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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.

  • Gold & Silver Trading Alert

    November 27, 2020, 4:18 AM

    Available to premium subscribers only.

  • Quick Thanksgiving Update on Gold

    November 26, 2020, 3:27 AM

    Available to premium subscribers only.

  • Further Clues Reveal Gold’s Weakness

    November 25, 2020, 8:24 AM

    It might have been tempting to think that the recent move lower in the U.S. Dollar Index would serve to push gold higher, as it usually does according to the traditional pattern. But these are extraordinary times and there are too many external factors weighing negatively on the price of the yellow metal.

    As if the previous vaccine announcements weren’t enough, the latest vaccine trials from AstraZeneca further propelled positive news. And as Trump reluctantly gave Joe Biden the green light towards a transition to the White House, what more can the precious metals do but capitulate? The risky assets train is leaving the station and investors are climbing on board. There simply is no clear catalyst for gold to rally and it can only go further down from here before bottoming.

    With this glut of headlines, what news can I possibly give you today? Well, I can tell you about some of the clues that yesterday’s decline provided and about one from today’s pre-market USD and gold trading.

    Let’s start with the latter.

    Graphical user interface, chartDescription automatically generated

    In today’s pre-market trading, the USD Index moved slightly lower, and at the moment of writing these words, it finds itself a bit below the mid-August bottom.

    The invalidation of the intraday breakdown below this level was what triggered the biggest part of gold’s decline on Monday (Nov 23). This might happen again very soon, but this is not the clue that I was writing about earlier. Today’s clue is that since the USD Index might be breaking lower here, gold should have reacted with a visible rally – if it was past a bottom.

    ChartDescription automatically generated

    Gold didn’t react with a visible rally. Conversely, gold reacted with a small decline. This subtle clue tells us that gold hasn’t formed a bottom yet. And since gold doesn’t want to rally from here, and it seems that it’s about to get a bearish push from the USD Index (I expect the tiny breakdown to be invalidated just like the previous 3 attempts), we have a quite bearish combination of factors for the yellow metal.

    Please note that moves in both the USD Index and gold were relatively small (so they could be invalidated before you read this) but this lowers the bearish implications only a little – after all, for some time in today’s pre-market trading gold was definitely moving a bit lower while the USDX was a bit lower as well.

    What about the clues from yesterday’s session? They are visible on the mining stock chart.

    ChartDescription automatically generated

    Miners moved lower and while they tried to bounce back, they failed to do so, creating a bearish reversal during the day. This kind of shape during the day’s session is bearish in nature. It’s especially the case when we see it after a rally (it’s a shooting star candlestick or a gravestone doji candlestick in this case), but even during a decline it indicates more weakness. Please note that we already saw that a few times recently: on November 12 and 13, and on October 26.

    The shape of yesterday’s session is one clue, and the steady buildup in volume as prices decline is another. The August, September, and October bottoms were characterized by a relatively average volume during the declines preceding them, and then a huge spike in volume at the bottom. This time, the volume is also significant in absolute terms, but not in relative terms. The volume is simply increasing as the price moves lower as more and more people become convinced that gold is no longer in a bullish mode.

    The RSI indicator is approaching the 30 level, which some might view as bullish, but let’s keep in mind that back in March, the bottom was not yet in until the RSI moved into its low 20s.

    So, while it’s clear that there are counter-trend rallies within any move, it seems that the precious metals market is not yet ready to launch a counter-trend rally right now. And even if it does start this kind of move, it’s unlikely that it would be significant. The outlook for the precious metals market remains bearish for the next few weeks.

    Thank you for reading our free analysis today. Please note that the following is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

    Sincerely,
    Przemyslaw Radomski, CFA
    Founder, Editor-in-chief

  • Gold: Digging Beneath the News

    November 24, 2020, 12:20 PM

    Gold plunged on Tuesday to slightly below $1800 an ounce – the first time it did so since July. Successful vaccine tests have made investors bullish and there is hope on the horizon, but is that it ? Did the yellow metal decline on the news or are there other factors afoot ?

    Approximately two weeks ago gold plunged about $100 and we received a few messages saying that there was nothing technical about this move, and it was just a reaction to the potential Covid-19 vaccine. Well, what about now? During today’s pre-market trading gold was down about $75 counting from Friday’s intraday high – what is this in response to? The U.S. Dollar Index and the stock market haven’t moved in any significant manner and no major news hit the market. Why did gold decline?

    Because things are not as simple as news-price-reaction models would have one believe. People’s interpretation of events is what matters – whether we’re discussing the performance of markets or any other life situation in general.

    Let’s consider a bank robbery, during which precisely one person gets shot and it’s in the arm - without any major impact on their life (heals relatively quickly, no long-lasting damage). Was this person unlucky or lucky?

    The event was clear and objective. But what about the interpretation?

    If one chooses the following interpretation: they could have been shot fatally and/or many other people could have been shot - then based on what really happened, this person was lucky.

    However, if one chooses the following alternative: they could have simply stayed home or there might have been no robbery at all - then based on what really happened, this person was unlucky (wrong place, wrong time).

