Silver Price Projections

Craig: Well, happy April from Sprott Money News at sprottmoney.com. It's April already, the second quarter of 2024, and it's time for your monthly "Precious Metals Projections" video. I'm your host, Craig Hemke. Joining us, as usual, is Chris Vermeulen, of thetechnicaltraders.com. Chris, good to see you.

Chris: Yeah, same to you, Craig, yeah. Pleasure.

Craig: Boy, we've had a heck of a month. Before we get started, though, I mentioned it being April. We've got 10 more days as I record this to get to tax season. So, if you haven't filed yet, if you're still looking for deductions, hey, take a look at an IRA in the U.S. There's always time to put something in an RRSP up in Canada, and Sprott Money can help you do that, and own physical metal. Never stop stacking, as we like to say. Go to sprottmoney.com. All the instructions are right there. You can give them a call if you wanna talk to somebody. They'll walk you through the process. Simple, safe, effective, but also very convenient. And Sprott Money has great service. And, again, your metal is very safe when it's held by them at their custodians. So, please check it out. sprottmoney.com, 888-861-0775.

All right, my friend. We are gonna pick up where we left off. Back in early March, gold had stormed out of the gates, with a rally that really began on Friday the 1st. Broke out on the weekly chart, above, it got near $2100, and the next month, next week, I should say, rallied to $2200. When we did this "Precious Metals Projection," back in that first week of March, you were very clear. You said, okay, we're cooking now. The first level of resistance is a Fibonacci level, 0.618. And you said that was about $2150. You said if price gets above there and then holds it as support, it absolutely should go to $2300. Well, guess what, Chris? It got above there, and it held the support, and now it's actually north of $2300. So, kudos on that. Brilliant call on your part. As we look at this chart now, going forward, what do you see?

Chris: Yeah, there's a lot going on, and just to touch on the Sprott metals projection, or not the projection, but the storage, because I use Sprott as well, it feels so good to actually have, you know, the storage reports come back, showing gold prices skyrocketing. I mean, it feels so good to be, like, starting, you know, the next kind of push up in the precious metals space, and silver's starting to break out. So, it is, it's exciting, and it's gonna be interesting to see how physical gold, the spreads will be a couple years from now, when we get there. I mean, if you don't own it, it might be really hard to get it, but...

Craig: Yep. No doubt about that. I even saw it not, to interrupt you, but I even saw a note that was in the Financial Times this week, quoting some quants or strategist or whatever at JP Morgan, of all places, saying that, "Yeah, maybe an ETF's not the best idea. You want to own the real thing, with no counterparty risk," and I'm like, "Huh. I thought only us lunatics said stuff like that." Anyway. Please continue with your chart.

Chris: Yeah, yeah. So, let's take a look. So, more or less, when you and I were talking, there was this short-term rally that we saw through February. This was using Fibonacci extension. We ran up, we had a tight, little high-momentum pullback. And if this found traction, we were gonna go up to the 0.618, have a little bit of a pause, which, we ran up through there, pulled back for one day, and then now we've come up and we've pretty much hit that $2300, $2350 target to the upside. So, that's the short-term move. That move is now kind of done, but if we take a look at the monthly chart...

Craig: Oh, boy.

Chris: ...the monthly chart shows kind of the next really key run. Let's just zoom out a little bit here. And, kind of, to... I'll just clean this up. Let me just get rid of this Fibonacci... Actually, I'll leave that in, because it's kind of interesting how these things line up. So, if we take the low after the bear market, down in 2015, we take this rally high, and then we got this big bull flag pattern. We use the low, and we take Fibonacci extension here, this gives us our targets. And if I just squish this down, and we'll zoom in a little bit, you can see where this next rally is actually poised to run to about $2600, $2700. Craig, you and I have been talking about this for a while. It's kind of like the next major technical level. And what's really interesting is this little pattern that we initially kind of drew it on the daily chart, this tiny little wiggle, it is, I mean, just stretch it right out. The 0.618 for that little pattern is the same 0.618 for the multi-year pattern.

