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Gold Investment Updates are weekly gold investment newsletter provided by Przemyslaw Radomski, CFA. They are based on the flagship Gold & Silver Trading Alerts that focus on all the key factors that govern long- and medium-term outlooks for gold, silver, and mining stocks. These comprehensive reports (usually size of a small ebook) ensure that you’re kept up-to-date on important developments that 99%+ of investors are likely to miss.

  • Gold Investment Update - Gold's Shocking Weakness vs. the USD

    June 8, 2020, 9:36 AM

    Available to subscribers only.

  • Gold Investment Update - The Implications of the Monthly Reversal in HUI

    June 1, 2020, 7:47 AM

    There is a laser-precision technique that tells us whether the precious metals market is going to move higher or lower, and it could take form of a confirmation or invalidation of a major breakout. We just had the make-or-break situation in gold mining stocks, and previously described the HUI Index - flagship proxy for the gold miners - in the following way:

    The HUI Index declined significantly, and then it rebounded significantly.

    Both are likely linked. Miners first declined more sharply than they did in 2008, so the rebound was also sharper. Based on the stimulus and gold reaching new yearly highs, miners also rallied, and tried to move to new yearly highs. It's not surprising.

    However, if the general stock market is going to decline significantly one more time, and so will gold - and as you have read above, it is very likely - then miners are likely to slide once again as well. This would be in tune with what happened in 2008.

    At this time, it may seem impossible or ridiculous that miners could slide below their 2015 lows, but that's exactly what could take place in the following weeks. With gold below their recent lows and the general stock market at new lows, we would be surprised not to see miners even below their 2020 lows. And once they break below those, their next strong resistance is at the 2016 low. However, please note that miners didn't bottom at their previous lows in 2008 - they moved slightly lower before soaring back up.

    Please note that the HUI Index just moved to its 2016 high which serves as a very strong resistance. Given the likelihood of a very short-term (1-2 days?) upswing in stocks and perhaps also in gold (to a rather small extent, but still), it could be the case that gold miners attempt to rally above their 2016 high and... Spectacularly fail, invalidating the move. This would be a great way to start the next huge move lower.

    And what happened last week?

    The HUI Index invalidated the breakout above its 2016 high in terms of the weekly closing prices and also in terms of the monthly closing prices.

    This is a perfectly bearish sign, especially since the HUI Index has been forming an extremely clear monthly shooting star candlestick. This is a clear formation with clear implications - gold miners are likely to decline in June.

    It's important to note that on a daily basis, miners have barely moved higher on Friday. They had a good reason to do so - even two reasons. Both: general stock market and - most importantly - gold / GLD moved higher so miners should have rallied as well. They didn't, which shows that they are much more likely to decline in the short term instead.

    Combining two key gold trading tips: silver's exceptional strength with miners' exceptional weakness provides us with a great trading opportunity.

    Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold Investment Update.. The latter includes multiple details, but most importantly, it includes the clear discussion of what will be the sign telling one that gold's move lower is almost certainly completely over. That's the detail, we think you might enjoy, want, and need right now.

    Subscribe at a discount today and read today's issue ASAP.

    Sincerely,
    Przemyslaw Radomski, CFA
    Editor-in-chief, Gold & Silver Fund Manager

  • Gold Investment Update - Signs from Gold, USDX and Stocks Just Keep Coming In

    May 27, 2020, 5:34 AM

    While every year is unique in its own right, looking at a series of them offers quite some tendencies that can be profitably exploited by the astute trader and investor. This is where seasonality comes, and precious metals are no exception. What message does the history send for the PMs complex in June?

    Gold (seasonally) and gold miners (seasonally) move tend to top in early June, so it might be the case that we'll see another attempt to move higher here, and then the decline would take place during June.

    Interestingly, there were usually two triggers for these moves: one from the USD Index, and the other from the stock market.

    The USDX (seasonally) tends to bottom in early June, while stocks (seasonally) tend to form a local top. These moves are not huge, though, and the accuracy for the seasonality-based forecasts is lowest in the entire quarter.

    This means that while a bottom in the USD Index and a top in stocks is likely to be "somewhere near", it doesn't have to take place exactly after May ends. In other words, we should already be on the lookout for either bullish or bearish signs, instead of blindly trusting the seasonal factors. They shed some light but the light itself it dimmed, like the one provided by a candle, instead of one being provided by a laser pointer.

