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If you're interested in gold trading or silver trading and would like to see how we apply our gold trading tips in practice, you've come to the right place. The Gold & Silver Trading Alerts are the daily alert service provided by Przemyslaw Radomski, CFA that deals directly with the latest developments on the precious metals market. The situation is analyzed from long-, medium-, and short-term perspectives and topics covered go well beyond the world of precious metals themselves, ranging from the analysis of currencies, stocks, ratios, as well as using proprietary trading tools. Subscribers also receive intra-day follow-ups in case the market situation requires it. 1-2 alerts per week are posted also in our Articles section, so you can review these real-time samples before you subscribe.

Whether you already subscribed or not, we encourage you to find out how to make the most of our alerts and read our replies to the most common alert-and-gold-trading-related-questions.

  • What's Behind the USDX Breakout?

    September 21, 2020, 11:21 AM

    So far, 2020 has been an incredible and challenging year for the many markets, and that does not exclude gold, arguably one of the most important and most valuable commodities in the world.

    The yellow metal's price is influenced by a myriad of obvious and non-obvious short and long-term factors, such as the long-term turning point and its self-similar pattern. In recent months, we've already discussed the presence of gold's long-term turning point in broad detail. Furthermore, only a couple of weeks ago, we've learned about the powerful self-similarity pattern in gold, making sense of similarly shaped patterns in the marketplace over different periods.

    In today's analysis, we'll discuss both, starting with the former. Let's take a look at gold's long-term chart.

    We used the purple lines to mark the previous price moves that followed gold's long-term turning points, and we copied them to the current situation. We copied both the rallies and declines, which is why it seems that some moves would suggest that gold moves back in time - the point is to show how important the turning point is in general.

    The big change here is that due to gold's big rally, we moved our downside target for it higher. Based on the information that we have available right now, it seems likely that gold will bottom close to the $1,700 level. That's very much in tune with how much gold moved after the previous long-term turning points.

    Having said that, let's take a look at gold's short-term chart.

    Gold is already after the breakdown below the rising red support line, which makes the short-term outlook bearish, especially that this breakdown was confirmed.

    And what about the likely target? Please note that the if gold declines to the 61.8% Fibonacci retracement based on the most recent rally, it would also decline - approximately - to the April - June lows... Making this support very strong. And - guess what - this price target is in tune with what we already wrote above based on the long-term turning point's consequences.

    Moreover, that's not the most important thing about the above chart. The most important thing about this charts starts with the reply to one important question:

    Do you get the feeling that you have already seen gold perform this way before?

    Because you did.

    The history rhymes, but this time, the similarity is quite shocking.

    We copied the short-term chart and pasted it on the long-term chart above and next to the 2011 top. We pasted it twice, so that you can easily compare gold's performance in both cases in terms of both: price and time.

    They are very similar to say the least. Yes, these patterns happened over different periods, but this doesn't matter. Markets are self-similar, which is why you can see similar short-term trends and long-term trends (with regard to their shapes). Consequently, comparing patterns of similar shape makes sense even if they form over different timeframes.

    After a sharp rally, gold declined quickly. Then we saw a rebound, and a move back to the previous low. Then, after a bit longer time, gold moved close to the most recent high and started its final decline. This decline was less volatile than the initial slide. That's what happened when gold topped in 2011 (and in the following years), and that's what happened also this year. Ok, after the initial decline from the 2011 top, we saw two initial reactive rallies and in 2020 there was just one, but it didn't change the similarity with regard to time.

    The patterns of this level of similarity are rare, and when they do finally take place, they tend to be remarkably precise with regard to the follow-up action.

    What is likely to follow based on this pattern, is that we're likely to see the end of the slower decline, which will be followed by a big and sharp decline - similarly to what we saw in 2013.

    How low could gold slide based on this similarity? Back in 2013, gold declined approximately to the 61.8% Fibonacci retracement based on the preceding rally (the one that started in 2008), so that's the natural target also this time.

    And we already wrote about this particular retracement - it's approximately at the $1,700 level. This has been our downside target for weeks, and it was just confirmed by this precise self-similar technique.

    Another interesting point is that gold made an interim low close to the 50% retracement and the previous lows. Applying this to the current situation suggests that we could see a smaller rebound when gold moves to about $1,760 - $1,800.

    The interim downside target has very important trading implications. Even though gold's rebound might just be temporal, something much more profound is likely to take place in case of mining stocks and silver. You will find more details in today's flagship Gold & Silver Trading Alert. Subscribe now and read today's issue right away.

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

  • USDX's Specific Juncture Maintains the Bearish Outlook

    September 18, 2020, 9:13 AM

    In the global financial world, with a highly interconnected economic dependence, commodities, energy, materials, and in particular, currencies play a pivotal role in the stock market's heterogeneity and connectivity. This applies to gold as well as the world's busiest precious metal marketplace.

