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Precious Metals Projections

Gold Price Projections for June

Craig and Chris on Precious Metals Projections Banner

In today’s episode, Craig Hemke and Chris Vermeulen discuss the seasonality of markets, historical market patterns, and how the U.S. election year might influence market dynamics. They also cover:

Outlook for General Equities Markets: 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: 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: Hello again, from Sprott Money and sprottmoney.com. It is time for your "Precious Metals Projection" podcast. We do this every month, and the current month is May of 2024. I'm your host, Craig Hemke, and joining us as usual for these videos, is Chris Vermeulen of thetechnicaltraders.com, one of Eric Sprott's favorite technical analysts, so it's always good to hear from him. Chris, nice to see you.

Chris: Good to see you, Craig. Always a pleasure.

Craig: And it is always a pleasure. It's always fun. And boy, these are interesting times to be tracking the markets. Of course, it's always an interesting time to be buying physical metal. Always a good time to be buying physical metal, given all that's going on in the world. Anytime you're in the marketplace, do not forget to visit Sprott Money. I thank them for all this great content they put out all month long. Go to sprottmoney.com, and as Chris is showing you here, you can always check the deals tab. There are sales that go on from time to time. You wanna be checking the site regularly, maybe save it to your favorites bar, so that you don't forget to be checking it. sprottmoney.com is where you go, but of course, you can always just pick up the phone and give them a call too, and talk to an actual human being. That number's right there on the page, 888-861-0775. So, thanks to Sprott Money for continuing to put on all of this great content.

Chris, what an interesting month we've had. It's now getting into the middle of April. The last time we spoke...or middle of May. The last time we spoke, it was back in early part of April, and the metals had been on quite a tear. They were set to go even higher before they began a pullback. We'll talk about those today. But I wanna start with the equity markets in general, specifically the U.S. equity markets, and we'll measure them by the S&P 500, or the ETF SPY, as a proxy. Even I have fallen into this trap. It's like, every time there's a pullback, "Oh, my gosh. Look, it took out the 20-day moving average. Oh, this time, it took out the 50-day. Surely, it's going down." And then, right back up. What do you make of this? And I like starting here, because, you know, we all talk about precious metal, but so many people, probably almost everybody, have some exposure, through their IRA, their 401(k), their RRSP, whatever, to equities. So, let's start there. What do you think?

Chris: Yeah. I mean, the stock market's had a really nice pullback here, and now we see the SPY hitting new all-time highs yet again. I think we're still gonna see this market wanna push higher. Originally, I thought we'd see a rally into May, and we are seeing this rally, as May goes. Typically, seasonality-wise, I think I might even have the chart here. Seasonality-wise, we tend to find the stock market tops out in June or July. That's when it topped out last year as well, and it sold off. So, we still have this, you know, the saying is, as you and I talked about last month, "Sell in May, and go away." So, we're seeing this push higher in May. Our strategy here, our analysis is showing that the stock market is on the verge of kicking back into a strong uptrend. We're starting to see life come back into this market, in terms of the market going higher, the stock market going higher. And I, you know, I believe that we are in this stage 3 topping phase, which, the market can still push higher.

The majority of individual sectors and stocks have this topping phase, whereas the indexes are hitting new all-time highs because they're tech-heavy, and the tech is doing most of the weighting. But the general market is putting in a topping phase. And during a market top, just from a really high level, if we come down, this is typically what we see. We see precious metals, energy, industrial capital goods all do really well, and we're seeing that. Energy sector stocks have been one of the strongest sectors, precious metals and miners, gold's hitting new highs, or, and, almost hitting new highs again, and we're seeing miners come to life. So, I believe, you know, we're close to a top. We're not there yet, but I do think we're gonna probably see a major top in the equities market, but this is a prime time for precious metals, and this rally, that could be just starting right now in the major indexes, I think we could see equities rally. I think we could see precious metals and miners rally together, and I think this is a time for both markets to potentially shine here, for not that long. Maybe a month or so. But the metals space is definitely my favorite position right now, simply because I think it's actually, it naturally has got support, this, when money is flowing into them. And even if the stock market goes sideways or down, we have seen precious metals continue to move higher in this type of market condition. So, I think it bodes very well.

