside from the Triangle that was forming, mainly because of its positive Accumulation line coupled with favorable seasonal factors, but instead, after moving sideways for a while, it broke down, as we can see on its latest 6-month chart below. The good news is that no technical damage was incurred because of this breakdown, as gold is well above important support and well above its rising 200-day moving average. So the fact is that that this drop has actually improved its technical condition by completely unwinding its earlier overbought condition.

While the latest gold COT chart shows that readings are still somewhat on the high side, they are certainly not at levels that preclude another upleg.

On the 3-year chart we can see why it was probably for the best that gold didn’t break out upside from its Triangle, as that would have resulted in the uptrend becoming steeper and probably unsustainably steep. Instead, we can see that it seems to want to remain in the uptrend channel that we earlier delineated. So it is interesting to observe that the break lower over the last week or two did not result in it breaking down from its uptrend channel, instead it has approached its lower boundary which is a good place for it to turn higher again, and that’s what seems to be happening.

On the latest 13-year chart we can see that gold is being propelled higher rapidly by the now steeply rising right side of its Cup base that has already driven it to new highs, and as long as the Cup boundary is not breached it should continue to ascend swiftly. Given that we are in a rapidly changing economic situation with Fed money creation going exponential as they race to stave off economic implosion, this pattern could drive a spectacular vertical ascent by gold, but at the same time we take note of the fact that, should the price breach the Cup boundary, we could see a lengthy period of consolidation with a Handle forming to complement the Cup, so the pattern ends up as a classic Cup & Handle base.

Larry’s latest gold chart suggests it will either slingshot much higher very soon, or break down from the hemispherical Bowl pattern and run off sideways for some time to form a Handle consolidation.

If gold looks set to take off higher again, then what about gold and silver stocks? The latest 6-month chart for GDX shows that they should too, with it looking like it is completing a corrective phase from its early August highs, and the chart looking overall positive with the Accumulation line holding up and moving averages in bullish alignment. On this chart it is interesting to observe that a time correction has been in force across the sector for 4 months now, with GDX having made no net progress from mid-May to its low a few days back. So there is now “plenty of gas in the tank” for a sizable upleg, should it decide it wants to make one.

The latest Gold Miners Bullish % Index shows a considerable improvement in sentiment over the past week – far too many people had been bullish, but this has now moderated substantially, and while there is still room for improvement, this index has certainly moderated sufficiently to permit another sizable upleg to begin.

The latest Gold Risk Levels chart shows that risk for longs has moderated greatly since its early August peak.

Chart courtesy of sentimentrader.com

The larger trend of the dollar is down and therefore the modest rally of the past week or so is regarded as a bear market rally, despite it breaking above a line of resistance at 94 on the index, as we can see on its latest 6-month chart below. This “achievement” does open up the possibility of the countertrend rally running to the next significant resistance level in the 95.60 – 96 zone, although it is thought more likely that it will roll over and drop away again.

Originally published on CliveMaund.com on September 29, 2020.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Charts provided by the author.

CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

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