There has been a lot of talk over the last week about the large move in gold prices. There is good reason for that. Tenuous global markets, the prospect for negative interest rates in the U.S. and a rise in volatility propelled gold to a four month high last week.
Technically, gold has broken out.
It looks like there may be a little bit of retracement this week. Overall though, gold has established a nice base and is technically bullish over the near term.
However, a better bet is probably buying silver. Silver usually lags gold and is more volatile.
Think of silver as gold’s little brother. He comes late to the party. But when he does, he goes a little crazy. You can see silver has risen in value, but hasn’t hit the highs that gold has.
It is just below what looks to be a resistance level. It seems to me that the fundamentals of the market will continue. We are going from what looked to be a somewhat stabilized situation at the end of last year to one that is not.
This week Fed Fund futures went from predicting a rise in interest rates to predicting they will fall later this year. I find it hard to believe businesses can keep adding jobs at this level, with what looks to be a recession coming. This would remove the one positive thing the U.S. economy has right now. The economy moves in cycles and it looks like we are at the top of this one.
Look to buy shares of IShares Silver Trust (N:SLV) on any weakness. This is an ETF that holds silver.