    Gold Miners' and Their 2016 High

    The laser-precision technique that tells us whether the precious metals market is going to move higher or lower, could take form of a confirmation or invalidation of a major breakout. And we currently have this exact make-or-break situation in case of gold mining stocks. We previously described the above HUI Index - flagship proxy for the gold miners - in the following way:

    The HUI Index declined significantly, and then it rebounded significantly.

    Both are likely linked. Miners first declined more sharply than they did in 2008, so the rebound was also sharper. Based on the stimulus and gold reaching new yearly highs, miners also rallied and tried to move to new yearly highs. It's not surprising.

    However, if the general stock market is going to decline significantly one more time, and so will gold - and as you have read above, it is very likely - then miners are likely to slide once again as well. This would be in tune with what happened in 2008.

    At this time, it may seem impossible or ridiculous that miners could slide below their 2015 lows, but that's exactly what could take place in the following weeks. With gold below their recent lows and the general stock market at new lows, we would be surprised not to see miners even below their 2020 lows. And once they break below those, their next strong resistance is at the 2016 low. However, please note that miners didn't bottom at their previous lows in 2008 - they moved slightly lower before soaring back up.

    Please note that the HUI Index just moved to its 2016 high which serves as a very strong resistance. Given the likelihood of a very short-term (1-2 days?) upswing in stocks and perhaps also in gold (to a rather small extent, but still), it could be the case that gold miners attempt to rally above their 2016 high and... Spectacularly fail, invalidating the move. This would be a great way to start the next huge move lower.

    And what happened last week?

    The HUI Index invalidated the breakout above the 300 level, and it also invalidated the breakout above the 2016 high (286.05) in intraday terms by closing at 285.13. This made the bearish picture for gold miners more bearish. The final confirmation of the top being in, will be gold stocks index's close below the highest weekly close of 2016 - 278.61.

    The reason we're giving so much attention to the 2016 high right now and so little to anything else - at least in case of the gold stocks - is that what happens with regard to it really is the key to the miners' technical outlook. Confirmed breakout above the 2016 high would be likely to result in a bigger move higher, while its invalidation is likely to result in a bigger move lower.

    Given the fact that gold is not moving up despite USD Index's sizable daily decline, it seems that we might see declines in gold and gold miners shortly (as soon as the USDX regains strength), and the decline below HUI's highest weekly close of 2016 will serve as a great bearish confirmation for gold, silver, and miners alike.

    Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold Investment Update. The latter includes multiple details, but most importantly, it includes the clear discussion of what will be the sign telling one that gold's move lower is almost certainly completely over. That's the detail, we think you might enjoy, want, and need right now.

    Subscribe at a discount today and read today's issue ASAP.

    Sincerely,
    Przemyslaw Radomski, CFA
    Editor-in-chief, Gold & Silver Fund Manager

  • Gold Investment Update - It's Not Only Palladium That You Better Listen To

    May 18, 2020, 11:40 AM

    Whenever one hears the words precious metals, gold and silver spring to mind. But this world is much richer, and precious metals don't end with the yellow or white metal. The less well known cousins, platinum and palladium, can and do send valuable signals too. Before we examine silver, let's take a look at something interesting in palladium.

    The interesting detail is palladium's weakness. This precious metal was the one that soared most profoundly in the past few years and while it recovered some of its 2020 declines recently, it appears to be back in the bearish mode as its unable to keep gained ground, even despite the move higher in the general stock market.

    The previous leader is now definitely lagging. And you know what was leading? The previous laggard - gold stocks. And you know what is leading now? Silver - as it usually does in the final part of the upswing. The HUI Index is marked with brown in the bottom part of the chart. When leaders are lagging, and laggards are leading, one should recognize that the market is topping - and that's the key take-away from the palladium and platinum analysis right now.

    Palladium was the leader and platinum was actually one of the laggards. Palladium was down by 0.43 last week. And what did platinum do?

    Platinum rallied by 3.52% last week.

    The big rally in platinum to palladium ratio is yet another sign from the relative valuations analysis pointing to a nearby top in the precious metals sector.

    Having said that, let's take a look at silver's forecast. In case of the white metal, its ratio to gold might be more important at this time than price itself.

