Silver Price in 2024 - Technical Analysis
In today’s episode, listen to Craig Hemke and Chris Vermeulen as they delve into broader topics such as the seasonality of markets, historical market patterns, and the potential impact of the U.S. election year on market dynamics. They also explore:
- Outlook for General Equities Markets in 2024: What is the current state of the stock market?
- Sentiment Analysis and Market Psychology: Why does Chris emphasize the importance of gauging investor sentiment? What is the potential impact of widespread bearish sentiment, short positions, and the likelihood of a short squeeze in the stock market?
- Precious Metals Projections for 2024: Chris and Craig analyze the monthly chart for gold, discuss resistance levels, and mention the potential for a significant rally in precious metals. They also caution about possible pullbacks and highlight the need for investors to manage their emotions.
Watch the full video below:
Craig: Happy New Year from Sprott Money News at sprottmoney.com. It's January 2024, and it's time for some of your great monthly content from Sprott Money. I'm your host, Craig Hemke. Joining us, as usual, for your "Precious Metals Projections," something Sprott Money puts out every month, it's Chris Vermeulen of thetechnicaltraders.com. Chris, good to see you, my friend.
Chris: Hey, happy New Year, Craig. Pleasure to be here.
Craig: Hey, it's gonna be a volatile year, and of course, this channel, whatever you're listening to this audio, or watching this video, you wanna subscribe so you can keep an eye on things. Sprott Money's gonna put out stuff every month. These "Precious Metals Projections," "Ask the Expert," "Monthly Wrap-up." You can go to the Sprott Money site for insights and articles from people like David Brady. Please keep an eye on Sprott Money all through the year, to stay ahead of the curve, and stay ahead of where everything seems to be going in what will be a very volatile year. As the new year begins, I've got my glasses on, because I wanna tell you all about something Sprott Money is doing. I asked my friend Chris. Chris, have you ever held a 1000-ounce silver bar before?
Chris: I have. And it is heavy. I had my daughter, I think she was maybe 11 years old at the time, and she was trying to hold it up, and it is a heavy piece of metal. It's about 65 pounds or something like that. It is nuts.
Craig: Right. You, a big, strong guy like you, you could, like, work out with it. You know, you could sit there and bench, put one in each hand, you know. Well, anyway, if you ever wanted to own one, here's a great way to buy one from Sprott Money. Between now and the end of February, if you buy a 1000-ounce silver bar, or, the mint varies, of course, but you get yourself a 1000-ounce silver bar, Sprott Money will give you three months of free storage. And then, if you want, ship it to yourself and put it in your gym. Call Sprott Money to place your order for one of these thousand-ounce bars, at 888-861-0775. It's a great way to get in on silver, and save on storage cost while protecting your precious metal investment. So don't miss out on this great deal. Remember, Sprott Money is the most trusted name in the business, so rest assured your investments are secure, and here's a way to get three months of free, safe storage.
All right, Chris. It's a new year. We ended the year very strong in the precious metals, gold in particular, new monthly, quarterly, and annual highs, and we'll get there in a minute. Stock market finished pretty strong, too, and I know everybody watching us probably has at least some exposure to the stock market. What do you see in the general equities markets here, as 2024 gets rolling?
Chris: Yeah, there's a lot going on, as you mentioned. I think this year, 2024, is going to be an absolutely nutty, volatile year. And there's a lot we can touch on here, but let's just start off, let's start off with the NASDAQ real quick here. If we look at the NASDAQ, we have... Whoops. Let me just full-screen this here. If we take a look at the NASDAQ, if I can get this chart to go full-screen...
Craig: The miracles of technology. Got it.
Chris: Here we go. Yeah. So, the NASDAQ here has poked up into nominal, kind of, all-time highs. If we go to the spike that we saw, just back here in 2022, and zoom in, we can see we broke those highs, just temporarily, and then quickly, we saw a bout of selling hit the market, and that's simply because a lot of money goes into the...the NASDAQ is more volatile, it can wiggle, and has waves of emotional traders piling in, chasing things higher. So, it has broken out, but then suddenly, some sellers stepped right in. I like to really follow the SPY, because, to me, that is the overall gauge of the general market, and it hasn't really broken out just yet. It is in striking distance of hitting that level. We've had a little bout of selling here as well. But it's just showing us that money has really been flowing into the growth stocks. We have seen growth stocks just turn a corner, and rip higher over the last few months, and we can really see that when it comes down to, if we take a look at some of the leading sectors, for example, the ARKW ETF, I mean, it rallied up here over 30% to the upside, and then it's had a quick snapback, which is a little bit of a warning sign that the stock market is definitely getting a little exhausted.