    Under normal conditions, gold and the US dollar are in an inverse relationship. Due to its worldwide denomination in USD, any USD weakness pushes gold prices up, and vice versa. Therefore, as far as the USD Index piece of the puzzle is concerned, the situation is not what it appears to be at initially, as we've witnessed something genuinely perplexing.

    Namely, the index invalidated its breakout, which is a bearish sign. The USDX was quite visibly above the declining resistance line, but it failed to hold these gains. In July, a failure to rally above its resistance meant another significant downturn, causing higher gold prices.

    So, does the USD Index and gold await the same faith soon?

    Not necessarily.

    The USD Index is a weighted average of several currency exchange rates. The biggest weight (over 50%) is attributed to the euro exchange rate, and the second biggest weight is attributed to the yen exchange rate. So, let's see how the situation looks like in both currencies.

    The euro is after a breakdown and a verification thereof. This is a very bearish situation, but bullish for the USD Index. Because of that, the situation with the euro is bearish for gold, at least in the short run.

    And what about the Japanese yen?

    Well, the situation is not that different as far as the implications are concerned, but the direct reason for it is.

    As you can see on the Japanese yen index chart above, in the past 1.5 years, whenever the yen tried to rally above the 95 levels, it topped briefly and reversed its course.

    In the mid-2019, this resulted in a prolonged gold decline, and by early 2020, it resulted in a sharp and deeper decline.

    In recent weeks, we've detected the signal above (the yen index trying to break above 95) 4 times: once it was just before the final top in gold, and in all the remaining (3) cases, these were local tops in gold.

    The implications of the current yen situation are bearish for gold, and they are bullish for the USD Index, as the Japanese currency is likely to have invalidated the breakout once again. History tends to repeat itself, after all.

    Given the tips that the individual currency exchange rates give us, should we really expect a USD Index's breakout invalidation to lead towards lower values? Definitely not. The respective currency exchange rates are more "basic", and their outlooks outweigh the index chart that is essentially based on them.

    This means that the legitimacy of USDX's invalidation's bearish implications is suspicious, to put it mildly.

    In other words, the bearish outlook for gold didn't really change at all, even though we admit that it is not as bearish as it was before the USDX's breakout's invalidation. While we continue to predict lower gold prices, in the next several weeks (possibly months), based on the USDX action, we agree that the outlook is slightly less bearish than it was in the previous days.

    Please note that gold has yet another triangle-vertex-based reversal that is just a few days away. Perhaps the yellow metal will move slightly higher once again and then start its plunge on Tuesday or Wednesday. During this time, the USD Index could regain its strength and attempt to break above its declining resistance line once more. Only this time, the breakout would be successful.

    All in all, the outlook for the precious metals market remains bearish.

    Thank you for reading today’s free analysis. Please note that the following is just a small fraction of today’s full Gold & Silver Trading Alert. The latter includes multiple details such as the interim target for gold that could be reached in the next few weeks.

    If you’d like to read those premium details, we have good news. As soon as you sign up for our free gold newsletter, you’ll get 7-day access of a no-obligation trial to our premium Gold & Silver Trading Alerts. It’s really free – take advantage of the opportunity and sign up today.

    Przemyslaw Radomski, CFA
    Editor-in-chief, Gold & Silver Fund Manager
    Sunshine Profits: Analysis. Care. Profits.

  • The Dollar Is Breaking Out While the Miners...

    September 17, 2020, 7:23 AM

    Available to premium subscribers only.

  • The Dollar Is About to Tip Its Hand

    September 16, 2020, 9:32 AM

    Available to premium subscribers only.

  • The Turnarounds in Gold, USDX and Miners

    September 15, 2020, 5:44 AM

    Available to premium subscribers only.

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Aug Market Overview

Gold Market Overview

For a long time, pundits talked excitedly about the rapid, V-shaped recovery. I never shared this view, finding it too optimistic and without basis in reality. Like Jeff Goldblum in Jurassic Park, I hate being right all the time, but it really seems that I was right about this issue. According to the July World Flash report by IHS Markit, we can read that "the new wave of infections has reduced the probability of a V-shaped cycle (...) and increased the risk of a double-dip recession (W-shaped cycle)."

What does it all mean for the gold market? Well, the fragile, W-shaped recovery is, of course, a better scenario for gold than a quick, V-shaped recovery. It means slower economic growth and longer recession, which would force central banks and governments to expand and extend their dovish stance and to provide the economy with additional rounds of stimulus. Music to gold's ears!

Read more in the latest Market Overview report.

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