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The Calm Before the Storm

Gold coin stack

 

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Nothing has changed over the past week. The Fed remains dovish, and in spite of its transitory speak about inflation, prices continue to soar. Biden calls for even more stimulus, but it’s doubtful all of it will make it through the Senate. Meanwhile, the parameters for Gold remain the same. Resistance is at 1800 and support is at 1740-50.

Yields are rising again…

David Brady Analysis

… but so are inflation expectations:

David Brady Analysis

Real yields are flat to lower recently, supporting Gold’s move off its lows. While Powell says rising inflation is temporary, all evidence is to the contrary. While yields cannot be allowed to get out of hand and risk the collapse of everything, inflation will continue to rise as the printing presses remain plugged in and supply chains break down. This is the foundation for the coming surge in precious metals. I don’t see the 30-Year T-Bond going beyond the 2.75-3.00% resistance zone.

David Brady Analysis

As long as Gold holds 1740, where the 50-day moving average also happens to be, a break of 1800 could signal take off. Confirmation would be a sharp move up through the 200-day moving average. In the meantime, don’t spend all day looking at the price going sideways. Wait for a break one way or the other.

Silver may continue to underperform Gold in the short-term but will blow past it once the rally takes hold.

David Brady Analysis

GDX has already broken out of its downtrend and now appears to be backtesting former resistance. A break back down below 34 would signal a fake breakout and tends to be extremely bearish. Until that happens, the 200-day moving average is the next target on the upside.

David Brady Analysis

SILJ is the easiest chart of all. A break of the triple top at 16.29 and it’s CYA-time! However, it risks a possible move down to support at 14 first. The 200-day moving average just below 15 could put a stop to that.

David Brady Analysis

I wish I had more to say this week, but who wants to hear a running commentary on how paint dries. We have our levels to watch, and given the long slow grind lower following the slingshot to 2089 in Gold, I’m sure that when they break we’re going to get some rapid moves to the upside, imho.

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About the Author

David Brady has worked for major banks and corporate multinationals in Europe and the U.S. He has close to thirty years of experience managing multi-billion dollar portfolios including foreign currency, cash, bonds, equities, and commodities. David is also a CFA charter holder since 2004.

Using his extensive experience, he developed his own process utilizing multiple tools such as fundamental analysis, inter-market analysis, positioning, Elliott Wave Theory, sentiment, classical technical analysis, and trends. This approach has improved his forecasting capability, especially when they all point in the same direction.

His track record in forecasting Gold and Silver prices since has made him one of the top analysts in the precious metals sector, widely followed on Twitter and a regular contributor to the Sprott Money Blog.

*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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