Craig: Chris, how does a technical analyst come up with price targets when we're in an area of all-time highs? And again, this is true for gold, too. I'm kind of perplexed by this. You know, I can look at a chart, you know, where you're range-bound, or you've pulled back and you're moving back up, and you can go, "Okay, there's some resistance here, and we should now have a target there." Man, when you're at all-time highs, how do you project forward? What's a good rule of thumb for that?

Chris: Yeah. I mean, it's tough. If we're, for example, this is the weekly chart of the SPY, and let's... I like to use Fibonacci extensions. So, you just need to pick on, like, the timeframe you wanna look at. So, I'm gonna show you a larger one here. If we were to take a Fibonacci extension, which tells us, based on the first rally up, and the first major pullback, it tells us where that 100% target is, and the 0.618. Now, what I find really interesting is, is we saw the market rally, and based on the strength of the pullback, it tells us where the next two price targets should be for the S&P500, which is the 0.618 level. And we had a perfect run-up to that, it paused for a little bit, and my general rule is if you pause at the 0.618, we almost always go up and hit the 100% measured move.

So, you know, we've hit that, and now we're starting to push through that. So, if we were to zoom in a little bit more, and try and get an idea of where the next upside target is, we can do that by using Fibonacci extension, and we can take the most conservative pattern here, which is the low from here. We got the first rally up, and then we take this pullback, and that tells us where the next fairly conservative upside target is for SPY, which, right now is at the 0.618, which is $528 or so, give or take. Obviously, we're close to that range. Based on where we are right now, there's only, you know, another 4%, 4.5% upside for us to hit that next level. And that could only last a few weeks, which falls in line with the market topping out in June or July. And I believe equities markets, and the precious metals space, are gonna do fairly well here.

So, that's kind of the next move. We got about a 4%, 5% upside move. I wouldn't be surprised if we see a week or so pause here, because it's the 0.618, and we're at previous resistance. So, I wouldn't be surprised if some sellers kind of step in a bit, which is a good thing, and then we see it push higher. So, there's a little bit more to squeeze out of this market, I believe, over the next four, five bars, which is, you know, a month, month and a half, somewhere in that space.

Craig: Yeah. That makes sense to me. And it does, because I'm gonna send you now to the gold chart, because we had this discussion, back in March. And when gold first took off, and broke out above $2100, I remember asking you, okay, where do we go from here? And you laid the same Fibonacci extensions on. You said it should pause around $2150. But if it gets through $2150, it should go all the way to $2300. Chris, that's exactly what happened, and now we've gone beyond there as well. So, let's, again, all-time high territory. Let's do those same numbers, and see what we can come up with.

Chris: Yeah. So, yeah, we've had that run. We had the big move up, we had the big pullback, it hit the 0.618, it consolidated, and then it went up and hit the 100% measured move. And now it's exhausted. It's kind of shaking out and consolidating. To carry it forward to where we are right now, we can just do the same thing. Let's zoom in a little bit here, and we'll take the most conservative weekly chart pattern. So, we could go right here. We could go down here, but this is the most... We can do, actually, both. Let's do both. Here's the first rally and the pullback. And then we can go down here to where this kind of longer rally took place, which, this bull flag is a little bigger, which coincides better with the longer flagpole, the bigger rally.

So, I do like the low, to this high, and then down to this low, and this gives us those, a few zones here, where gold should run into some resistance. I think we could see this run up. We might see a little bit of a pause at $2470. This is obviously gonna be, I think, the next fairly clear target, which is $2580, $2570 area. That is a hundred-percent measured move, based on the short-term pattern. It's also the 0.618 level, based on the larger pattern. So, that, to me, is kind of the next key target, is $2580 for gold, and then there's potential for it to rally up to the $2740, but that's a little more out there. I would say this is the sweet spot right now. The monthly chart actually points to about $2650, which is a little bit higher. So, again, depending on the timeframe, you step back how big of the picture you wanna look for. But overall, it looks like we've got potential, percentage-wise, in gold from where we are as you and I are speaking.

