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Another Buying Opportunity in Gold and Silver

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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.

silver price chart may 23

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

silver price chart may 23 1

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

silver price chart may 23 1

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

silver price chart may 23 1

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.

silver price chart may 23

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

silver price chart may 23

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.

silver price chart may 23

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.

Don’t miss a golden opportunity.

Now that you’ve gained a deeper understanding about gold, it’s time to browse our selection of gold bars, coins, or exclusive Sprott Gold wafers.

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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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