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Waiting on Confirmation That Lows Are in Place

Coins and bars

Rather than go through the various reasons why I believed a low was close, below are some of the tweets I posted over the past week:

David Brady tweets

David Brady tweets

Gold bottomed on November 30. At least, that is how it looks so far.

Gold Price Chart

I still maintain that we need to see a break of former support, now resistance, at 1860 to signal the bottom is in place. Confirmation above 1900 and 1966 in particular are the closest we’ll get to certainty.

In the meantime, I am looking for the top of this nascent rally. It may already be in place at 1847 or we could see a test of 1860 first before falling back. In the absence of any major technical support levels, we must turn to Fibonacci as a guide for where the next higher low could be:

David Brady analysis

Any one of these could provide the higher low we are looking for, but my preference is for around 1800, the 61.8% retracement, as highlighted above. Frankly as long as we remain above 1767, then I am agnostic to what price Gold decides to turn up from. At that point, we would have our wave 2 in place, following wave 1. However, we would still need to see a break of 1860 or higher depending on what the peak of wave 1 turns out to be. If this scenario plays out as described, then we’re likely heading up to new highs.

On the contrary, below 1767 and it’s back to the drawing board. But 1767 just happens to be the 50% retracement of the entire rally from 1451 in March to the peak of 2089.

SILVER

Silver is a slightly different animal, as it fell in March to its lowest level since April 2009. Gold did not. Silver has also not broken its prior low on September 24 at 21.81, although I do not rule out that possibility yet.

Silver Price

The key resistance on the upside in Silver is 26.14, the prior high on November 9. A break there would indicate the bottom is in place and new highs are on the way.

Ahead of that, Silver has run into resistance at its 50 day moving average around 24.15. If its peak at 24.45 holds, then these are the levels I am monitoring in Silver for the higher low to follow:

David Brady analysis

Again, a break below 21.96 and all bets are off.

GDX

GDX

We got the fake breakout to the upside in November and now the forecasted fake breakout to the downside. While the risk of a lower low to 31 remains, a break above the prior high of 36.35 back on November 20 should signal the all-clear to the upside. But I wouldn’t be surprised to see a pullback ahead of that to around mid to low 34.

SILJ

SILJ

SILJ, like its bigger brother Silver, has not broken down below its low on September 24 at 12.80. It has since established a double higher low at 13.08-13.10. I am now looking for a peak and retracement to anywhere above 13.10, a higher low, followed by a higher high above the previous peak.

Conclusion

At the end of the day, what I am looking for is a peak followed by a higher low then follow thru to the upside breaking the prior peak, i.e., a higher high, signaling the all clear for the move up to new highs across the precious metals and miners complex.

Stepping back to the bigger picture, we got this headline today:

S&P Hits Record, Dow Soars Over 30,000 After McConnell Says "We Can Do This... Compromise Within Reach"

As I have said since July, when we get new and sizeable fiscal stimulus quickly followed by more monetary stimulus, just as we did in March, precious metals and miners will take off again to new highs. It looks like we’re close from a technical, sentiment, Elliot Wave, and fundamental perspective. This isn’t hurting either:

DXY

 

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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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