Tentatively Bullish Signs for Gold and Silver Prices
The Fed is done tightening. The core CPI has confirmed it. Now it is just a matter of how “Higher for Longer” it will be before we get rate cuts and QE on steroids, all of which will make the $6 trillion printed since March 2020 look like pocket change. Ciao to foreign buyers of U.S. debt. Goodbye dollar.
The only obstacle to higher Gold and Silver prices is the Bullion Banks. But they can only maintain an organized retreat. Said differently, they can slow the coming rally, but they can’t stop it. If they try, they’ll get run over, much like in Palladium in 2018 and Nickel in 2022.
Deflation is coming back to the fore, and a stock market crash in 2024 likely forces the Fed to pull another 180, and then it’s game over.
My point is that the rally we have been waiting for has been stalled, but it’s inevitable, imho. I also believe that the worst is behind us. The banks will continue to make Gold and Silver work for every penny higher, but there will come a time when they are forced to throw in the towel. Once they step aside, all of the energy built up by the prior suppression will be released, and we’ll be seeing $100 jumps in Gold almost daily and even bigger percentage gains in Silver and the miners. It’s only a matter of time. We don’t know exactly when, but keep the big picture in mind. I always do, but I focus on the baby steps to get there.
Here’s what I see coming next in the metals and miners…
The 10-Year peaked at ~5% and fell almost 60 basis points over the next three weeks. Unsurprisingly, the DXY followed suit, dropping from a high of 107 to 104. Both are overdue a rebound of some sort soon, but we could see lower levels first.
This is a chart I shared prior to the CPI announcement, based on a standard A-B-C correction where C = 1.618*A in size. The estimated bottom in C was 103.92. It has been tested twice and broken, but it has not closed below there. The RSI allows for a lower low, but whether or not we see one, DXY is due a rebound next or after that lower low.
The 10Y could also go lower to as much as 4.20%, so says the RSI. Whether it does or not, the risk is a rebound in yields too.
So what do the FX and Bond markets signal in Gold, Silver, and the miners?
Gold set a higher high at 2019 on Oct 27, only superseded by the peak in wave (1) at 2085. So the trend of lower highs has been broken in the short-term.
If DXY and Yields continue to go lower, we could go straight up from here to above 2019 and perhaps even test 2090. But as I said last weekend, the Banks want Gold to close between 1900-2000 to collect the premiums on those worthless put and call options. This would likely coincide with the aforementioned rebound in DXY and the 10Y yield.
The alternative is that the rebound in DXY and the 10Y yield occurs much sooner and we’re headed lower, aided by the bullion banks.
Which scenario plays out will likely be determined by whether Gold heads up or down in the next day or so, imho.
I don’t see much downside below, maximum 1900. But a break of 2000 opens up a possible test of 2090. The risk-reward is clearly up.
If we do get to 2090, or thereabouts, I don’t expect it to break on the first attempt, but I do expect a sizeable pullback to the 1900s again, as DXY and the 10Y yield rebound. Wherever it bottoms out, it will set up the massive wave iii rally we have been waiting for. It’ll be worth it.
As for Silver, what a few days following its drop to 21.93! I noted this wouldn’t last long because most put option strikes were at 22. It lasted less than a day below 22.
Silver has run into the green trendline as resistance again at 23.70 and closed below it. This may signal a short-term pullback and then higher, for the same reasons as Gold.
But if Gold heads south, Silver will follow suit.
Put simply, either Gold and Silver remain stuck between 1900-2000 and 22-23 until OpEx next Monday, Nov 27, or they spike higher first and then head down to those ranges. If the latter, then the next low would set us up for the money wave, wave iii higher, finally!
GDX remains sandwiched between 25.62-30.16. But the correction bottomed exactly at my primary target of 27. This means we have a wave i and ii and next is wave iii higher, as long as 27 remains intact.
Conclusion of Precious Metals Prices
We will know in the next day or so whether the metals and miners are going to finally break resistance and get a possible test of 2090 in Gold. Silver is likely to outperform Gold if that happens, and I’d expect miners to outperform Silver too. But remember, even if this happens, we’ll get another sizeable pullback, but I’ll be expecting that to be another great buying opportunity. We could get two bites of the apple, the second even bigger.
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.
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.Learn More