One of the key leaders right now is the biotech. We're seeing in the biotech space, it's got a beautiful chart pattern, just kind of stair-stepping its way up, pushing higher, and it's kind of definitely driven the market, and of course, technology, biotech, definitely heavyweights in the NASDAQ, helping to poke it to new all-time highs. But really, to me, it's the S&P 500, that when this breaks this level here, this, to a new all-time high, that, to me, is gonna be kind of, like, the final straw that anybody who's betting on falling market pricing with short positions, if it breaks to new all-highs, there's gonna be a huge short squeeze. Anybody who's short the market's gonna have to get out, because the market is in a strong uptrend, and it's making new all-time highs, so it's gonna create a wave of buying. There's also gonna be just a whole new breed of investors and traders who aren't...they've watched this rally, and they haven't jumped in because they were bearish. They didn't expect last year to be such a strong year. That'll be the final straw for those people on the sidelines, to say, "I can't take it anymore. I have FOMO. I have to get in," and they will pile in.
So there's gonna be, potentially, a very strong pop, that could last a month or two, and the stock market hits new all-time highs. That is, to me, is gonna create that tipping point that really carries over into all kinds of other assets, including precious metals, and we're gonna see headline news of stock markets back making new highs, bull market, everybody get long. And, to me, that is gonna be kind of, like, one of the final straws, actually. I think we're gonna see probably some huge selling step in, once that wave of all the shorts are out, all the rest of the investors who aren't in are gonna be long, and that's how it typically works. People buy high, and then we go into a bear market, and they sell low. And so, all that is gonna play into this kind of full cycle, which, if we look at our kind of stage analysis here, we are in this stage 3 topping phase, where the market is coming up, and it's trying to poke to nominal new highs. We saw this exact same thing happen in 2008. S&P 500 poked up for one month, hit a new high, and then slammed and got, and sold about 50-plus percent.
So, we're in a very similar setup as to what happened back then, and we are seeing a lot of the scenario in this whole market condition, where gold is holding up very well. We've seen that in the past, where gold holds up really well near the end of the bull market, and we can maybe touch on this later, but we're actually seeing utilities...or not utilities, sorry, the industrial sector, which is, like, capital goods products, machinery, equipment, tools, all that stuff, doing exceptionally well, leading the way higher. And I like to look at that sector, kind of, as almost, it's a physical, you're buying physical assets for your company. Just like gold is a physical asset, both of these tend to do very well just before the stock market kind of goes off a cliff. So, there's a lot of things coming together for, potentially, a big pop in stocks over the next month or two, probably followed by a massive reversal, catch everyone off-guard, and then we're gonna see a lot of things sell off. So, you know, as that happens, a lot of commodities and sectors, and currencies, are gonna kind of go a AWOL, and go all over the place. So, as you said, I mean, this is gonna be a very volatile, emotional year for investors and traders.
Craig: Yeah. Well, you know, and it's a U.S. election year as well. And you mentioned 2008, another U.S. election year, where it seemed as if the Fed was just trying to hold things together as long as possible to get to the election. And yeah, that first quarter of 2008 was when gold got to $1000 for the first time. And the S&P put in those highs, like you said. So, yeah, you know, I think there's gonna be great value in talking to you every single month, in these "Precious Metals Projections," because we don't just talk precious metals. We gotta keep track of everything. That's a great chart you have there.
Chris: Yeah. So, you and I touched on this, I think, last month too. We were talking about how the stock market has the, seasonality-wise, how the market typically moves year after year. And the general rule is, we are here in January, which is a choppy, volatile month. Kind of, the saying is, however January closes is how the year goes, meaning, if January closes positive for the S&P 500, the stock market should have a positive year. If it closes negative, we generally have a negative year. Now, so, that's kind of where we are right now. We're in a volatile January. It's gonna be very interesting. But if we look at the price action, on average, how the market rallies up from January, tops out in kind of May, June, July, puts in that low in October, and then we go into this holiday rally, this is exactly what we saw in the stock market last year, if we look at...
Craig: That's remarkable.
Chris: Yeah. If we look at the year here, we've got, it rallies up, tops out, kind of, in July, bottoms out in October, and then we had that multi-year rally up, and we talked about this, I think, in our last, a month ago...
Craig: Yeah. We did.
Chris: And everything's unfolded. Even gold seasonality has done the same for what it typically does. So, we're definitely in a very unique market situation, where, you know, the market is moving the way it normally does. And right now, we've got gold at resistance. We've got the stock market at major resistance. We've got sentiment at extreme levels. What's really interesting is if we actually take a look at the S&P 500 here, and we look at this sentiment chart on the right, this is what I find really interesting. So, I've got my own tools and indicators that allow me to see when people are panicking, when people are putting their money into defensive sectors, or moving out of the stock market, and typically, when we get red bars is usually a standout low. If we're in an uptrend, in a bullish phase, after people have finally kind of, you know, bailed out at the last minute, we tend to see the market surge, and we just had that last week, first week of the trading year was very bearish. We had a lot of panic in the market, and now the market is starting to put a rebound, and we might be headed up to hit all-time highs in the S&P 500, hit some more profit targets. We're long the indexes. We've been long the indexes from way back over here.