    The silver futures are trading at $17.73, and gold futures are trading at $1,773, which means that in case of the futures market, the gold to silver ratio has just moved to the 100 level.

    Earlier this year, the gold to silver ratio had broken above the very long-term and critical resistance of 100. Is it really that surprising that silver is verifying the breakout by moving back to the previously broken level? It's not.

    The key ratio for the precious metals market has just moved back to the previously broken resistance level and it's verifying it as support. This is relatively normal that after a breakout, the price or ratio moves to the previously broken level.

    Yes, on a short-term basis, and looking at silver chart alone, the breakout above the April highs and a quick move to the early-March highs was a clearly bullish phenomenon. However, this ignores the fact that silver is known for its fakeouts (fake breakouts) and that looking at its relative performance to gold has been more useful (and profitable) than looking at its individual technical developments, especially if they were not confirmed by analogous moves in gold.

    Consequently, we view the current action in silver as bearish, not bullish, especially since the gold to silver ratio moved back to the very strong support level (100), which likely means that silver's strength relative to gold is over, at least for some time.

    Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. It also includes the fundamental analysis of the Great Lockdown with the emphasis on the dramatic changes on the US jobs market, as well as technical discussion of silver, mining stocks, USD Index, platinum, and palladium. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions.

    Subscribe at a discount today and read today's issue ASAP.

    Sincerely,
    Przemyslaw Radomski, CFA
    Editor-in-chief, Gold & Silver Fund Manager

  • Gold Investment Update - Gold Investors Shouldn't Be Losing Focus

    May 11, 2020, 10:11 AM

    The recent volatility in most markets was really extreme, which means that it was easy to lose focus on the things that matter the most in case of the gold market. It was relatively easy to keep one's focus as far as the fundamental outlook for gold is concerned - it's quite obvious that the economies around the world are in deep trouble and that the various QEs and money-printing mechanisms are likely to be inflationary, which together is likely to result in stagflation - which gold loves.

    On the other hand, it was easy to lose focus with regard to one of gold's key short- and medium-term drivers - the USD Index. If the USD Index soars, then gold is likely to plunge in the short run, regardless of how favorable other fundamentals are.

    Consequently, in today's free article, we'll discuss the situation in the USD Index, with emphasis on two key similarities.

    The USD Index was previously (for the entire 2019 as well as parts of 2018 and 2020) moving up in a rising trend channel (all medium-term highs were higher than the preceding ones) that formed after the index ended a very sharp rally. This means that the price movement within the rising trend channel was actually a running correction, which was the most bullish type of correction out there.

    If a market declines a lot after rallying, it means that the bears are strong. If it declines a little, it means that bears are only moderately strong. If the price moves sideways instead of declining, it means that the bears are weak. And the USD Index didn't even manage to move sideways. The bears are so weak, and the bulls are so strong that the only thing that the USD Index managed to do despite Fed's very dovish turn and Trump's calls for lower USD, is to still rally, but at a slower pace.

    We previously wrote that the recent temporary breakdown below the rising blue support line was invalidated, and that it was a technical sign that a medium-term bottom was already in.

    The USD Index soared, proving that invalidation of a breakdown was indeed an extremely strong bullish sign.

    Interestingly, that's not the only medium-term running correction that we saw. What's particularly interesting, is that this pattern took place between 2012 and 2014 and it was preceded by the same kind of decline and initial rebound as the current running correction.

    The 2010 - 2011 slide was very big and sharp, and it included one meaningful corrective upswing - the same was the case with the 2017 - 2018 decline. Also, they both took about a year. The initial rebound (late 2011 and mid-2018) was sharp in both cases and then the USD Index started to move back and forth with higher short-term highs and higher short-term lows. In other words, it entered a running correction.

    The blue support lines are based on short-term lows and since these lows were formed at higher levels, the lines are ascending. We recently saw a small breakdown below this line that was just invalidated. And the same thing happened in early 2014. The small breakdown below the rising support line was invalidated.

    Since there were so many similarities between these two cases, the odds are that the follow-up action will also be similar. And back in 2014, we saw the biggest short-term rally of the past 20+ years. Yes, it was bigger even than the 2008 rally. The USD Index soared by about 21 index points from the fakedown low.