So, when all these things line up, I mean, it can really create a powerful move. And we talked about this the last time we were on here. We had the supercycle kind of start in gold, 2002, 2003. We had a new supercycle starting in the gold space commodity, back in 2019. And then what happened was we had a multi-year consolidation. We had a multi kind of year consolidation through here, and then we saw gold start to run into the end of the stock market bull market, into the recession, with the 2008 pullback. Well, here we are. We've had the same setup. We're running in, I believe we're gonna run into a major stock market top, we're gonna go into a recession, we're gonna have a big bear market, that could last a year or several years. And so, all this is exciting for precious metals, and we are still showing quite a bit of upside. I think we could see a run all the way up to $2700, $2650 or so. So, there's a lot of momentum here for gold, and I believe it's gonna be kind of one of these here, where there's upside right now. I think silver miners are gonna play catch-up, and really blast off, for potentially a couple more months, and even if the stock market starts to roll over, even like we saw in 2000, in 2008, we can see gold and miners continue to push higher for a couple of months even while the stock market is falling. They come into favor. So, I'm really excited about precious metals, the whole space right now. But when we come into potentially this top, say we do get up to $2700, and the stock market finally gets into enough panic selling, we have our official recession, you know, I do think we'll see gold fade, and build a bullish pattern for that next run that I think will go up into the $3000 mark and well beyond, but that's kind of where I see gold right now. We are kind of in this run-up phase, and it's an opportunity, for sure.

Craig: Pretty remarkable stuff. Especially the way those numbers line up on multiple timeframes. Chris, we, you know, in that flag pattern that you've got from 2020 to 2023, that we finally broke out of back in late February, early March, and now we've got all this momentum and this surge of interest in gold. Silver's yet to see that. It has been flagging kind of between $22 and $28. The first key level to me was at least even getting over $26, and we're at least gonna accomplish that here in the first week of April. What do you see in silver, and what levels will you be watching as it attempts to catch up and break out in its own right?

Chris: Yeah. Well, I would say silver has broken out. I think, you know, we had a big pause just before the 2008 market top, and then silver broke out. I believe... We've got a fairly big, big chart pattern here, but it has broken these short-term highs, and it really is, it's rallied, it's paused, and now it's primed and ready to rally to probably $30 an ounce, I think fairly easily. That'll definitely be a, that's a conservative, I think that's a target that will get hit. So, there's upside potential in silver. If we look at the daily chart, and kind of get a little more granular look... Let me just clear some of those lines. Obviously, we've broken some of these significant highs. These were the ones that were standing out on the monthly chart. We got lots of volume moving in. So this is definitely a very strong move. Now, we can use that Fibonacci extension, like we did with gold, just based off this...

Craig: Let's do.

Chris: ...last run here. And, if we were to get an upside target for silver, you can see that it has had that first move. It's pulled back, and now it is flirting around. It paused, it popped up a day, it sold off this morning, came back, and when it has a pause, at the 0.618, we almost always go and see it hit that 100% measured move, which, at this point, is $28.50. So, I believe, you know, this could get hit, in a day or two, really. That's not that far away for silver to scream up $1.50. So, that kind of is a, the first short-term target. If we go back to the monthly, we can use Fibonacci extension, and let's take a look at a bit bigger of a pattern. And we'll get an idea of where that could go, similar to our $2700 target for gold. So, if we take this larger pattern and carry it forward, we're looking at about $36 for silver, and what's really interesting is the 0.618 is, are these previous highs, and it's pretty much the 100% measured move on that smaller part.

Craig: Remarkable.

Chris: So, if the price comes up here and pauses for a bar or two, that is a very bullish sign, and it probably will, because it's got a lot of overhead resistance. We got, like, six months trading at that level, so there will be a lot of people saying "get me out." They're gonna wanna sell their silver at break-even, because they've gone through this roller coaster ride. But once it breaks through there, I mean, we could see a big move up, to $36 or $35, which is right up into this topping section, and then this section that it was stuck underneath. So, the charts are, you know, pretty bullish, and silver, percentage-wise, as you know, once it gets on the train with gold, it definitely outperforms percentage-wise.

Craig: Well, let's relate that to the shares, then, and let's use GDX as a proxy for the mining sector. It's probably about the easiest thing to look at. You and I have discussed the long-term, kind of odd correlation, but it's pretty tight, between silver prices and the GDX. Let's look at the just the GDX, though, because, again, if silver is looking at maybe $28.5, that would imply some higher prices for GDX, and a breakout to $36 would certainly imply some higher prices too. What do you see?

Chris: Yeah. Well, we definitely saw miners kind of put in a rounding bottom. It's had this big impulse move. Now it's just flagging out of favor. I would say that it's starting to break down through these highs. If we were to kind of connect... I like to connect to opens or closing bars. We kind of connect where they open and close on average. We are now poking through. Now, we can see that they've poked through before, and by the end of the bar, they've reversed back down. So, we're not in the clear yet, but we're definitely starting that upward momentum. And if we were to use Fibonacci extension here, depending where we wanna grab these lows, the bigger picture for miners is somewhere around these levels. So, GDX could rally up to $42, which happens to be previous highs, and if it takes a pause there, we could see a pop all the way up to $54, which is the high that we saw back in 2012, which is a fairly significant move from where we are right now. So, it's pretty exciting, that, these patterns.

