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gold silver price chart

Above is the Wave 1 gain in Gold from December 2015 to July 2016, a gain of $332 from 1045 to 1377, or 32%.

gold silver price chart

Above is Wave 3 from December 2016 to August 2020, a gain of $965 from 1124 to 2089, or 86%.

Why does this matter? Because the wave 5 gain in metals is typically the same size as in wave 3 or it’s more. 

gold silver price chart

We’re in wave 5 now. A gain of $965 from the bottom of wave 4 at 1618 is 2583 or ~2600. And that's the "minimum”, imho.

I believe wave i of (3) of 5 is about to complete. The daily RSI is extreme overbought above 70. Both MACDs are negatively divergent.

As for sentiment, despite my protestations that “Emotion is the Death of Wealth”, people never seem to learn from history, no matter how numerous the examples are. They cannot fight their emotions—it’s just human nature. Everyone is getting giddy once again after a powerful rally, but that is when caution is warranted. Extreme bullishness is a contrarian signal, especially in Gold and Silver.

Then there is positioning. I would be shocked if Large and Small Speculators have not been loading up long over the past week while the Banks add to their short position. Another negative signal.

Future of Gold and Silver Prices

I continue to believe we will get a bounce in the DXY and the 10-Year yield soon, which could also weigh on the metals.

And in every 5-wave rally, wave ii down always follows wave 1. Gold could top out at 2090 or even 2120, but a short-term peak is coming, imho. I really don’t care what level we turn down from. I am solely focused on what will be the bottom in wave ii when it occurs. It could be a back-test to 2000 or fall to around 1950. The lower the better, in fact. I don’t know and I don’t care, because the correction will come in three waves: A, B, and C. Once we know where A bottoms and B tops, we can make a more accurate estimate of where the bottom in ii or “C” will be.

I emphasize this because what happens next is wave iii of (3) of 5, the money wave we have been waiting for. I plan to go all-in at the bottom of ii and let it ride to whatever the final peak in 5 will be.

Price of Silver

The same goes for Silver and the miners. They too are heading up to a peak soon, to be followed by a pullback—or more appropriately called a “gift”. Because Silver and the miners will crush Gold in terms of performance. Considering the gains still ahead in Gold, the outlook for precious metals and miners is truly spectacular and exactly what we have been waiting for. Our patience is finally being rewarded.

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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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