Where are Gold and Silver Headed this Summer?

Craig Hemke (00:01) Greetings once again from SprottMoney. At SprottMoney.com, the month of May is behind us and we've flipped the calendar to June. Could we be off to a summer rally? Well, we're gonna talk about that today. I'm your host, Craig Hemke, and joining us for our monthly precious metals projection video is our old friend, Chris Vermeulen of the TechnicalTraders.com. Chris, always good to see you.

Chris Vermeulen (00:45) Always a pleasure, Craig. Yeah, let's talk markets.

Craig Hemke (00:48) It has been a crazy couple of months—down hard in April, up in May—and now we'll see what happens in June. One thing you can be certain of is you always get good deals from Sprott Money. And so please remember the folks that put these videos together and get them on the internet. Please like or subscribe, whatever channel you're watching this on, so you're notified every time there's new content, because we have all kinds of content as we go through the month of June. But please also be sure to visit SprottMoney.com.

Check out all of the deals that they always offer. They have great deals on storing your precious metal too. I mean, it's okay to keep a couple of ounces around the house. If you also want to keep it in a secure facility, so you know you can always get your hands on it, Sprott Money will send you all kinds of great deals on storing your metal as well. Again, just go to SprottMoney.com and they will get you all the details. All right, my friend, let's dive in. I know you've got some charts that are ready to roll.

Chris Vermeulen (01:43) All right.

Craig Hemke (01:47) As I mentioned as you got started, April just straight down in stocks and then back up in May. So now here we are. Most everybody's got some exposure to stocks, whether in the US, Canada, or globally. Let's focus on the US markets. What do you see?

Chris Vermeulen (02:02) Yep.

Yeah, sure. So if we take a look here, this is the daily chart of the S&P 500 futures. And as you can see, and you just mentioned there, Craig, we kind of went bombs away with the tariff talk and we've kind of recovered back. Obviously, big news-driven move, lots of panic selling in the stock market. Really just, you know, the whole market, the whole world has kind of shifted and everybody's hit pause. A lot of businesses have hit pause. And now the big question is, where does the stock market go from here? Now, there's a lot of mixed signals in the market.

Just the way gold has been performing compared to the stock market and what the dollar is doing and sentiment. But the charts right now, when we look here, the S&P 500, and this is the same with the NASDAQ in general, have had a series of rallies and pullbacks or pauses. And of course, we're in this pause right here. And the big question is, can the stock market get some traction and have another leg up? And it'll go right up and potentially test or break these highs on the next run. So this bullish chart pattern is actually pointing to really

The next week we could see a move roughly 3 to 4 percent move bring us up to all-time highs maybe a little bit higher and kind of really create headline news of people getting very bullish in the market. I have a lot of different indicators that track money flow and sentiment in the markets and what's interesting is everybody is actually getting very bullish here. Everybody's decided for some reason that it's buy-the-dip mentality, the markets are going to all-time highs, and the bullishness is actually getting fairly strong on a short-term basis. And to me that is

A bearish sign. But I think the charts here are pointing to one more push and then I think we could see the markets roll over. I think if the stock market starts to struggle here, which I think it's going to, we're gonna see gold have another leg higher and push up to potentially $3,750 per ounce.

The next few weeks are going to be really volatile in the stock market. And I think we're going to go up and try and test those all-time highs.

Craig Hemke (04:10) Well, there's certainly no shortage of stuff going on here in the month of June. Even as we record this here on Monday the second, this week is going to be busy. We have the next jobs report in the US, after that another round of inflation data. The June FOMC meeting is always a big one, and that'll be coming up in a couple of weeks. So there's all kinds of news that's going to drive this. As it relates to the precious metals, here we are on what some would consider the first day of summer—not from a calendar-wise, meteorologically maybe—the 1st of June. We've flipped over from May into June and boom, up go the metals. If we are going to get an extended summer rally, one of the drivers of that would probably be the dollar index. So that might be a chart I want you to look at next. It's been trending sharply lower all year long. As an analog, kind of similar to what happened the first year of the first Trump administration, a rally into January after the election and then down.

Here we are on what some would consider the first day of summer, not.

from a calendar wise, ⁓ meteorologically maybe, 1st of June. We flipped over from May into June and boom, up go the metals. ⁓ If we are going to get an extended summer rally, one of the drivers of that would probably be the dollar index. So that might be a chart I want you to look at next. It's been trending sharply lower all year long. As an analog, kind of similar to what happened the first year of the first Trump administration, a rally into January after the election and then down. ⁓

Chris Vermeulen (04:46)

We're definitely seeing the dollar index here. This is the daily chart. It's kind of gone off a precipitous waterfall. It's sold off. Now this is the daily chart and it keeps finding a little bit of a bid and a bounce but it's fading down. I think the monthly chart is a pretty interesting and scary looking chart for the dollar when we look at it. Obviously it has got some pretty wild price action, kind of a broadening formation of higher highs and lower lows, showing a lot of uncertainty and it really just has sold off.

Chris Vermeulen (05:42)
Right now it is like clinging on trying to hold the lows from this year and potentially if this breaks it could actually extend and have a pretty big drop which could fuel ⁓ Obviously gold as you just said Greg we could see falling dollar could send gold sharply higher and And so that's the big question can the dollar get traction? You know there's a really interesting comparison chart I'm not sure if you and I have talked about this or showed this yet, but the left chart here is the 2006 2007

2007 and 2008 is the market top of the S &P 500 the candlestick chart is the S &P 500 the yellow line or the gold line is the price of gold and then if we come over to where we are now this is the current S &P 500 with this year's sell-off and what gold is doing and there's a couple of interesting things here now I know from a fundamental and economic financial kind of standpoint it's a very different market than 2008 but price action always does the same thing it's either going up with

fear of missing out and people greed or it's selling off because people are feared fear of losing more money and so prices either going up or down it doesn't matter what the news is but price generally kind of repeats similar price actions and what's interesting here is we had a high in 2007 the market put in a nominal new high and then it ended up selling off and had about a 20 % pullback as that first crack to the downside and as the stock market was topping in 2008

It had already gone sideways for about a year year and a half and that was the well gold more or less traded sideways in that bullish pattern That was when stocks took off real estate took off Bubbles, you know, felt like they were everywhere and everybody was a hero making tons of money yet Just in the final few months of the stock market starting to push to new highs Gold joined in on the rally and then gold shot higher became the number one top performer and everybody wanted gold and

You know, it's interesting if I was to pull up the dollar index on here, take a look. If we drop the dollar index on here, the green line, the dollar was down at the bottom. Nobody wanted it. Everybody said the dollar was going to implode the whole fiat currency scenario. Nobody wanted it. And so if we fast forward to where we are today, we have a very similar type of price action. We have a high on the chart right here. We have a nominal new high. We did see the stock market have a

Chris Vermeulen (08:12)
20 % correction. Now we're bouncing up, but just similar to this, this double bottom and this move sideways, we're having a strong bounce right now. And of course we have gold trading up. ⁓

Gold has surged and taken off right as the US stock market was just hitting new all-time highs. Gold's been leading the way. And then if we look at the dollar, the dollar's in the lower right-hand side again, obviously way off those highs, and it's hated. Everybody hates the dollar. Everybody's fearful that it's gonna fall just like previous. So this is a really interesting comparison. Scratch out what's going on with banking system in 2008, the housing crisis. If you just look at it as price, price and emotion,

Oceans are the same. Prices going up or down. People are either fearful of losing money or they want to make money. And so when you look at the charts, it really does take the news out of things. And that's why I love technical analysis because I can look at it through the lens of what are people doing with their money? Where are they moving it? Pulling it out of the dollar, going into gold, getting out of stocks or chasing high tech stocks or growth stocks. And what's interesting right now is we actually have a lot of people moving into high growth growth stocks.

like the ARK ETFs, uranium stocks. There's a whole bunch of different pockets. Uranium's got a little more news to it, but a lot of aggressive stocks, and that's what happens near major market tops. People move into the aggressive stuff thinking we're going a whole lot higher. Meanwhile, it's potentially the end is near for a big market correction. So, you if I was to fast forward, what happens with...

In 2008 obviously the stock market fell 57 % Gold pulled down naturally with it about 34 % it ended up finding a bottom way before the stock market did and then of course gold eventually took off and shot higher So I believe we're gonna go into something similar. Whereas the the price of the stock market is eventually gonna roll over I think gold will eventually get pulled down with the bear market in the forced liquidation margin calls And then I think we'll we'll see it take off and stop

another major super cycle to the upside. But I think those two comparisons are really interesting because they the charts are very similar. They're not identical but they sure have the same characteristics and the same feeling as the last major market daub, the last stage four just before we went into a stage four bear market.

Dope With A MacBook (10:38)
fascinating stuff Chris had not seen all that before I'm sure everybody watching is like whoa that's that's a compelling thing to look at if in the short term that dollar continues lower though and breaks down like you said it you know as a possibility at that 98 level seems to be important we're probably gonna get ourselves at least a summer alley you'd mentioned some higher prices for gold a few minutes ago in the short term what could you what could we see happen

Chris Vermeulen (10:44)

Yeah, I mean, this is the monthly chart of gold. Obviously it is in a raging bull market still. It's just had a more or less a month pause and now it's on the verge of popping and extending higher. So I'll just drop to the daily chart.

And we can just grab the price action just off this most recent this standout low in this chart up to this high. Now this is using Fibonacci extension. This is going to measure to the upside where gold has that potential to run to based on this pattern. So you can see this this pattern here is pushing to about 3660 based off this overall pattern. Depending where we want to say that that that move started, we could go somewhere over here. This is kind of a little bit more of where panic selling hit that stock market back in April where there's there's three or four days where the stock market just free fell. Everybody was dumping shares and it's a perfect example of how it can hit gold. While gold may be the better play, it still got hit three days in a row with big heavy volume selling. And that's what happens in a bear market. We have extended periods like this and it'll naturally pull gold down. But more or less, we're pointing to somewhere around this 36 60 all the way up to about 37 80, somewhere in that range for this next upside target move. So

When we look at this chart pattern, obviously it's had a big move up. We've got gold flagging sideways. A flag is known as the halfway point. so from the low of that flag is usually where that full move could go. And so that's kind of what we're setting up for. So there's a lot of nervousness in the market. If stocks start to fall down, start to struggle even more, people are going to move to gold and flock to safety. ⁓

That's where people tend to go just before we have a big financial crisis. We saw this in 2008. People are worried about the financial system, so they get out of it and they buy gold pet rocks and silver pet rocks to store for a while,

Well, and with all the bearishness of the last month, all these people talking about the overcrowded and overbought, and I'm just sitting there screaming, have you seen the cop report? A summer rally would catch a lot of people by surprise, and you can certainly have made a case of how that could happen. Silver is a whole other story. ⁓ A really odd little box it's been in for about eight weeks.

trading sideways between about 32 maybe 33, 50, 34 and as we record this on Monday the second first day of the month we've got a little bullish cross of the 20-day moving average up through the 50-day and all it's like the computers all took notice within the same hour this morning. What do you see here? What is the potential ⁓ if we were to get this summer rally, know, this falling dollar, summer rally in gold, what is the potential for silver?

Chris Vermeulen (13:36)
Good.

Yeah, I think Silver's got quite a bit of upside. Obviously it can move so quickly, but it has a very strong chart pattern. Obviously it's had a big run up. It's put in a big bull flag pattern. Over the last week and a half, two weeks, we've been talking about how it's pushed up into resistance, into these highs, and it's held its ground in a very tight range. That is a very bullish chart pattern. Using Fibonacci extension, there's a couple of different targets we could pull off of this. The most conservative target is not using the spike
Where it was a washout kind of panic in the market but to use at least two bars this red bar and where another bar crosses and Same with the upside and the downside here. This gives us a conservative target So the first target is the golden ratio, which is six one eight This is the most probable target that it'll hit This is generally a spot if I'm trading something like this any discretionary trade This is where I always sell some of my position lock in some profits and then I move my stop up if we hit this level and pause for a bar or

or three, however long. As long as it pauses, it's usually a very good sign that we're going to see it go up to this 36.42, which is another pretty good move from where we are. Just from where we are, that's another 5 % move to the upside. Now, if we were to have more of a wash out low where everybody piles in and it really gets a lot of momentum, then we can go to the full extreme of these moves. And that shows we should go up to about $38 per ounce, which would be a very strong pop. 10 % move from where we are.

And if we just kind of go way back in time here, we can see where that matches way way back here. That's one weird looking chart. Oh yeah, this is his good.

Chris Vermeulen (15:36)
way back there. here's the weekly chart. This is a little cleaner. Obviously we're going to potentially hit this target around 38. I'll just draw a line across here and that brings us right up into this massive blow off top and the hiccup and kind of into this previous high. So there's no doubt ⁓ if it gets up there, it's probably going to get rejected very, very quickly and sold back down. In fact, we've, we've seen that just in, these recent pushes to the upside right over here, you see a very strong push and it gets slammed down a strong

Chris Vermeulen (16:06)
push up to another high gets slammed another push up it gets slammed so this is the characteristic we're in if it was to hit 38 that would be like I'd probably close out my position because not only does it suit what has been happening in this chart already but it is a really major level where momentum is going to run out and probably be a big bout of selling you could pick it up probably you know a week or two later at a much lower price so I'm still bullish on on both of these and see

Chris Vermeulen (16:36)
Reasonality wise if we just look at gold typically June July August is when kind of gold You know starts to bottom out or just trade sideways So we will be going into potentially summer type of push higher as the stock market stalls out over the next month or so ⁓ gold could you know take that lead and and want to push higher as well

Dope With A MacBook (16:59)
Let's selfishly for me do one more. ⁓ A lot of folks watching the show watch ⁓ in the mining shares as well. And we can use some of the big ETFs as proxies. we've certainly, you and I have discussed.

Chris Vermeulen (17:02)

Yeah, I think it's in a similar boat as I mean what what is nice about Miners at this point is they're actually leading the way higher. They're actually breaking to more or less multi. I think multi your eyes here before gold is and before silver is so this is Generally, we haven't been seeing gold miners perform really well. They're actually coming to life. This is a very good sign This is one of the main things I'm looking for if we're gonna start a new major move up in the precious metal space is for miners to take the lead, you know, so I'm

to see if they can hold the lead and what happens over the next month or so but overall they're now in the outperforming state which makes them more attractive than more or less gold and silver than physical gold. So this is a very good sign of what's going on. mean volume is not huge it's not like it's raging or anything and it's getting driven higher but we are breaking to multi-year highs. This chart pattern we can draw Fibonacci extension and get a couple different targets.

we could take this biggest one, this last leg up and down to this consolidation, this is pointing that we could see GDXJ run all the way to about 82.30. So from where that is right now, that's about 18%.

Typically that makes sense. whatever gold moves, miners silver will move twice or three times that and miners will move multiples as well of that. the charts are all pointing to all the precious metals and miners are actually pointing to one big another push to the upside as a defensive play. The fact that they're all moving up right now with the stock market to me is actually

more of a warning sign that we're closer to a big, some type of financial crisis and a big reset. And that's what we saw in 2008. Gold rallied on that last push up. It rallied with the stock market. Miners are rallying with the stock market too right now. And that is telling us people, they don't care the stock market's going higher. Some, certain group of people, they're saying, get me into gold, silver and miners because something bad is about to happen. And so when they're saying, forget about like, you know, other ETFs with potentially more potential,

volatile, they're sticking their guns to this. So this to me is a warning sign. Bullish for precious metals, bearish longer term for the economy that something ugly I think is just around the corner.

Craig Hemke (20:11)
You make me think of a little history lesson like you said there you know it was march of 2008 and gold hit a thousand dollars an ounce for the first time you know and the rockets went off and the fireworks and everything else three months later it's 700 right and everybody's like hey that's it it got to a thousand and you know now it's going back to 200 well three years after that it was up two and a half times to 1900 so important thing is recognizing you know whether in a bull market or a bear market

and then kind of just jumping on and letting it take you for the ride. Chris, you do a great job of recognizing these trends and on a short term trying to figure out what's in favor and what's not in favor. You put out great information out every day. Please let people know where they can find it.

