Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19
Betting on Next British Prime Minister Tory Leadership Betfair Markets Forecast - 10th June 19
How Can Stock Market Go Up When We’re Headed Towards a Recession? - 10th June 19
If You Invest in Dividend Stocks, Do This to Double Your Returns - 10th June 19
Reasons for the Success of the Dating Market - 10th June 19
Gold Price Trend Analysis - Video - 10th June 19
US Stock Markets Rally Hard – Could Another Big Upside Leg Begin? - 10th June 19
Stock Market Huge Cosmic Cluster Ahead: Buckle Up! - 10th June 19
Stock Market Higher To Go? - 10th June 19
The Gold Price Golden Neckline… - 10th June 19
Gold Price Seasonal Trend Analysis - 9th June 19
The Fed Stops Pretending - 9th June 19
Fed Rate Cuts Soon; Bitcoin Enthusiasts Join Wall Street in Bashing Gold - 9th June 19
1990s vs. 2010s - Which Expansion Will be Better for Gold? - 9th June 19
Gold Price Trend Analysis, MACD, Trend Channels, Support / Resistance - 8th June 19
Gold Surges Near Breakout - 8th June 19
Could Gold Rally Above $3750 Before December 2019? - 8th June 19
5 Big Lies About Precious Metals Investing Exposed - 8th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Precious Metals Stocks Alert: Gold Powerful Upleg Believed Imminent

Commodities / Gold and Silver 2017 Jul 31, 2017 - 02:10 PM GMT

By: Clive_Maund

Commodities

Clive Maund analyzes the significant increase in Large Spec positions in gold and silver in the past week, and the gold stocks to gold ratio.

The significant increase in Large Spec long positions this past week in gold and silver from a very low level might be cause of concern to some, since it of course increases the risk of a reaction in these metals, but there is another much more positive way of looking at it, which is that, in the face of a continued albeit incremental rise in the prices of gold and silver, the Large Specs have suddenly realized their mistake in bailing out over the past couple of months, and are scrambling to get back on board.


On gold’s 1-year chart we can see that it actually made an important breakout last week, from the Dome pattern shown. So far the breakout is marginal, and there is still no confirmation by momentum, which has not broken out of its downtrend, but that is not the case with silver, which as we will see HAS broken out above a similar Dome pattern. Gold is approaching a zone of considerable resistance approaching its April and June highs at the top of the Dome, and once it breaks out above this it should really get moving.

While there was a considerable increase in Commercial short and Large Spec long positions in gold last week, they are still at modest levels that permit a big rally by gold from here. Certainly they are a long way from being bearish.

Click on chart to popup a larger clearer version.

Silver, meanwhile has made a more decisive breakout from its Dome pattern, after putting in a capitulative low a few weeks ago, and is in position to push on past its moving averages towards resistance in the $18.50 near to its February and April highs. Like gold there is still no momentum breakout (MACD) but it is close to it.

After falling to extremely bullish levels a week ago, there was an uptick in Commercial short and Large Spec long positions in silver last week, shown on the latest COT chart below, which is taken the mark the dawn of the realization of their mistake by Large Specs in dumping all of their long positions over the past couple of months, and such an uptick often occurs at the start of a major uptrend.

It is enlightening and useful to observe the long-term silver to gold ratio chart at this juncture, as it shows that the ratio is still close to levels that typically mark an important sector bottom. This chart by itself clearly says there is plenty of room for a major bull market to develop from here.

Lastly we will look at the important gold stocks to gold ratio, with stocks being represented by GDX. This ratio is at its lowest at bear market bottoms, because that is when fear is at its peak, and when investors are fearful they choose bullion over stocks, as they regard it as a more solid investment. At the end of 2015 we saw an extreme low in this ratio which marked the final bottom, and what has been happening since as far back as mid-2013 is that a giant relative Head-and-Shoulders bottom has been forming, and right now we appear to be at a great entry point for stocks, because the ratio is very close to the Right Shoulder low of this relative Head-and-Shoulders bottom. The huge surge by the ratio out of the Head of this pattern that occurred during the 1st half of last year was a game changing move, which showed that the tide was turning and that a new bull market was being birthed. Note that the ratio has to get to 0.26 before it even breaks out of the H&S bottom, which is quite a way above its current level, and once it does break out of the base pattern it is likely to push on quickly to the resistance level shown in the 0.36 – 0.38 zone, which will mean BIG gains for stocks.

We will now look at the GDX to gold ratio in more detail on its 2-year chart, for important guidance re timing. The 2-year chart is quite dramatic as it shows the massive advance in the ratio during the first half of last year, and remember that gold was rising at the same time, so this chart is showing the outperformance by gold stocks during that period, which was certainly very impressive and marked the birthing of a new bull market. After such a huge outperformance, stocks were certainly in need of a rest and that’s why the ratio bedded down into a big consolidation Triangle, but as we can see this Triangle is now fast closing up, which is why we have been buying the sector aggressively in recent weeks, because breakout should be to the upside and lead to a big uptrend, an outcome which is made much more probable by the now strongly bullish gold and silver COTs following the Large Specs giving up and bailing out at the worst possible time in recent months as they are always prone to do.

Conclusion: it couldn’t look better for the sector, which suits us, because we are bullish and now heavily long.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Clive Maund.

 


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules