Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Seasonal Buying Opportunities - 4th Dec 23
Transition From Debt Default And Dollar Demise To A Digital Bridge Currency Recovery - 4th Dec 23
The Future of Trading Has Arrived: Say Hello to Tradu - 4th Dec 23
Adapting to the Fast-Paced World of Online Poker - 4th Dec 23
Israeli Prime Minister Confesses to Being a Palestinian - 4th Dec 23
The Bond Trade - 1st Dec 23
Gold Shines as the Economic Outlook Darkens - 1st Dec 23
Stock Market Santa Rally to S&P 4600+ - 28th Nov 23
Stocks and Silver Have Something to Say about Gold - 28th Nov 23
Can A Stock Market Crash Be Averted... For Now? - 28th Nov 23
Taiwan 2024 Election: Militarization or Development - 28th Nov 23
The Stock Market Trend and the Policy Behind it - 28th Nov 23
Cameco Uranium Stock Hits All-Time High - 28th Nov 23
TSLA, LRCX, TSMC Stock Earnings and Trend Analysis - 26th Nov 23
A Golden Setup: Gold Price Trend Forecast Report - 26th Nov 23
Gold Stocks Winter Seasonal Rally - 26th Nov 23
Elections in South America and Europe Reveal Backlash against Socialism - 26th Nov 23
LMT, JNJ and ASML Stock Earnings and Trend Analysis - 23rd Nov 23
When AI Hallucinates - Top AI Tech Stocks - 23rd Nov 23
Stock Market Ignoring Hawkish Fed - 23rd Nov 23
Stock Market Trend Trajectory into Year End 2023 - 22nd Nov 23
Copper/Gold Ratio: Still Counter-Cyclical - 22nd Nov 23
Learn to Use the FORCE! - How to Really Get Rich - 21st Nov 23
Quad Witching Cracks Stock Market Nuts - 18th Nov 23
Biden Bizarrely Brags About Lower Budget Deficits as US Federal Debt Skyrockets - 18th Nov 23
Silver Price Between a Rock and a Hard Place - 18th Nov 23
The Most Important Chat GPT Tech Reveal of 2023 - 18th Nov 23
AI Tech Stocks Portfolio - 9th Nov 23
Micron MU Stock Trend Analysis - 9th Nov 23
TSMC Stock Trend Analysis - 9th Nov 23
NVIDIA Stock Trend Analysis - 9th Nov 23
The “new ChatGPT” just launched - 9th Nov 23

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Eleven Reasons Why I Am Super Bullish On Gold and Silver.

Commodities / Gold and Silver 2018 Aug 31, 2018 - 10:16 AM GMT

By: Peter_Degraaf

Commodities

                           The Ducks are Lining Up!
This chart is courtesy Real Investment Advice.com and borrowed from a recent article:  ‘Wicksell’s Elegant Model’.   The brown areas in the chart highlight the periods when ‘real rates’ were and are negative.  Gold tends to perform best during those periods.


      


    
Featured is the weekly gold chart courtesy Stockcharts.com.  The pattern indicates the likelihood of a developing ‘inverted head and shoulders’ formation.   Watch for a turnaround here to carve out the right shoulder.  A breakout at the blue arrow will confirm the pattern, with a target at $1650. 


This chart courtesy COT@softwarenorth.com shows the ‘net short’ position of commercial gold dealers has evaporated for the first time in years – perhaps for the first time ever.  As a percentage of open interest the number is very bullish at 0.4%.

/
        
This chart courtesy Zerohedge.com shows hedge funds have NEVER been more ‘net short’ gold.  Hedge funds are often referred to as the 'dumb money'.  The last time these funds were somewhat short (compared to today), was in December 2015 - see chart).  That was when gold moved from $1050 to $1375.  Is history about to repeat?


           
This chart is courtesy Bloomberg.com shows a situation today that compares to a set-up in 2002.  Gold back then rose from $275 to $1925.


This chart courtesy BGMBullion.com shows a steady increase in the amount of gold that is being acquired by Central Banks, since the end of the last financial crisis.  Since Central banks are hoarding gold, we can assume that these bankers anticipate a future role for gold in the world’s financial system. 

This chart dated April 2018, and courtesy IMF and Deutschebank shows several dozen countries and the expected % Change in Government Debt-to-GDP Ratios for “Advanced” Economies.  Most of the countries listed are expected to reduce this ratio, but the USA is shown here as likely to increase its debt to GDP ratio by 9%.  This increase in the level of debt will cause the US dollar to depreciate.  Investors are likely to seek gold and silver for protection.

While this article is focused primarily focused on gold, we recall that historically, during a gold bull market, silver usually moves up even faster than gold.

     
This chart courtesy Sprott.com and sources listed shows hedge funds have shorted silver at an all-time high number.  When too many passengers in a boat are seated on one side, there is danger of the boat tipping over.  Watch what happens to the price of silver when these short positions are covered. 

      
This chart courtesy Egon von Greyerz at Goldswitzerland.com shows a bullish pattern is developing in silver.  Silver is the only commodity that has not yet reached the value that prevailed in February 1980.  An upside breakout here will send silver advancing towards that 48.50 level, and possibly beyond.


This chart courtesy goldchartsrus.com shows the number of ounces backing SLV and other silver ETFs and trusts has increased while the price of silver declined.  This is bullish divergence; leading to the conclusion that silver is due for a rise, to match the uptrend in this chart.


      
Featured is the Palladium chart.  Palladium often leads the precious metals complex.  The upside breakout at the blue arrow is setting a positive example for gold and silver and is confirmed by the supporting indicators. This breakout sets up an initial target at the green arrow.

DISCLAIMER:  Please do your own due diligence.  Peter Degraaf is NOT responsible for your trading decisions.

By Peter Degraaf

Peter Degraaf is an on-line stock trader with over 50 years of investing experience. He issues a weekend report on the markets for his many subscribers. For a sample issue send him an E-mail at itiswell@cogeco.net , or visit his website at www.pdegraaf.com where you will find many long-term charts, as well as an interesting collection of Worthwhile Quotes that make for fascinating reading.

© 2018 Copyright Peter Degraaf - All Rights Reserved

DISCLAIMER:Please do your own due diligence.  Investing involves taking risks.  I am not responsible for your investment decisions.

Peter Degraaf Archive

© 2005-2022 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