    Therefore, the feelings and implications garnered from the situation depend entirely on the person and how they subjectively interpret these scenarios.

    The above example (taken from the book, The Happiness Advantage by Shawn Achor, which I highly recommend) can be applied to markets as well. The markets are bombarded with news every day. Some news is more important than others, and sometimes when a more important event takes place (or when something trivial happens), the markets move. But they move because they (markets = market participants) interpret a given situation in a specific way. And the way they choose to interpret news and events depends on the stage of a particular cycle that they’re in.

    Do the markets want to move lower? If so, they will overreact to the bearish pieces of news, and will more or less downplay the bullish ones – either immediately or shortly thereafter. Did gold plunge two weeks ago based on the news regarding the Covid-19 vaccine? Yes, but the extent of the decline was based on something deeper. It could have declined about $15, right?

    The current price movement proves that what we saw two weeks ago was indeed much more than just a reaction to news. Gold just plunged even without any major news announcement. In fact, it declined even without the most obvious trigger that it was likely to get – a rally in the USD Index.

    What does it all mean? It means that while it’s not possible to predict unexpected news like a Covid-19 vaccine, it’s still possible to detect a large part of the market’s movements. This is possible thanks to the techniques aimed at detecting at which stage the market is at and what it wants to do next. Some of these gold trading tips include looking at the relative performance of gold vs the USDX and gold miners vs. gold, but there are many additional ones that one can use.

    All things considered, it should now be obvious to everyone that gold wanted – and likely still wants – to move lower before soaring.

    So, what’s next?

    First of all, I previously wrote that gold might bounce from about the $1,800 level. I think this is no longer likely. Why? Because gold is already almost right at this level and the USD Index hasn’t rallied yet.

    A picture containing chartDescription automatically generated

    The USD Index refused to decline below the mid-August lows and the invalidation of the tiny breakdown was enough to trigger the slide in gold. In yesterday’s analysis, I commented on the above chart in the following way:

    At the moment of writing these words, the U.S. currency is testing the previous lows. It’s very near to the last daily close price of 2020. At the same time, the USDX is below the 92.5 level, which is much more important than it seems at the first sight. Previously, in 2020, the USDX managed to stay below this level for a maximum of 2 sessions. This is currently the fifth session below it. Normally, this could be viewed as an early sign of a breakdown, but I don’t think this would be the proper interpretation.

    Given the Thanksgiving seasonality, and the fact that the small breakdown below 92.5 didn’t result in a breakdown below the previous price lows, it’s doubtful that there are any bearish implications at all. Besides, that’s not even the most important detail from the precious metals investors’ point of view.

    The most important detail is that all these bearish moves in the USDX failed to trigger any decent rallies in gold, which shows that the latter simply doesn’t want to rally from here.

    The fact that gold declined so much based on just the USD’s inability to decline more is very telling. Precisely, because it tells us how much gold actually wants to slide, and how impatient it got with the lack of bearish triggers.

    ChartDescription automatically generated

    Since gold broke below the previous lows practically on its own, and it seems that it’s about to get a bearish push from the rising USD Index (it seems to have completed its broad bottom). Consequently, it’s likely that it will decline more than just an additional $10 or so when the USDX finally rallies.

    Actually, it’s likely to decline much more. Based on the 50% Fibonacci retracement based on the entire 2020 rally, on the 138.2% Fibonacci extension based on the initial August – September decline, and on the April high in terms of the daily closing prices, the next short-term target is at about $1,770.

    Still, I wouldn’t be surprised to see gold decline even more before it reverses. Based on the declining trend channel (the line that’s parallel to the line based on the August and November highs), gold could decline to about $1,750 or so (another $50) before bouncing.

    And yes, “bouncing” not “bottoming”. If gold was able to decline as much without the USD’s help, then it’s likely to slide much more when the USD Index finally rallies. The bullish potential for the latter is significant, so gold could continue to slide well below $1,700 before bottoming.

    On the other hand, there are multiple techniques pointing to $1,700 as strong support, which suggests an important rebound from this level. Will it be THE bottom? It’s a tough call to say at this time. As I wrote many times previously, it will be gold’s ability to hold strong despite USD’s rallies that will be the final bullish call. At this time, we have gold declining even without the USD’s help.

    Thank you for reading our free analysis today. Please note that the following is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

    Sincerely,

    Przemyslaw Radomski, CFA

    Editor-in-chief, Gold & Silver Fund Manager

    Sunshine Profits: Effective Investment through Diligence and Care

  • Precious Metals Now and Then: A Comparison

    November 23, 2020, 10:20 AM

    The last time The Gold Miners Bullish Percent Index ($BPGDM) signaled overbought conditions, it was 2016 and another U.S. Presidential election was in full swing. Precious metals tumbled right after that. What's this $BPGDM you ask, and why is it important ? 

    When making decisions regarding the gold mining stocks sector, some will choose to follow price actions while others will use indicator tools. The Gold Miners Bullish Percent Index ($BPGDM) is one such tool, essentially being a gauge of overbought and oversold conditions for the gold mining sector with readings plotted on a range between 0 and 100. Anything below 30 suggests oversold conditions while readings above 70 indicate an overbought situation, with a buy or sell signal being triggered when the index reaches an extreme level and then reverses. Because gold stocks move in tune with gold or silver, the index can be useful in determining the direction of the entire precious metals sector as well as acting like a crystal ball when comparing historical patterns.

