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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 Are the Implications of Miners' Upswing?

    September 10, 2020, 8:26 AM

    Available to premium subscribers only.

  • Mining Stocks - Taking a Cue from S&P 500?

    September 9, 2020, 7:10 AM

    The big news of yesterday's session was that the S&P 500 invalidated its breakout above the previous 2020 high, and that happened after the Fed was even more dovish than previously. What are the implications for the precious metals market, and why didn't miners decline more yesterday?

    After topping at approximately the triangle-vertex-based reversal (please note how effective and versatile this technique is), stocks moved lower and ended yesterday's session clearly below the previous 2020 high. Invalidations of breakouts are important on their own, but this development is something special. The reason is similarity to what happened in the late 2018. This is the most recent example of what an invalidation could do to the price in the matter of jus several weeks. In short, stocks plunged shortly after breakout's invalidation.

    There are also other factors that need to be kept in mind, but in my opinion stocks are likely to fall in the following weeks. On a side note, if one is into stock investments at all, it might be a good idea to currently consider a market-neutral strategy based on selection of stocks that are likely to fall the most. The short position in one of our stock picks (it was NVDA) just gained almost 20% while the S&P 500 fell by almost 6% during the same period.

    Moving back to the precious metals market - how does the above-discussed bearish outlook translate into mining stock prices and PMs in general? In short, it has bearish implications - PMs and stocks fell together in March as well.

    Ok, so why didn't the mining stocks decline more yesterday?

    Indeed, miners moved just a little lower during yesterday's session. The GDX ETF closed the day above the lower border of the blue triangle pattern, even though it moved below it during the day. Did miners just show strength?

    They both did, and didn't. Gold ended yesterday's session slightly higher despite the intraday decline, so the fact that miners closed the day lower is not a sign of strength.

    Miners held up very well compared to the general stock market, but this is just a supplementary market for them - the most important influence comes from gold.

    Consequently, it seems too early to say that miners are indeed showing strength. They are declining very slowly - just like gold is.

    And it's all happening in tune with what we wrote yesterday - gold appears to be repeating its 2013 performance but on a much shorter timeframe. The part of the move that it's currently repeating, is a slow decline that we saw right before the plunge. Therefore, what we just saw is not odd at all - it's normal.

    Quoting our yesterday's analysis - the part about the self-similar pattern - seems appropriate:

    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 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.

    This might be the moment to switch from short positions in the miners to short position in silver. It's too early to say for sure at this time, though.

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

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

  • Powerful Self-Similarity Lesson from Gold

    September 8, 2020, 8:32 AM

    A picture is worth a thousand words, so let's get straight to the gold chart itself.

    As far as gold is concerned, we previously wrote the following:

    After topping at its triangle-vertex-based reversal, gold declined and is now trading at its declining resistance line, which turned into support. This could generate a rebound, especially that at the same time gold finally broke below the rising medium-term support line. This breakdown is a big deal, as all previous attempts were invalidated.

    Since this support is so strong, we expect a rebound, quite possibly back to it. Such a verification (if gold doesn't invalidate the breakdown that is) would be very bearish for the short term.

    Gold paused after moving below the above-mentioned support line, and the breakdown was verified. This is very bearish for the short term.

    Gold moved back and forth at the most recent triangle-vertex-based reversal, which is a bearish sign. Why would this be the case? Because gold had declined previously, which means that it "should have" rallied at the most recent turning point. It didn't, which shows short-term weakness.

    The next support is at $1,700, which is where - approximately - gold topped and bottomed multiple times earlier this year. That's also the 61.8% Fibonacci retracement based on this year's upswing.

    The $1,700 level is additionally confirmed by the 38.2% Fibonacci retracement based on the entire 2015 - 2020 rally.

    There's also possibility that gold would decline to the $1,500 - $1,600 area or so (50% Fibonacci retracement and the price level to which gold declined initially in 2011), but based on the size of the recent upswing, we no longer think that this scenario is the most likely one.

    Gold's very long-term turning point is here and since the most recent move has definitely been to the upside, its implications are bearish.

    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.

    Also, while we're discussing the long-term charts, please note the most important detail that you can see on the gold, silver, and mining stock charts, is hidden in plain sight. Please note how much silver and miners rallied.

    The analogy to the price moves after the previous turning points didn't change, but since the starting point is much higher, the downside target is also higher.

    Speaking of upside targets, two weeks ago, we wrote the following:

    Based on gold's Fibonacci extensions and the previous major highs and lows (the 2018 high and late-2019 low along with the 2020 low), we get a nearby upside target of $2085. At the moment of writing these words, gold is trading at $2044. Given this week's volatility, it could even be a matter of hours before gold reaches the above-mentioned target and reverses. Taking closing prices into account, gold is up by $35, so if it reverses significantly, we would be likely to see a powerful weekly reversal candlestick and one that causes gold to decline in the following weeks.

    That's more or less what happened. Gold topped at $2,089.20. It then declined quite visibly and closed last week at about $1,950.

    Before moving to silver, we would like to discuss something very important regarding the most recent rally in gold and the subsequent consolidation.

    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 might rebound just temporarily, something much more profound is likely to take place in case of mining stocks and silver. You will find details in today's flagship Gold & Silver Trading Alert. We invite you to subscribe and read today's issue right away.

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

  • The Move Is On

    September 4, 2020, 8:18 AM

    Available to premium subscribers only.

  • Strength in the Miners - Real or Fake?

    September 3, 2020, 7:42 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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