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What's Next For Gold And Silver?

By Gary TanashianCommoditiesDec 09, 2021 02:37PM ET
www.investing.com/analysis/whats-next-for-gold-and-silver-200611068
What's Next For Gold And Silver?
By Gary Tanashian   |  Dec 09, 2021 02:37PM ET
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With an understanding that there is always much more in play than nominal charts (the macro and sector fundamentals, for example, which bounced of late but never did definitively flip positive), let’s review nominal charts of gold, silver and HUI along with an update of the gold/silver ratio for good measure.

Meanwhile, we will continue to update the full spectrum of considerations for a positive view of the precious metals complex, including gold’s standing versus cyclical, risk-on markets/assets, the state of speculative versus quality credit spreads, the inflationary backdrop (despite promotions to the contrary, cyclical inflation is not beneficial to the gold mining industry), the seasonal averages and the charts of the metals and miners over various time frames.

Gold

The daily chart shows the gold price (futures) below the moving averages but above short-term support after failing–amid much personally observed cheerleading to the contrary–to cross the bull gateway at 1920.

As a side note, the broken blue downtrend channel on this daily chart is actually the handle to a large and bullish big picture cup that only has one thing going against it that I can see; too much exposure by too many technical analyses, which, of course, means it may not be expressed until many of those technical analysts recant their stories (we have noted all along that the handle can drop all the way to the 1500s without damaging the 2022 bullish cup story. Indeed, if it were to happen (not predicting folks, but being prepared) it would be healthy. There is nothing healthier than a good running of the bugs before a major bull move.

Gold Futures Daily Chart.
Gold Futures Daily Chart.

Silver

The silver price (futures) had risen all the way to the objective, which was the now down-turning SMA 200. It then not surprisingly failed there. This keeps open the possibility of a drop to just below 19 in what could still be termed a bigger picture bull market, sloppy though it is compared with gold

Silver Futures Daily Chart.
Silver Futures Daily Chart.

Gold/Silver Ratio

The GSR is accompanying its fellow market liquidity extractor, the U.S. dollar, as updated recently, upward. With silver having lost leadership gold stocks, which tend to rise when silver is leading, and fall when both metals are bear trending, with gold firm relative to silver, would be vulnerable. As for the rest of the markets, a rising GSR is often but not always bearish. The less cyclical and inflation-sensitive the better, if the GSR and USD continue to rise together (USD is near the third of NFTRH’s three upside targets (98), while the target for GSR, not necessarily a stop sign, is noted in the 81-83 area).

Gold/Silver Ratio Daily Chart.
Gold/Silver Ratio Daily Chart.

HUI

I have been leaning toward an oversold bounce for the sector, but (okay, we’ll slip one macro chart into this post). As you can see, the said bounce would be without some important fundamentals at Huey’s back. Recently constructive ratios of gold versus cyclical and inflation markets have dropped again this week.

SPX, Dow, CRB, Copper, Crude Oil, And US Materials Daily Charts.
SPX, Dow, CRB, Copper, Crude Oil, And US Materials Daily Charts.

HUI had formed a daily chart pattern that you, I, and a legion of technical analysts saw form…

The index then expressed upward, took out the SMA 200 and, in typical gold stock fashion, failed miserably. While there was much gold bug excuse-making about an “attack” by the cabal, the daily chart trends (SMA 50 and SMA 200) were and are down. Period. Too boot, as noted above, the fundamentals are not in order. Not yet.

The lower low was a caution, so it may turn out that the bounce scenario was wrong (or already played out as HUI bounced to and lurks right below the SMA 50). Personally, aside from three long-term positions, I had added a few miners for an oversold bounce and may need to revisit that situation as the bounce could turn out to be of the mini variety. There is a whole wide market out there and while the time will come to ride a big gold stock rally, that time does not yet appear imminent, continued short-term bounce or not.

HUI Daily Chart.
HUI Daily Chart.

What's Next For Gold And Silver?
 

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What's Next For Gold And Silver?

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Comments (4)
Carl Olsson
Carl Olsson Dec 10, 2021 5:02AM ET
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In my currency, SEK, gold prices are holding firm near record levels. In fact, gold prices look pretty strong in all other currencies except USD.  If the Fed actually follow through on the hawkish jawboning there may be more downside in gold of course.
Fabio falec
falec Dec 10, 2021 5:02AM ET
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Yeah, agree, some minir downside. But the point is that you never know what's priced in already. All we know is that in 2019 they could raise max 2.5%, that's it. Now that markets are way less leveraged, they do not have much scope until we'll see cracks. So I am expecting them reverting everything back. It's gonna be epic!
Dave Jones
Dave Jones Dec 10, 2021 2:15AM ET
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Sir. Not one single physical ounce of silver will be traded at these prices anywhere in the world.
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Dec 10, 2021 1:29AM ET
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at least two persons are thicker than the rest
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Dec 09, 2021 10:47PM ET
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Gold will go up if stocks go down faster than gold goes down. hope you understand.
 
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