And so, there's a lot of opportunity. This is very exciting. And what's interesting is, really, over the past month, orange bars means people are nervous. They're slowly starting to bet against the market. Red means everybody's sold their positions, and they're fully positioned to profit from falling prices. And as you know, when everybody's positioned in one way, betting on lower pricing, the market typically goes the other way. So, we've got a full month here of people being nervous, betting on lower pricing, and that, to me, is gonna be that final push that's gonna pop the S&P 500 to new all-time highs, all these people are gonna have to cover, and that is gonna be, I think, a major turning point. When we look back a month or two from now, we're gonna be, like, "Holy..." look at the volume, look at the volatility. The news is gonna be super bullish about getting long the stock market, you know, "invest in the stock market," and that's just like what you see in everything else, like when Bitcoin topped out initially, you know, all you hear is Bitcoin ads. "Buy Bitcoin. Use your credit card." That's what we're gonna see here. And then I think we're gonna see the stock markets have a huge, huge pullback.
So, the sentiment is very interesting. I find the sentiment is extremely powerful. It powers a lot of our trading, our decisions, and to understand what we should expect from the markets. So, that's, you know, it's a very important thing to be able to gauge, and you can do this by looking at different sectors and commodities, and, kind of, money flows with the New York Stock Exchange, to get all this stuff, but all these things really add up to paint that whole picture, which, if we bleed over now into gold, and let's take a look at the monthly chart of gold. You know, we've been kind of testing and trying to break above this high that we saw back in 2020. It pierced up through it on the futures chart, and it is just holding its ground up there. It is trying to eat through that resistance. And I feel as though we are in a very similar scenario to, you know, when we had the major bottom, the super cycle for gold, start back in 2001, I feel as though that super cycle started on the 2019 breakout, and then we saw gold rally up. Back in time, it created a, kind of, a multi-year consolidation, and then it started to push higher, and it rallied up for several months, just as the stock market was putting in a top.
Chris: Well, we've had that multi-year consolidation, and we're starting to go up here, and then, you know, this could last a few months. We could see a nice push in precious metals and miners, but then it could very easily sell off and pull back, just as we saw with when the stock market crashes, in 2008, we saw gold pull back about 34%. Silver pulled back about 60%, so, you know, we might see a pop and break in the precious metals space, which is big volatility, but it might be followed by another big, sharp pullback, to bring it back into this range. So, you know, everybody wants things to go higher. They're gonna be really excited if this pops and breaks, but it's probably gonna end up being back down at this pricing sometime later this year, and people will be pretty disappointed. But it's part of the process. After this pop and drop, if we get it, is gonna be, to me, the ultimate opportunity, one of the last opportunities in a decade or two, for one of these big rallies. Precious metals, when commodities go out of favor, they are out of favor for a bloody long time. And...
Craig: We know that.
Chris: ...we don't get these cycles very often. So, you know, wading in a few more months, and maybe a pullback, I mean, I still think this is a prime opportunity to be collecting physical metals. I actually put in a big order yesterday, to give out as gifts, and to accumulate some myself, because I do think it's gonna go a whole lot higher. And I'm hoping I can buy more at a lower price down the road. But, again, that's kind of the picture where we are. Silver is in the same boat. If we look at silver, it's not performing quite as strong as gold. Gold is way up here, and that's simply because gold is that defensive global safe haven. It's slow, it's conservative. You can put more money in it, and not sweat bullets. In silver, it's volatile. You can lose 30%, 50% on some of these big pops and drops. That's not something somebody wants to do with retirement capital. But gold is something that people look at and be like, "Ah, it's big and slow and shiny. It goes to the upside over time." So, gold has been holding up, and becoming that kind of global play, and moving up a lot more.
But silver, if we look at silver compared to the 2000 market bottom, this was the consolidation that silver and gold had. And then we see the big rally up. Actually, it was right over here. This was the big consolidation, and then it rallied up, as that defensive play, as we went into the stock market top, and then silver pulled back 60%. And then it started that huge, huge rally to the upside. So, there's a lot of opportunity. This type of whipsaw action, of a rally and a sharp pullback, definitely needs to be navigated if you're a trader. But as a long-term investor, even when we do get the pullback, we just know we're, like, you know, a few more bars closer to the next, kind of, rocket ship move up in precious metals. So, it's really exciting to see this unfolding. I just know we still have probably months before we actually... And I hate to say it, but it might be, like, late this year, or potentially the bottom in the precious metal space could be even, you know, maybe next year. It really depends. Remember, this is the monthly chart, so 12 bars is a year, and years go by pretty darn quick now, I find.