    Most recently, the $BPGDM showed the highest possible overbought reading, which gives us an indication that the outlook for the precious metals is bearish.

    Graphical user interface, chart, histogramDescription automatically generated

    The excessive bullishness was present at the 2016 top as well and it didn’t cause the situation to be any less bearish in reality. All markets periodically get ahead of themselves regardless of how bullish the long-term outlook really is. Then, they correct. If the upswing was significant, the correction is also quite often significant.

    Please note that back in 2016, there was an additional quick upswing before the slide and this additional upswing had caused the Gold Miners Bullish Percent Index to move up once again for a few days. It then declined once again. We saw something similar also this time. In this case, the move up took the index once again to the 100 level, while in 2016 this wasn’t the case. But still, the similarity remains present.

    Back in 2016, when we saw this phenomenon, it was already after the top, and right before the big decline. Given the situation in the USD Index, it seems that we’re seeing the same thing also this time.

    Please note that back in 2016, after the top, the buying opportunity didn’t present itself until the Gold Miners Bullish Percent Index was below 10. Currently, it’s above 50, so it seems that miners have a long way to go before they bottom (perhaps a few months – in analogy to how gold declined in 2016).

    ChartDescription automatically generated

    Last week, when I was preparing the analysis of the above GDX ETF chart, I commented on the late-week decline in the following way:

    On Thursday (Nov 12th) and Friday (Nov 13th) of last week, miners moved and closed higher, but it’s important to note that their upswing was tiny and not accompanied by strong volume. In other words, it has all the characteristics of the breather that’s going to be followed by another move in the direction in which the market had been moving previously.

    The previous move was down, so the implications are bearish.

    The intraday nature of Friday’s and Thursday’s moves is also quite informative. In both cases miners moved higher – just as gold did – but then they declined, erasing a large part of the preceding gains before the end of the session. That’s yet another clue confirming the counter-trend nature of the recent upswing in the miners.

    Something similar took place last week, and thus today’s comments will be similar. Gold miners declined early during the initial part of the week, and then they bounced right before the weekend. The volume was decent, but nothing to call home about. What does it mean? It means that we have just likely seen a regular breather that is likely to be followed by further declines.

    As indicated earlier, the biggest part of the decline might start shortly after Thanksgiving.

    Also, let’s not forget that the GDX ETF has recently invalidated the breakout above the 61.8% Fibonacci retracement based on the 2011 – 2016 decline.

    ChartDescription automatically generated

    When GDX approached its 38.2% Fibonacci retracement, it declined sharply – it was right after the 2016 top. Are we seeing the 2020 top right now? This is quite possible – PMs are likely to decline after the sharp upswing, and since there is just more than one month left before the year ends, it might be the case that they move north of the recent highs only in 2021.

    Either way, miners’ inability to move above the 61.8% Fibonacci retracement level and their invalidation of the tiny breakout is a bearish sign.

    The same goes for miners’ inability to stay above the rising support line – the line that’s parallel to the line based on the 2016 and 2020 lows.

    Let’s proceed to metals themselves.

    ChartDescription automatically generated

    Just as miners, gold seems to be taking a breather. The breather was quite likely to occur after such a big daily (Nov 9th) decline, and there’s not much more that we can say about it per se.

    However, the size of the counter-trend rally is quite interesting when we compare it to the size of the corrective upswing in silver.

    Please note that gold is more or less in the midway between the bottom and the 38.2% Fibonacci retracement based on the August – November decline.

    Silver, on the other hand, was much higher in relative terms.

    Graphical user interface, chartDescription automatically generated

    In fact, last Monday (Nov 16th), silver even moved slightly above the 38.2% Fibonacci retracement.

    What does it mean? It means that silver was outperforming gold on a very short-term basis. This might not be exciting to those who are new to the precious metals market, but it should be very exciting for those who have been following my analyses for some time. Silver tends to outperform gold on a short-term basis right before declines. Consequently, the above serves as a bearish confirmation.

    Silver broke below the rising short-term support line since that time, which suggests that the days of the counter-trend rally are numbered. Based on the analogy to other U.S. election years, it seems that we won’t have to wait for long.

    Thank you for reading our free analysis today. Please note that the following is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

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

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Nov Market Overview

Gold Market Overview

The U.S. passed a milestone! The federal debt in private hands surpassed 100 percent of GDP measured quarterly, in the second quarter of 2020. On an annual basis, it would exceed the size of the economy next year, due to a massive fiscal stimulus and a plunge in revenues amid the coronavirus crisis (however, the fiscal deficits and debts were already increasing significantly prior to the outbreak of pandemic). According to the Congressional Budget Office, the fiscal deficit will reach $3.3 trillion in 2020, more than triple the shortfall recorded last year. At 16.0 percent of GDP, the budget deficit would be the largest since the World War II. Is the US waging a war I don’t know about?

Read more in the latest Market Overview report.

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