Craig: Ten percent, yeah.

Chris: Yeah, there's 7%, 8%, potentially 10%, up to that $2650 area. So, there's some pretty good upside, which means miners are probably ready to have a very nice move. I love this weekly chart on gold. This looks really explosive. I mean, $2740 is not out of the question. That is what this pattern is pointing to. I'm just giving you the more conservative, likely-to-hit scenario first.

Craig: Yeah. I do, like you said, you go up, you pull back, and we bounced off $2300 a few times, which is that full move. What was resistance becomes support, now moving back higher. That's pretty compelling. I'd encourage everybody to write that down. Watch that $2580 to, what, $2640 level.

Chris: Yep.

Craig: That sure seems to be next. Okay, as you said, that should translate into the mining shares. Very interesting action as of late. A lot of mining shares have, some have doubled in the last couple of months. I know some, like Agnico Eagle, trading at three-year highs. You've got a chart there of the GDX. We always like to use that as a proxy for the large-cap mining sector. What do you see in this chart, and where do we go from here?

Chris: Yeah. I mean, if we look at the short-term chart really quick here, we can see very similar type of pattern, using Fibonacci extension, as what gold had. We had the low, we had a high, we had a pullback, and we carry that forward. And so, based on that momentum, we had a strong move, the pullback, and it went right up to this 100% measured move, and now it is just, it's been dealing with, you know, it ran out of momentum. That's what Fibonacci does. It says that 100%, that's where it should run out of momentum. So, now it's building a launchpad, and now it looks like it's starting that run up, and it's starting to break out for another move higher. And based on this pattern, I mean, there is quite a bit of potential upside for the miners here. If we were to go from this low, and take this big bull flag pattern, and take this low, and carry that forward... I'll have to shrink this chart down for us to see those targets. But you can see, those upside targets are fairly significant up there. We could see GDX run from where it is right now, about 6%, 7%, all the way up, you know, 17%, 18%, somewhere in that range. So, this is a very nice pattern, with a lot of momentum, I think, building behind it. I think we're in that market condition where money seems to be rolling into commodities, commodity or resource stocks. So, this is the time, I think, for metals to shine, and potentially dramatically outperform the stock market, for a short window, for a month or two, as we go forward. And as you mentioned earlier, Craig, if we take a look at the monthly chart...

Craig: Yes. The mother of all pennants.

Chris: ...and go way back in time, and take a look at this huge pattern...

Craig: Yes.

Chris: ...I mean, massive rounding bottom. It had, you know, it broke out of this base, this resistance area. Now it's been fading back down into support, and now it's starting to come to life for potentially breaking out of this falling trend line. And of course, those targets, which is interesting, if we zoom in, those upside targets, this 0.618, coincides with these two major tops...

Craig: Yep.

Chris: ...and the 100% measured move brings us right back up to the high of 2020, which, my general theory is, if a Fibonacci target coincides with previous highs, then there's very good chance it's gonna have a pause or a pullback. And of course, 100% measured move, when it hits that level, and it's a previous significant high, you definitely wanna be locking in some gains, because there's a good chance it's gonna get sold down fairly significantly for, you know, a consolidation, a large consolidation, before starting the next major leg up to the upside. So, the charts are looking really good. We're close to resistance, and breaking out on miners, and there's some pretty good upside potential here.

Craig: Well, let's then look at the silver miners. And then we'll wrap up with silver. But while we're in the mining sector, the SILJ has had a heck of a run, too. [inaudible 00:14:04] beautiful little base there, at $8 a share.

Chris: Yeah.

Craig: And now, $12 looks like resistance, and it's doing its level best to get above that here on the, what, I suppose that's a monthly chart. And you can see on the weekly chart too. What is that chart telling you about the silver miners?

