Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Joins the Decline – the Earth is Shaking

Commodities / Gold and Silver 2018 Nov 28, 2018 - 04:31 PM GMT

By: P_Radomski_CFA

Commodities

Gold, silver and mining stocks declined in a quite visible way yesterday, which is in tune with our previous expectations. In the previous days it was only silver and miners that declined in a meaningful manner, but yesterday gold joined them, making this a sector-wide decline. Is this the groundbreaking decline that we have been writing about for so long? Time will tell, but the earth is already shaking.


Precious Metals’ Decline



Gold declined on a significant volume and closed yesterday’ session below the 50-day moving average. The Stochastic indicator flashed a sell signal. We previously saw something similar earlier this month, which was followed by a short-term decline. This is a short-term sell signal also this time, but…

It really doesn’t matter. What matters is the combination of the powerful long-term signals that have been in place for a long time and that have been pointing to much lower gold prices. It’s not a $10 decline in gold that is important here. It’s the $150 slide that’s likely to follow shortly… And that will likely be followed by even lower prices (to about $890) after a temporary corrective upswing.

Silver moved lower once again after topping out practically exactly as the triangle-vertex-based reversal had suggested and as we had described it earlier. Silver invalidated the previous breakdown below the $14 level, but will it manage to invalidate the upcoming breakdown as well? It may not be strong enough to do so, since it didn’t even manage to get back to its previous high earlier this month.

Miners’ Breakdown

The gold and silver mining stocks declined on strong volume and once again closed the session below the rising neck levels of the bearish head-and-shoulders pattern. The current pattern is a bit different than what we usually see as a head and shoulders pattern. It usually has one head and two shoulders. In this case, we have a pattern that had two left shoulders and two right shoulders. It seems odd, but it’s within the definition of what could be viewed as the H&S pattern. The implications are just as bearish as they would be if the pattern had a regular shape.

But, to be 100% objective, this pattern is not fully completed. The two neck lines that we have on the above chart are not the only way that such line can be created. Another way would be to create it based on the mid-October and mid-November bottoms. Such line would have not been reached, let alone broken. The decline is still likely based on multiple other reasons, but let’s keep in mind that the final bearish confirmation will be when the GDX ETF confirms the breakdown below approximately $18.30 – the above-mentioned hypothetical neck level.

This breakdown is likely to happen shortly and lead to a move to new 2018 lows. Confirmed breakdown below the September bottom will open the way to much lower mining stock prices and volatile declines.

The Direct Trigger

The ultimate direct trigger for the huge decline in the precious metals market will likely come from the breakout above the neck level of the inverse head-and-shoulders pattern in the USD index. This will only be a “direct” reason, because there are many other technical reasons for the big slide in the PMs that we outlined in our previous analyses, and because the foremost reason for the entire decline is that gold and silver simply haven’t fallen enough in 2015. Back in 2015, the sentiment wasn’t bad enough to confirm the final bottom and thus lower prices were likely to be seen eventually even despite the early 2016 rally.

The USD Index is not yet above the upper neckline that’s based on the intraday highs and once it gets there it will be very close to the 61.8% Fibonacci retracement (approximately 97.8) based on the entire 2017 – 2018 decline. Consequently, we may see a pause close to this level, but once the above is taken out and the USD confirms a breakout above 98, the following rally would likely be big and sharp. The corresponding decline in the PMs is likely to be big and sharp as well.

Summing up, the outlook for the precious metals market remains very bearish for the following weeks and months and short position remains justified from the risk to reward point of view, even if we see a few extra days of back and forth trading or even a small brief upswing. It is a very high probability of a huge downswing that makes the short position justified, not the outlook for the next few days. It seems that our big profits on this short position will become enormous in the future and that we will not have to wait much longer. Gold’s inability to rally on the increased geopolitical tensions regarding Ukraine confirm this scenario. In other words, being fully in the market doesn’t seem to be a good gold investment idea.

Naturally, the above is up-to-date at the moment of publishing it and the situation may – and is likely to – change in the future. If you’d like to receive follow-ups to the above analysis (including the intraday ones, when things get hot), we invite you subscribe to our Gold & Silver Trading Alerts today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com
Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 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