Commodity Trade Mantra

Gold and Silver on a Major Buy Signal for the Long Term & Short Term as well

Gold and Silver on a Major Buy Signal for the Long Term & Short Term as well

Gold and Silver are on a Major Buy Signal

Technical analyst Jack Chan charts the week’s movement in the gold and silver markets, continuing to track a multimonth correction.

Chancover6-10

Our proprietary cycle indicator is down.

chanhui16-10
The gold sector is on a long-term buy signal. Long-term signals can last for months and years and are more suitable for investors holding for long term.

chanhui26-10
The gold sector is on a short-term buy signal. Short-term signals can last for days and weeks, and are more suitable for traders.

chanspec6-10
Both speculation and OI are not anywhere near a major top.

chanspdr6-10
The trend is up.

chansilver6-10
Silver is on a long-term buy signal.

chanslv6-10
SLV is on a short-term buy signal, and short-term signals can last for days to weeks, more suitable for traders.

chansilverspec6-10
COT data is supportive for overall higher prices.

Summary
The precious metals sector is on a major buy signal. The cycle is down, barely. The multimonth consolidation continues.

Gold – On The Verge of Tearing Up Resistance

Gold is on the way up, says Tom Beck, editor of Portfolio Wealth Global, and sets out several elements investors should look for before buying.

HUI Bull and Bear Cycles Since 1995

You can already taste victory, but keep calm.

Gold is trading in its highest level in seven months.

Don’t get overly bullish yet. What we’re waiting for is the “all clear” signal, which is just 3% or so away from us.

What Portfolio Wealth Global is also keeping an eye on is the sentiment. If gold’s price is rising while demand is soaring, then the banking giants smack the price around and scare off the weak hands, but this isn’t happening now.

American Gold Buffalo Sale

The best time to enter a position is when the elements are aligned.

Remember these three elements that I’m about to show you and stick to them—don’t ever deviate from them.

For an investment opportunity in commodities to work out for you in the most profitable way, you must be ready when an asset is hated, cheap, and in an uptrend.

1. Hated: Middle-class America has abandoned gold and silver. Not only are the sales severely down, but on Google Trends, Bitcoin and Ethereum have surpassed the search quantity of the metals.

In fact, bond investors are betting on low interest rates at a record pace. This is a deflationary theme, and we all know that investor sentiment is a brilliant contrarian indicator.

COT 10-Year Treasury Notes Report

Bond investors are more confident that lower rates are here to stay than they have been for 35 years.

But as we’ve seen many times before, especially under the fiat monetary system, inflation picks up speed without warning and very quickly.

Historical U.S. Inflation Surprises

2. Cheap: What’s important to do is to compare gold’s price today with its 1980 high using the same CPI formula—the U.S. Government has altered the components of the Consumer Price Index over the years to make inflation appear much less harmful than it is.

In 2011, gold was as high as it was a third of the way through the 1970s cycle, which means that rising to a price of $5,700 per ounce could be expected. Gold is cheap.

CPI Formula Shows Gold Near All-Time Lows

3. Uptrend: This was certainly missing for a long period, but the metal just snapped out of its 2011 resistance line. Chief technical analyst for Goldman Sachs, Sheba Jafari, has come out today with a report that sees gold reaching $1,304-­$1,315.

This is a huge confirmation that the gold bears are losing again.

Don’t be committing the fatal error of jumping the gun, though. Let’s make sure this isn’t a false alarm—$1,300 is our key for seeing this through.

2016’s 180% move higher was extremely brief and is not considered a bull market in itself, but merely the first act.

HUI Bull and Bear Cycles Since 1995

The swift 8-month bullish roar is not the typical length of a bull market.

It was merely a correction within the long-term bear market that started in 2011.

Gold has had to shake off deflationary fears, a strong U.S. dollar, the weakness of the BRIC countries that are interconnected with gold, the price suppression by the big banks that is now out in the open, and low oil prices.

Gold is mimicking the 1970s move, and it has a lot more room to go.

With regards to the miners, gold ripping through the $1,300 mark would signal that they can begin spending more on acquisitions, drilling, merging, and expanding.

This will be the next logical step, as their financial health is firmly in place.

Free Cash Flows of HUI Components

Their books are looking solid.

The next step is that the same investors who have been shorting the stocks as a means of a hedge for years will now be reversing course.

For more than six years, traditional investments have outperformed the riskier miners.

Important dates to keep in mind are rate hike decision and the GDXJ rebalancing.

Those two major events will determine how precious metals will perform going forward.

Due to Rising Demand, Silver Prices Could Eclipse $100 Per Ounce

Famed money manager Stephen Leeb created waves in the financial media when he told King World News that the spot price of silver could soon eclipse $100 per ounce.

For the spot price of silver to climb past a $100 threshold, it would have to appreciate more than 450%. Yet, Leeb not only thinks it’s possible, but he says it’s only a matter of time until China pushes drive silver to $100. Other analysts agree with Leeb, arguing that silver is on the verge of a new “super cycle.”

Demand for physical silver could spike in the world’s most populous countries. The Chinese middle class—itself larger than any other country in the world except India—demands jewelry, electronics, infrastructure, and energy independence. Each of these things require silver.

“There is massive demand for photovoltaics in Japan and China,” Leeb said in his King World News interview. “There is also massive demand for silver in the Middle East for this type of energy infrastructure.”

There are other reasons why silver prices could go much, much higher than they were in early June 2017.

  • For years now, investment experts and silver bugs sounded the alarm that silver costs too much to mine and that the lack of mining profitability would mean much higher future prices.
  • According to the Silver Institute, global silver production declined in 2016 and should again in 2017. Silver mine production may have peaked in 2015, which means less supply and upward pressure on prices.
  • The gold to silver price ratio is out of proportion compared to historical norms. Silver used to trade around 15:1 or 20:1 for gold. Now, the gold to silver ratio hovers around 70:1 or even 80:1. By this standard, silver may be magnificently undervalued.
  • Potential for U.S. political fallout—specifically surrounding President Donald Trump’s unpredictability and the uncertain future of his administrative agenda—could drive all commodity prices higher.
  • U.S. and Chinese fiscal and monetary policies may bankrupt their countries and create spiraling inflation. This could encourage speculative flows into silver bullion.
  • Physical silver demand remains strong in 2017, especially among retail investors. The U.S. Mint reported that it sold out of the Federal Douglas silver coin, and demand for the American Silver Eagle coin saw huge spikes between April 2017 and June 2017. Demand for silver bullion including bars and coins in 2015 to 2016 reached a 21st century high, surpassing the post Great Recession boom.

Gold remains the most popular precious metal for commodity investing, both in the United States and internationally. Silver is the second most popular investment metal, and is particularly popular for Self-Directed IRA inclusion.

You can own real, physical silver bullion and store it in a tax-advantaged retirement vehicle. American Bullion can discuss your options and help you every step of the way. – PRNewswire

 

Please check back for new articles and updates at Commoditytrademantra.com



request your views on the above article

  • Michal Ben

    Very interesting and informative blog and about the precious metals companies and I must appreciate your work well done keep it up.

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