Now, this is a fairly large pattern. I'll be very interested to see, you know, how long it takes for these things to move if they're gonna rocket higher, because I really do think, I think the stock market is very close to topping out. I think we're only a month or, a couple months away. So, that gives us a couple bars on precious metals to keep moving up. And then precious metals can keep moving up for a couple more months, even when the stock market tops and trade sideways, or even starts to sell off. So, I think we still have, like, three, four, five up bars for the miners, and the metals, potentially. And they're gonna buck, I think, if the market rolls over, I think they could buck the trend and keep going up, for a little bit. And that'll be a warning sign that, you know, we're getting close to not only the miners and everything getting, you know, overbought, and probably ready for a pullback, but it'll also be that warning sign, saying, okay, stock market's going down, metals continue to go up. It's just a matter of time now before the stock market has a much larger breakdown, and starts what I consider a stage 4 decline, a big bear market, a financial reset, that we'll look back on and be like, "Oh, my gosh, that was..." whatever, whatever we're gonna nail it, that, you know, call it, there's the tech bubble in 2000, there's financial crisis 2008. I don't know what they're gonna call it this time, but I believe we'll be starting something like that this year.

Craig: I saw something on Twitter earlier this week about the market cap of the S&P versus the total GDP in the U.S. in the previous couple of big smashes, in 1929, or in the year 2000. We are well beyond a percentage basis of the market capitalization of the stock market versus those previous highs. So, let's wrap up with kind of those general categories, if you will. Let's start with the bond market, because, you know, rates have been moving up sharply this year. [inaudible 00:13:44] number of things happening. Gold just keeps on soaring. And there's kind of this tug of war. You know, people think inflation is gonna get worse, and so they're selling bonds. And you also kind of have maybe a safe-haven bid sort of thing, or you think maybe the Fed's gotta come in and buy bonds to try to keep rates down. You know, to service all the existing debt. What, if anything, what does the TLT show you?

Chris: Yeah. So, TLT, this is the monthly chart. I mean, it's definitely backed down into some levels that feel like they're fairly-valued. It looks like we're in a type of bottoming formation. We had initial, you know, a big pullback. We had a kind of a bounce, that you could say it was a giant head and shoulders pattern, and it's in a stage 4 decline, right now. And it's trying to put in a bottom. I really like this type of sell-off here, into the bottom. I like big volume. We still might see it bleed down a little bit lower, but overall, when I'm looking at it on the daily chart, we are getting a lot closer to a buy signal, of getting bullish, actually, on the bond market. It has a very strong move. It's got a bull flag pattern. It's getting close to one of my strategies saying, hey, we can start trading bonds, potentially, when the stock market's out of favor. Bonds are starting to show some upward momentum. They're holding their value. We're not there yet, but, I mean, I've been excited for bonds to come back into play, because they're actually a very big part of how we generate money when the stock market's not in favor. And we haven't really been able to play bonds for the last few years, simply because, got rising rates, falling bonds, and they haven't been, you know, rallying when the stock market goes down.

So, I'm really excited. I feel like this is the year we're gonna see bonds, maybe the bottom's already in, but we're gonna start a new bull market in bonds, and it's gonna be a really good opportunity, that, I think a lot of people got burned. They don't wanna touch them anymore. And of course, that's probably, they're gonna be kicking themselves for probably not getting back into them at some point, but we're not in the clear yet. But I like bonds. Bonds, and the. U.S. dollar, both of them are actually very close to giving us buy signals. So, for example, when we have to get out of the stock market, because the trend turns around, we can move into the dollar index ETF, or we could move into TLT, versus kind of sitting on the sidelines and just collecting our, you know, the 4.5%, 5% interest in a, like, a Treasury note ETF, while we're kind of safely waiting on the sidelines.

Craig: Well, all right. Let's finish with the stock market, then, just the broad... You can pull up whatever you wanna do to look at it. Yeah, S&P, or whatever. It, you know, it has been 45 degrees, straight-line angle, you know, for all of this year, and actually, back to fourth quarter of last... I mean, that's just remarkable. I have to watch Twitter every day for what I do, you know, for my subscribers, and I see all day long, every time there's a red candle, it's like, "Okay, this is it." You know what? I'm reminded of the old adage about the market can stay irrational longer than you can stay solvent, right? Even Thursday of this week, we had this massive reversal, engulfing bearish candle on the daily chart, and it's like, "Oh, boy." I don't know, Chris. It just keeps reversing. What will you be watching? What will tell you, you know, for people that want to really jump the gun, in a sense, maybe, even? What will get you thinking that, "Okay, this time is different, and the market truly has broken this uptrend?"