Craig: As you get older, you've noticed that, huh? That they do. And again, I, hey, look, history never completely repeats, right? We all know about the repeating and rhyming thing.
Craig: But, there, you could say, I mean, this is analogous to 2008, in that first quarter of 2008. I remember when gold got over $1000 for the first time, and, "Wow, I can't believe it." And then the next thing you knew, it was $700. I think it would probably be very important for stackers, investors, traders, as you said, to really keep your emotions in check this year. You know, you mentioned the stock market traders, the retail crowd, that buys high and sells low. It'll be very easy to do that in the precious metals this year too, because we'll all be excited. You know, if gold breaks out and goes to $2500 or something like that, you know, there'll be everybody talking about "to the moon," and all that kind of stuff. And if it then turns around and pulls back to $2000...
Craig: So, I just think that things like this are very valuable, this kind of content that Sprott Money puts out, and I know that we plan to do this every month as we go through the year, and things will change, and there'll be unexpected developments and volatility, you know, that we couldn't quite foresee coming. But I think you do a wonderful job, Chris. Tell everybody a little bit about The Technical Traders, and what people will find when they come your site.
Chris: Yeah, sure. Well, they can go to thetechnicaltraders.com, and pretty much every morning, before the opening bell, I sent out a short video, kind of like what you and I did. I cover the indexes, precious metals, bonds, currencies, oil, all that stuff, and some of the leading sectors. And more or less, I focus just on trading ETFs. And whatever I trade, whatever my strategies come up with, I share with subscribers, so they can just follow and copy my trades. And it's good learning experience. You learn a lot. You learn the technicals. For example, this week, we saw, in the past, really, two weeks, we've seen a whole bunch of waves of short-term panic, selling, and then waves of FOMO, of everybody feeling like they're getting missed out. And we've got these little tools and indicators that show us this, and we see it coming the day before. It's pretty amazing, all these little things, and when...it's not that we trade those, but it's all about having the proper mindset and expectations of knowing what's likely to happen, and so you're never really caught off-guard.
And that's what people really find amazing. During 2022, the big sell-off, the average portfolio was down 24% or so. You know, our accounts just kept on growing, and people were, like, blown away. They're like, "This is so crazy." Markets are in free-fall, people are losing their shirts and panicking, and here we are just walking through it, expecting this, knowing how to handle it. And that's the nice thing about being a technical trader. That's what I focus on. We follow price. We don't pick a top or bottom. We just wait for a strong trend, and we move in using ETFs, which are nice and liquid, and they're slower-moving, so we can move more capital. And so, that's what I do with The Technical Traders.
Craig: Well, and as we just discussed, takes the emotion out of it, you know, and I think that's gonna be a very important thing to navigate your way through 2024, because emotions will be high, as they are in every presidential election here in the U.S. It kind of ripples around the world. And this is a...no time like the present to take a look at Chris' service, and to stay on top of things here at Sprott Money. As we check out, one more thing, from Sprott Money, to begin the year. This is going to be something that you are going to want to check out. It is tax season again. It's tax season, right? That's, like, the worst part about a new year. Do you do your own taxes, Chris? You have somebody do it for you?
Chris: Oh, yeah. Somebody does it for me. Taxes are complex, and a pain in the butt.
Craig: Oh, yeah. Me too. Me too. The last thing you wanna do is mess it up. And so, yeah, it's time. I'll be down in my office. I'll be pulling and getting all my receipts, making all my spreadsheets and all that stuff. But, that also means it's time to be looking at your IRA, or your RRSP, depending on where you live. Sprott Money is offering Canadian clients portfolio diversification, through utilizing your self-directed RRSP, or maybe your TFSA, and buy some precious metal investments. And you get those great tax benefits too. In the U.S., you can utilize your IRA, and own precious metals within it as well. So, to learn more, visit sprottmoney.com, or of course, just pick up the phone and give them a call, at 888-861-0775. Sprott Money, again, most trusted name in the business, and you can rest assured, at all times, your investments are secure and safe, and what a great way to save for retirement, with physical precious metal. Again, Sprott Money can help you out. We'll talk about that more in the months ahead, because we still got a couple months to get our stuff together regarding taxes, Chris. That's for sure. My friend, it's gonna be a volatile month to get the year started, no doubt about it. I look forward to talking to you again in February.
Chris: Sounds great, Craig. Take care.
Craig: And from all of us at Sprott Money News, at sprottmoney.com, thanks for watching, and keep an eye on this channel for more great content as we move through January.
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