    The USDX formed the recent fakedown low at about 96. If it repeated its 2014 performance, it would rally to about 117 in less than a year. Before shrugging it off as impossible, please note that this is based on a real analogy - it already happened in the past.

    In fact, given this month's powerful run-up, it seems that nobody will doubt the possibility of the USD Index soaring much higher. Based on how things are developing right now, it seems that the USD Index might even exceed the 117 level, and go to 120, or even higher levels. The 120 level would be an extremely strong resistance, though.

    Based on what we wrote previously in today's analysis, you already know that big rallies in the USD Index are likely to correspond to big declines in gold. The implications are, therefore, extremely bearish for the precious metals market for the following months.

    On the short-term note, it seems that the USD Index has finished or almost finished its breather after the powerful run-up. While the base for the move may be similar to what happened between 2010 and 2014, the trigger for this year's sharp upswing was similar to the one from 2008. In both cases, we saw dramatic, and relatively sudden rallies based on investors seeking safe haven. The recent upswing was even sharper than the initial one that we had seen in the second half of 2008. In 2008, the USDX corrected sharply before moving up once again, and it's absolutely no wonder that we saw the same thing also recently.

    In fact, on March 23rd, just after the USDX closed at 103.83, we wrote that "on the short-term note, it seems that the USD Index was ripe for a correction.

    But a correction after a sharp move absolutely does not imply that the move is over. In fact, since it's so in tune with what happened after initial (!) sharp rallies, it makes the follow-up likely as well. And the follow-up would be another powerful upswing. Just as a powerful upswing in the USD Index triggered gold's slide in 2008 and in March 2020, it would be likely to do the same also in the upcoming days / weeks.

    Please note that the 2008 correction could have been used - along with the initial starting point of the rally - to predict where the following rally would be likely to end. The green lines show that the USDX slightly exceeded the level based on the 2.618 Fibonacci extension based on the size of the correction, and the purple lines show that the USDX has approximately doubled the size of its initial upswing.

    Applying both techniques to the current situation, provides us with the 113 - 114 as the next target area for the USD Index. A sharp rally to that level (about 13-14 index points) would be very likely to trigger the final sell-off in gold, silver, and mining stocks.

    On a short-term basis, we just saw a daily move lower in gold, while the USD Index declined and reversed before the end of the day. This - by itself - is a sign of gold's weakness, but it's a sign of strong weakness, when one takes into account gold's recent technical development.

    Namely, gold recently moved above its declining resistance line - the upper border of the triangle / pennant. A decline in the USD Index was a bullish factor for gold and it should have easily held ground. Namely, it should have rallied further and confirmed the breakout. Gold didn't manage to do that. Instead, it declined and invalidated the breakdown. This is a profound sign of weakness.

    Interestingly, while gold showed weakness, silver showed daily strength by rallying higher despite a move lower in gold. That's exactly what we quite often see right before big declines in the precious metals market.

    The above is the most important short-term technical development in gold, so we don't discuss it separately from this point of view, but we would like to draw your attention to the following monthly gold chart.

    In 2008, after the initial plunge, and a - failed - intramonth attempt to move below the rising support line, gold came back above it and it closed the month there. The same happened in March 2020.

    During the next month in 2008, gold rallied and closed visibly above the rising support line. The same was the case in April, 2020.

    In the following month - the one analogous to May 2020 - gold initially moved higher, but then it plunged to new lows and finally closed the month below the rising support line. We might see something very similar this month.

    Speaking of this month in particular, let's check how gold usually (seasonally) performs in May.

    In short, gold usually tops in the first half of the month, and bottoms in its second half. It then recovers, but moves to new highs only in June. This more or less fits what we expect to see later this month also this year.

    All in all, the outlook for the USD Index is bullish, which is likely to trigger a decline in the price of gold. Ultimately, gold is likely to recover and soar in the following years, but the opposite seems more likely for the following weeks.

    Thank you for reading today's free analysis. The full version of today's article includes the fundamental analysis of the Great Lockdown with the emphasis on the dramatic changes on the US jobs market, as well as technical discussion of silver, mining stocks, USD Index, platinum, and palladium. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions - check out our new service, the weekly Gold Investment Updates, which we provide at promotional terms. Try them out today.

    Sincerely,
    Przemyslaw Radomski, CFA
    Editor-in-chief, Gold & Silver Fund Manager

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