Chris: Yeah. I mean, we've seen the technology space starting to run out of steam, like, not just from, like, price action, but if we look at where money flows are going, the big techs have some pretty bearish...a lot of them are in downtrends. They have very big topping patterns, that if they break down, it's gonna get pretty ugly, and believe it or not, the NASDAQ actually gave us an exit signal yesterday, saying, "You know what? We shouldn't be in tech and growth right now." The S&P 500 is still holding up. As we can see here, I've got three moving averages. The pink one, which is my favorite, is the 20-day moving average, and price tends to wanna bounce up to the 20-day moving average. I really like the five-day moving average, which is the little thin blue one, and my general rule is, if the 20-day is sloping up, and the 5-day is above it, you're in a really nice trend.

And so, we kind of broke below that with the Fed, just a day ago, and now we've got the markets trying to recover and rebound from that. So the S&P 500 is still holding up, but we are having these waves of, like, panic, of greed, and panic in the market. And if we look at this 30-minute chart, of regular trading hours, I've got these little indicators that tell us, when this red section gets above this blue line, this is telling us there's FOMO in the market. So, people are piling into the market, and typically, when that happens, when everybody's chasing pricing, we see the market sell off. And then we get into an oversold condition, and we get some panic selling, which is when our green indicator spikes. And this is panic. But I label it green, because when people panic, it's actually an opportunity, it's a buying point. And then we see the market take off. And yesterday was a really, kind of, what, it was a terrible setup. I'm not a fan of how yesterday played out, which is, we saw...the SPY actually shows it. I'll just show it. It shows a little bit better here.

But more or less, the stock market yesterday gapped sharply higher, and if something gaps up, we generally know the market has to come down and fill that gap. So, it gapped up, it gapped into major resistance, near all-time highs, and, yesterday morning, or, you know, of whatever day that was, previous session, we had FOMO buying. Everybody was buying on that gap up, and I was telling, you know, subscribers, I'm like, "Guys, this is a gap up, into resistance, and everybody's buying it. We're probably gonna see some type of pullback." And then the Fed came out, and you could say it was the Fed, but this is the way the markets move. If you didn't know there was news, you'd just be like, this was a technical setup. We had a huge sell-off yesterday, we had panic selling, and we got oversold condition, and now the market's trying to bounce, but... So, this market is so, as you were mentioning before, it's like, we can be at all-time highs one day, have a one-bar pullback, and everybody thinks the sky is falling.

And you can see it on Twitter. You can see it on LinkedIn. I saw a really good post this morning on LinkedIn. They compared the NASDAQ value to the value of commodities. And it is, they're identical to the same value, and same chart pattern, as the tech bubble just before it burst. So, I mean, it was amazing. I wanna write something on it, and go into the details, because it's actually really exciting. And it's good for precious metals. I mean, it's very exciting how undervalued commodities are and how overvalued technology and growth stocks are at this point, so...

Craig: Well, it's an interesting time to be alive. That's for sure. And you do great work in helping people manage this stuff on a day-to-day basis. Where do they find your work if they wanna become a subscriber?

Chris: Sure. Well, they can go to thetechnicaltraders.com, which, if they just go to thetechnicaltraders.com, I share charts just like you and I do. I share my ETF trading signals. I also run The Gold and Oil Guy. We've been long miners, like, the miners and silver miners, they're all up 25%, 30% from short-term. This is a short-term momentum strategy. So, it depends if you wanna do slower, big-trend trading ETFs, like what I focus on with core money, that's The Technical Traders. The Gold and Oil Guy, I mean, we've been on fire with the precious metals space, taking advantage of the cycle low in this huge rally. So, there's a lot of ways to be able to follow my work and get on my free newsletter if you want.

Craig: Perfect. Again, at a time like this? Boy. Thinking people could probably use as much objective and rational analysis as they can find. Could also use #preciousmetal, my new favorite hashtag. Never stop stacking. Boy, at a time like this, that could never be more true than it is now, I guess. So, keep Sprott Money in mind any time you're looking to stack. Always great deals, as you can see right there on that home page. And at the same time, even if you're not stacking at present, help them spread the word. It can be as simple as hitting the like or the subscribe button on whatever channel you are watching this content, and there'll be more content to come too, so you wanna get notified when there's more content, as we get later in this month, too. So, please hit that like or subscribe button, and to help out Sprott Money and yourself.

Chris, great stuff. Well, I tell you what. I remember when we signed off in March, and we went, "Boy, I wonder where we'll be in April?" Now I wonder where we're gonna be in May. But I look forward to talking to you. In the meantime, all the best. Take care, and keep your head down. We'll see what happens next.

Chris: Sounds good. Thanks, Craig. All right. Take care.

Craig: And from all of us at Sprott Money News and sprottmoney.com, thanks for watching, but keep an eye on this channel. We got more content to come here in the month of April.