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Gold And Silver Are Running Hot

By Monica KingsleyCommoditiesApr 22, 2021 11:00AM ET
www.investing.com/analysis/gold-and-silver-are-running-hot-200574697
Gold And Silver Are Running Hot
By Monica Kingsley   |  Apr 22, 2021 11:00AM ET
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The S&P 500 turned around at the open, and didn't look back. Is the selling over? Have the markets turned the corner? Buy the dip looks to have won the day. The VIX has been beaten back. And corporate credit markets scored strong gains. The benefit of the doubt went to the bulls as the Russell 2000 and emerging markets joined in the buying spree. Heck, even the option traders turned more complacent again.

The table looks set for brighter days, but it's the odd performance in value ignoring retreating yields, which the tech heavyweights strangely neither rejoiced. That reminds me of the story of dog that didn't bark. I'm looking for a daily consolidation of surprisingly easily gained ground without ruling out a weak downswing attempt. But the upside potential looks like it will be short term. The daily SPX chart doesn't give me confidence to declare this correction as not returning next week.

Nominal yields have again retreated a little, and inflation expectations are sending inconclusive messages. But don't forget that inflation is what the Fed ultimately wants.

But the higher commodity prices are sending a clear message to the contrary. Look for the PPI readings to be affecting CPI increasingly more. Markets aren't waiting for the Fed, and have been transitioning to a higher inflation environment, even though the Fed sold the transitory talking points quite well. It will indeed be 2022-3 when inflation supported by the overheating job market will kick in. That's the context decreasing nominal yields should be interpreted in.

Gold welcomes this reflation period with nominal yields becoming a tailwind, as reflation is also a time when commodities do great, not just the stock market. And we're in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead. Sorry dollar bulls, the greenback declines are resuming. Just look at the yen and yields nodding to the metals upswing.

Let's move right into the charts (all courtesy of www.stockcharts.com).

Gold And Silver

Gold Daily Chart With HUI And TLT.
Gold Daily Chart With HUI And TLT.

Gold's upswing is still in a healthy shape, with miners outperforming. The retreating nominal yields have turned into a tailwind as gold gathers strength to break the $1,800 level shortly.

Gold Daily Chart With Silver And Copper.
Gold Daily Chart With Silver And Copper.

Yesterday was characterized by silver's strength, and that means an issue of varying proportions usually ahead. But I am interpreting the chart as a weak setback only, a very temporary one. This isn't any kind of turnaround.

Gold's Big Picture

HUI-Gold Weekly Chart.
HUI-Gold Weekly Chart.

This is the key chart proving that the precious metals upleg has started weeks ago. The inset caption says it all. Look for much higher prices ahead as weeks and months roll by.

Summary

Gold and miners are taking a little breather, together with silver. It is nothing unexpected or groundbreaking. The precious metals upleg is well established already, and $1,800 will be history as early as next week, when the rip-your-face-off rally continues.

The shallow S&P 500 consolidation won't likely continue today as another good unemployment figure came in, and I look for the sectoral imbalances to improve later today and tomorrow.

Gold And Silver Are Running Hot
 

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Gold And Silver Are Running Hot

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Comments (8)
Ihsan ullah
Ihsan ullah Apr 24, 2021 11:50PM ET
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nice work love 💖 you
Monica Kingsley
Monica Kingsley Apr 24, 2021 11:50PM ET
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Hi Ihsan, thank you very much. Check out my site, the full content offering for free, and let's come back here to talk - it really depends how often I get published here... I am always available through mail or Twitter too - but I love https://investing.com and would prefer to be talking here
Coc Junior
Coc Junior Apr 23, 2021 7:15PM ET
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nice biz
Coc Junior
Coc Junior Apr 23, 2021 7:15PM ET
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am new here
Monica Kingsley
Monica Kingsley Apr 23, 2021 7:15PM ET
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I am not :D What can I help you with?
Randall Wagner
Randall Wagner Apr 22, 2021 11:14PM ET
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Missed you MK. Thanks for your hard work.
peter kumar
peter kumar Apr 22, 2021 11:14PM ET
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go to her website sir, there's more posts on there
Monica Kingsley
Monica Kingsley Apr 22, 2021 11:14PM ET
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Randall Wagner: No reason to miss me - you've already subscribed on my site - you have full length daily market analysis and more in there. Investing.com is getting my daily articles but it depends whether they manage to post reasonably early in the day or not - I can't influence that beyond sending my stuff early.
Monica Kingsley
Monica Kingsley Apr 22, 2021 11:14PM ET
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peter kumar Thank you Peter - Randall is subscribed already, and knows me since early summer 2020, and pretty well...
Biko Konstantinos
Biko Konstantinos Apr 22, 2021 6:38PM ET
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Great article Monica. What do you think about the potential of a multi year cup and saucer playing out in gold? The 2011 and 2020 highs make the top of the cup and the latest downturn would make the handle. If this does play out, I look forward to witnessing the rip-your-face-off rally you referred to!
Monica Kingsley
Monica Kingsley Apr 22, 2021 6:38PM ET
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Thank you Biko, I indeed do think this long consolidation is over and that we're in a new upleg. Will be fun to ride, really!
Mahesh P Parmar
Mahesh P Parmar Apr 22, 2021 3:01PM ET
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Mean Mam it is in uptrend trajectory.
Monica Kingsley
Monica Kingsley Apr 22, 2021 3:01PM ET
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Well, I am bullish precious metals and miners...
Paul Barron
Paul Barron Apr 22, 2021 1:41PM ET
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Totally Agree with you Lady ! Grin
Monica Kingsley
Monica Kingsley Apr 22, 2021 1:41PM ET
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Dear Paul, thank you very much, and I apologize for being unable to comment earlier. Some server technical issues not on my side, but hopefully I would be appearing here more often as of now again...
LEXI CHIEF
LEXI CHIEF Apr 22, 2021 1:27PM ET
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Totally Agree with you Lady !
Monica Kingsley
Monica Kingsley Apr 22, 2021 1:27PM ET
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Thank you very much Lexi Chief!
 
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