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Precious Metals Warns Of Increased Volatility Ahead - Chris Vermeulen (July 30, 2020)​

Precious Metals Warns Of Increased Volatility Ahead - Chris Vermeulen (July 30, 2020)​
By Chris Vermeulen 14 days ago 2330 Views No comments

July 30, 2020

Our trading team witnessed a big drop in Platinum and Palladium prices early this morning while Gold and Silver continued to push moderately higher. We began to question this move and investigate any historical relevance to previous patterns. Our research team pointed out that both Platinum and Palladium rolled lower just 3 to 4 days before the breakdown in the US stock markets on February 24, 2020, while Gold and Silver were reaching recent price peaks. Could the patterns in precious metals be a warning of another potential volatility spike and price decline in the near future?

ARE METALS PATTERNS PREDICTING A BIG DOWNSIDE PRICE EVENT?

Our research team created the charts below to help highlight the pattern that we are seeing in Precious Metals right now. First, we highlighted February 24, 2020, with a light blue vertical line to more clearly illustrate where the markets initiated the COVID-19 breakdown event. Next, we drew shaded rectangles around new downside price rotation levels that took place near this peak in the US stock markets. Lastly, we drew a red line that highlights the subsequent price decline that took place in Precious Metals as the markets tanked in late February and early March 2020.

The current downside price move in Platinum and Palladium are very interesting because it appears Platinum and Palladium both initiated a downside/contraction price event just 3 to 4 days before Gold and Silver, as well as the rest of the US stock market, began to collapse on February 25, 2020. You can clearly see in the bottom two charts that Platinum and Palladium initiated a downside price correction a few days before both Gold and Silver reached their peak levels and began to move lower. Once this peak rotation took place, all four of the major metals groups moved moderately lower for about 7 days before pausing, then collapsed even further.

Our researchers believe the current setup in Platinum and Palladium may be mirroring the February 2020 peak rotation and warning that a massive volatility event and downside price contraction event may be setting up and just days away from initiating.

The breakdown in Precious Metals at a time when the US stock market is crashing is usually a result of margin calls – where traders experience losses in their trading accounts and much liquidate Precious Metals positions to cover these losses. This time, the downside event in Precious Metals may not be as deep or exaggerated as the February/March collapse. Skilled traders have already positioned their accounts to avoid margin calls. Only the novice traders may be in a position to experience this type of event in the near future.

HOW DEEP WILL IT GO?

Our researchers believe any future downside event in precious metals will likely stall near the recent support levels on these charts and immediately rotate back into a bullish trend because fear and greed won’t allow metals to fall too far before greedy traders try to scoop up these positions at discounted price levels. Our Support levels for the four Precious Metals shown are:

Silver: $19 to $21
Gold: $1780 to $1820
Platinum: $750 to $850
Palladium: $1915 to $2090

We believe any attempt to reach these levels in any of these four various Precious Metals would present a very strong buying opportunity for skilled technical traders. If it were to happen while a US stock market volatility event was taking place and/or the US stock market began a new downside price decline, then skilled traders should understand we may be seeing a similar type of price rotation event to the one that took place in February/March 2020 – representing a fantastic trading opportunity for those lucky enough to take advantage of the discounted price levels.

Be sure to opt-in to our free market trend signals before closing this page so you don’t miss our next special report!

This next chart highlights what we believe may be the downside price event as it potentially takes place over the next 10 to 20+ days. Pay special attention to the differences in how Silver, Gold, Platinum, and Palladium react to the fear event and where real opportunity exists near the end of this potential event. Platinum and Palladium will likely fall 15% to 25% where Gold may fall only 8% and Silver may fall 15% to 20% before bottoming.

As technical traders, we can’t pass up an opportunity like this when Precious Metals gift us with a potential 15% to 45%+ rotation in price that should be moderately easy to trade given our expectations. If this event takes place as we have described, skilled technical traders could begin to acquire smaller positions near our target levels, then wait to acquire bigger positions as the bottom sets up. Take a look at how Gold and Silver rallied after the February/March collapse – Gold rallied back to new highs within 45 days whereas Silver rallied higher over 4+ months, then broke higher just recently on a huge upside breakout move. Platinum and Palladium rotated more diligently throughout a 90-day span – never really reaching new highs after the peak in February 2020.

The reality of patterns like this is they are fun and exciting to find at this early stage of the setup. We’re not 100% confident this pattern will play out as we expect yet – but we believe the probability is high that a volatility event is about to take place and that Precious Metals could react very similarly to the February/March 2020 price reactions again.

QUICK VIDEO CLIP ON SILVER & GOLD PREDICTIONS


As technical traders, we love this type of “telegraphed event” – even if it does not take place exactly as the previous event took place. It means we have an opportunity to take advantage of increased volatility and price rotation in one of our favorite sectors – METALS. Get ready for this move if we are correct – it may be your last chance to buy Gold and Silver at deep discounts for quite a while.

About Sprott Money

Specializing in the sale of bullion, bullion storage and precious metals registered investments, there’s a reason Sprott Money is called “The Most Trusted Name in Precious Metals”.

Since 2008, our customers have trusted us to provide guidance, education, and superior customer service as we help build their holdings in precious metals—no matter the size of the portfolio. Chairman, Eric Sprott, and President, Larisa Sprott, are proud to head up one of the most well-known and reputable precious metal firms in North America. Learn more about Sprott Money.


Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic.

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris also contributes market insight to several financial hubs like SprottMoney.com



The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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