Another Buying Opportunity in Gold and Silver

Right or wrong, the Fed minutes this week signaled that interest rates could go even higher if inflation rebounds. This acted as the catalyst for the drop in Gold, Silver, and the miners from their respective peaks. Typically, following euphoric sentiment on Monday, now we are getting the forecast pullbacks. As I like to say, go against the herd when the buyers get giddy and let the market come to you to buy on the downside, when “price chasers” get frustrated and sell at the bottom.

I am not sure that they are done yet either. For example, the downside risk in Silver is $29 or slightly below there. But the overall trend remains firmly up, and this provides another ‘buy-the-dip’ opportunity. This is a ‘raging bull market’. The risk-reward profile is skewed to the upside. I plan to scale in here ahead of the next rally to even higher highs.

GOLD

The negatively divergent higher high in Gold at $2454 signaled the peak was in. The Fed minutes just gave it the push it needed.

Gold has either already bottomed out or it has one more lower low to come around $2340. A break and close above $2400-$2410 would confirm the bottom is in and we are on our way to at least $2500 next, imho.

SILVER

As with Gold, we got a negatively divergent higher high at the peak in Silver on the daily chart. Then down it went. Silver may have already hit its low. If not, there is support around $30. Below there, the worst-case scenario is $28.80. Wherever we bottom out, we are getting higher highs next.

There is room for a positively divergent lower low on the hourly chart OR the bottom is already in. A break back above $31.20 confirms the bottom is in and we’re off to even higher highs.

GDX

At the risk of sounding like a broken record, yet another negatively divergent peak in GDX. Plenty of room on the downside according to the daily RSI, but a big support area at $32.00-$32.30 should hold “if we get there”, setting us up for higher highs in the miners too. $40 plus, imho.

The hourly chart suggests several scenarios:

• The bottom is in and we head higher.
• We get a bounce and then a positively divergent lower low to around $35.
• Or we get a bigger bounce in wave B followed by a deeper drop in wave C to ~$32.

Regardless of which plays out, I expect to see the same result as Gold and Silver when GDX bottoms out, higher highs next.

CONCLUSION ON GOLD AND SILVER PRICES

Negatively divergent peaks signaled the top. The Fed minutes gave metals and miners the push they needed. The pullbacks may already be done or there is more to come on the downside, but once the lows are in, we’re off to even higher highs next across the board. This is just another “buy-the-dips” opportunity, and there will be more. Stating the obvious, markets almost never go up in a straight line.