Yeah sure if you want to follow some of my analysis you can go to my YouTube channel The Technical Traders. I share videos almost daily there and then also my newsletter which I share the exact ETF trades that I do with my portfolio. You can copy those at the technical traders dot com and ⁓ if you like to learn about short term analysis is kind of Craig was just talking about to identify some really cool oversold market conditions when there's panic selling which is in certain levels.

I teach all this in my book how to trade a 30 minute chart how to set up identify trends how to know when something is oversold when there's going to be an exhaustion type of move before we have a big pop and rally when there's FOMO in the charts and panic selling all of these little tools you can get them on my website to my book technical trading mastery, but Just before we we carry on I just want to show one more chart here Craig, which is a mix of the indices so this is the S &P 500

Equal weighted so this is stripping out the Magnificent 7's weighting and saying the majority of the stocks It's also the Russell 2000, which is the 2000 next smaller stocks and the micro cap stock So this is thousands and thousands of stocks kind of the stock market as a whole and I find it very interesting that we put in what looks to be a Massive double top and we've got this huge pattern and it is really just bouncing this feels and looks like a dead cat bounce going to be stuck under resistance or

Chris Vermeulen (22:27)
somewhere in this zone if it pushes a little bit higher before we start to go off. And unfortunately, this is the majority of people's portfolios. People who, even if you have the buy and hold portfolio, people always have a bunch of random favorite stocks that they hold. And so this is, you know, we're going all the way back to 2001. Most people aren't up. They haven't made any money in four years. And that's because they have a mix of average stocks. These stock indices like the S &P 500 NASDAQ, because everybody knows.

Chris Vermeulen (22:57)
very tech heavy weighted, magnificent seven weighted, everybody thinks they should be up and they wonder why they're not, but that's because the majority of stocks aren't. And so this whole chart here is telling me like this is a potential massive double top. It's really not, the small caps, micro caps are not ripping higher. In fact, if we just look at like the Russell 2000. ⁓

You know, it's, it's not showing the same type of participation either. It has a big double top. It's not even close to the highs. It's really stuck here. So this is a huge red flag. I used to always look at the small caps like this and, the transportation index, but now I can really only look at the Russell because everything now is shipped with Amazon and all these other companies. So transportation is masked because that business is still growing, even though the economy is slowing just cause more stuff gets shipped versus driving places. But anyway, this is an interesting chart.

telling us that this bounce does look like a dead cat bounce or a bear market rally before we go lower but most people don't see or feel that when they look at like you know the Nasdaq they're like we're up near these highs we're about to break to new ones and ⁓ we need to figure out if this is just a

pull back by the dip before it goes higher or is it going to roll over? But the technicals to me show things are not looking good. Interest rates, bonds, like yields, what gold is doing. People don't have a lot of trust in the economy right now and things are, I think, grindingly getting slower here.

Craig Hemke (24:29)
Great stuff, Chris. Thank you for adding those charts. That's really eye-opening, and I'm sure, again, that's great service for everybody that has exposure just to general equities. Again, more information, thetechnicaltraders.com, correct? All one last thing, everybody, ⁓ as we exit this video here, as we begin the month of May, there's going be a lot more content coming up in ⁓ June, and...

Chris Vermeulen (24:39)
Thanks.

Craig Hemke (24:55)
you're going to want to keep an eye on this Prop Money channel. The best way to do that is by hitting the like or the subscribe button so you get notified when you get more content. I'll just let everybody know I was texting with everybody's favorite retiree earlier this morning and everybody's favorite retiree while sitting in his rocking chair drinking coffee agreed to come on for another discussion shall we say in a couple of weeks. So

Please hit that like or subscribe button so that when that video gets posted you don't miss any of it because you'll want to make sure you see it anyway. That's it for now though. This is your monthly precious metals projection video. Chris Vermeulen, thank you so much for your time.

Chris Vermeulen (25:38)
Always a pleasure. All right, take care everyone.

Craig Hemke (25:40)
And from all of us at Sprott Money, SprottMoney.com, thanks for watching. But keep an eye on this channel for a lot of great content still to come here in June.