Chris: Yeah, I mean, silver miners, they always struggle quite a bit more percentage-wise. They're more of a speculative play. They pull back so much during corrections, when we just look at the pullbacks. People eventually hit a breaking point, where they bail out, and they just, I mean, it's hard to hold a 70% or 80%, 50% loss. So, it naturally will fizzle out, and people give up on it, and it kind of resets the price. And I feel like we've already had that. I feel like prices reset, and I feel like now, we're kind of, you know, we're kind of in this phase here, where we're starting to see it bounce off the bottom, and we'll see how it consolidates. As long as we don't have, like, a COVID-type of crash, that'll, you know, force it to go down. But I do believe, you know, more or less, the bottom is in for precious metals and miners, and I think they're gonna build a launchpad. I think they're gonna continue to push higher. The daily chart might give us a bit better view of a short-term target for SILJ here.

Yeah. So, it's got, very similar to GDX, we've got the low. We had this rally up here, we got this pullback. It hit its 100% measured move, which is why we got all this chop through here. It's trying to eat through there. But if we look at the bigger picture, this bigger pattern, we go to this high, and we bring this to the low, I mean, this is really gonna show some pretty big targets the upside.

Craig: There you go. Yep.

Chris: Which, if I just draw those lines across, we got resistance there, resistance here. So, there's a lot of upside potential here in the silver miners. From where they are right now, we've got about 8%, similar to gold miners, and about 20% or so, which brings us right into this significant high, back in 2022, so, you know, and as you just mentioned, it's kind of got this, it's on the verge of breaking out of this base, this resistance area. If it can eat through here, you know, it's off to the races. A really simple general rule is, whatever the volatility is between support and resistance, you can usually just take that, and you can somewhat stack it on top of itself, and give you a rough upside target. Now, I prefer Fibonacci extension, and I'll always make sure, if the high is above a resistance area, I naturally will drop down, so that it's somewhere into this resistance area where lots of bars have hit. I always wanna take partial profits where I think it'll get hit, versus trying to stretch a little further, and then it reverses and you miss out getting out. So, I always try and pull the more conservative target. It feels good to lock in gains, and reduce risk, so...

Craig: Yeah. Well, all right, then. All these things seem to connect. If the stock market looks a lot like it wants to go higher, then [inaudible 00:17:06] roughly call that "risk assets look good." Gold looks like it wants to push higher. If that's the case, you could see why the GDX would look pretty solid, like it wants to break out and go higher. You just went through the SILJ. So, let's wrap up with, what does silver tell us? What do you see in the chart of COMEX silver?

Chris: Yeah. If you take a look at silver, silver is, I mean, it's really screaming to life. I find silver, myself, I've always struggled a little bit more with silver, just because it's so volatile. It's a little outside my comfort zone. But it is, it's screaming to the upside, like the silver miners. It's more or less breaking out, other than this spike we had in overnight futures that one day, where all the gold and silver both kind of went haywire for a little bit. But it is screaming to the upside. And silver, if we do a Fibonacci extension here, we can get a rough idea...

Craig: This one's gonna be a fun one.

Chris: ...of where these targets are. I mean, we're looking at $33, depending on where we take this, $33, $31, $30, or $34, and if we zoom back on the charts...

Craig: Now take that back, and you'll see what $34 is, Chris.

Chris: Yeah. Let's just go back to the weekly chart, get a better view here.

Craig: Might have to go... There you go. Now look at where, look where $34 is on there.

Chris: $34 is here, which is...

Craig: $35. Yeah.

Chris: ...these major highs. Where we're also stuck, you know, at these significant highs from 2020, 2021. So, this is a huge base. You could say this is just a massive base. If it starts to break through here, you know, the next stop will probably be $34 or $36, somewhere in that range. And then, you know, if we have a bear market in equities, we go into recession, I do think, you know, silver can muscle its way up. But I do think it'll probably consolidate, and build a launchpad during a bear market or a recession, and then, of course, I think we'll be off to the races, for a much larger move. And we can actually get a view of kind of where these rough upside targets are. Even this longer-term chart really is still only $36, which is right up to these highs.

So, that's definitely the sweet spot. $34 to $36, if we hit that, I have no doubt it's probably gonna, like, pause and pull back, and that's probably where we could see silver cap out. Until we go through a bear market in equities, and the recession clears itself out, and then, I think, after that, we'll see, you know, precious metals scream higher. They'll be the first to bottom. I'm super excited for all this to unfold, but it's painful waiting, because these are massive, multi-year cycles, and, you know, economics, so things have to evolve, so...

Craig: Well, I think you've done a great job of identifying some numbers. It'll be very difficult for everyone, me included. You know, if this plays out, and gold's around $2500-something, and silver's gotten through $30, and has rushed to $35, $36 in the shares, everybody's gonna be excited, right?

Chris: Yeah.

Craig: Which, again, will be another classic contrarian signal, that we're probably gonna pause for a while. But between now and then, no reason to give up hope just yet. It looks like you watch that get above... Or let's put this way. Silver starts trading with a three as the first number, things could get pretty interesting.

Chris: Yeah. Yeah, for sure.

Craig: Well, Chris, as always, this has been fascinating, and given everybody a lot to think about, no doubt about it. Before we go, let's do two things. One, tell everybody about what you do for your day job at thetechnicaltraders.com.

Chris: Sure. Yeah. So, if you go to The Technical Traders, I've got a blog. I share my morning, some of my morning videos with everybody. I walk through the charts, just like you and I did, on a more granular, shorter-term level, in most cases. I cover ETFs on all the major sectors, and commodities and indexes, and I trade those, and I share the trades that I do. I use technical analysis. I don't care about news or economics. I just follow price. If it's moving up and it's favorable, we'll hop on. And more or less, I kind of teach how to read the markets, keep you updated on everything that's unfolding, and we just do those trades, and I, of course, I use a strategy that I call asset revesting, which is, we only hold assets going up. Doesn't matter if we love something. If it's going sideways or down, we jump out of it. We'll just buy it back later. Our key, our goal is to always have our money in something that is holding value, or earning interest, or moving up. And it makes for a pretty good scenario. I mean, the buy-and-hold ETF, or buy-and-hold portfolio this year is up only about 1% and change, depending on the average portfolio. We're up almost 10% on the year, and we only do 5 to 12 trades a year. So, that is our core focus, is, the fewer the trades, the better. We just wanna catch waves that roll through the stock market and the bond market, and different assets, like currencies and things like that. So, that's what I focus on.

Craig: There you go. thetechnicaltraders.com. Everybody check it out. One last thing. Now, don't go leaving just yet. I wanna show everybody something. Go to that, back to that Sprott Money page. Chris will pull it up. And I want everybody to see this. See where it says "Insights" at the top? All right, click. Hit "Podcasts." See how easy this is? All right. Now, you look a bit down. There's all kinds of stuff that, well, there's something I've written. But under, if you go under podcasts... Oh, right there. Look at that. Eric Sprott himself. He and I visited, I don't know, about eight, nine days ago, so that's still fresh information. Eric likes to stop by every 90 days, 180 days, and give us his latest updates. He's a pretty busy guy. But if you missed this, again, you go to sprottmoney.com, hit that Insights tab, and scroll down. And that's about, I don't know, 30, 32 minutes of wisdom from one of the greatest precious metals investors of all time. So, be sure to check it out.

Lastly, Sprott Money, of course, is the sponsor of all this content. That whole page comes to you from Sprott Money. We got content all month long, so the best thing that you can do is to subscribe, or like, or whatever, wherever it is you're watching this content, okay? If it's YouTube, whatever. Just hit subscribe, and then every time there's something new, you will be notified, and you won't miss an episode. You might have caught Eric a week ago, when, right when it was published, if you'd been a subscriber. So, make sure you subscribe or like, whatever channel you're watching, okay? Chris, fascinating. I'm sure excited to see where we go over the next month. Precious metals looking interesting, shares looking interesting. It should be a very interesting month. Thank you for your time.

Chris: Hey, no problem. Anytime.

Craig: And from all of us at Sprott Money and sprottmoney.com, thanks for watching. Hit that subscribe button, and we'll have some more content for you as we go deeper into the month of May.

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About the Author

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities.

Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

*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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