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 Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold $2,100 and Silver $30. What Next? 

Commodities / Gold & Silver 2020 Aug 16, 2020 - 07:34 PM GMT

By: MoneyMetals

Commodities

On August 7, gold in U.S. dollars, notched its all-time nominal high of $2,089 (It's been printing new highs in many other currencies for quite awhile now.)

Silver peaked (so far) at $29.92. After a few days of attempting to scale $30, it gave up the ghost and dropped a stunning $4.90 intraday, closing down $3.20.

Not satisfied with punishing the bulls during the day session, silver proceeded to drop another $2.30 in overnight Forex trading, but next day opened virtually unchanged just below $26!


Thus far, it's certainly lived up to its reputation popularized by David Morgan who has famously said that "Silver will either wear you out or scare you out!"

Those who were late to the game (within the last few weeks), found their positions either underwater or at best, break-even.

Even more so, pity the leveraged metals' ETF speculators who bet with options or futures.

When the margin clerk contacts you, it's time to instantly pay up or be closed out by your broker - no excuses!

This is where those who principally hold physical gold, silver, and platinum in hand (preferably not in a bank box), or in a secure storage facility like Money Metals offers, and who take the longer view, get to sleep easily at night.

Some investors have made several large buys over a few years; many have dollar cost averaged by the month or quarter; and still others had the courage to buy into declines when weak hands were selling out or afraid to buy.

My guess would be that most who read this column are in one of these accumulator sub-categories.

They decided how much they wanted to acquire, earmarked the funds, and activated their plan without paying a lot of attention to what the herd might be doing. They are investing professionally.

And if we're right about the size and duration of the current bull run, which saw record high gold prices and a virtual doubling of silver in just the last few months, these fortunate "stackers" are going to be quite happy in the coming months and years with the result of their efforts.

Don't be too concerned about large nominal price swings.

In fact, I can tell you with a fair degree of certainty, that "You ain't seen nothin' yet," whether in terms of the coming intraday/overnight price (volatility), or in regard to the ultimate high these increasingly precious – and scarce – metals are ultimately going to reach. You've no doubt heard analysts speak of "three-digit silver" and $8,000-$15,000 gold.

For my money, this kind of talk may not be all that far-fetched.

It would not take a societal collapse, civil war, or regional conflict among nations to bring it about either.

The massive debt incurred by our Federal, State and local level "leaders," not to mention most other countries' governments around the world, added to declining new metals' discoveries, shrinking ore grades and lengthy mine development lead times post-discovery, have the potential to bring these lofty prices into view all by themselves.

But the biggest reason you should want to have a solid position in physical metal, is that it serves as an "insurance offset" against a value decline in other assets you hold, and against the devaluation – stated as public policy by our government – which guarantees to make every dollar in your pocket worth 4-10% less each year, as far as the eye can see. You're holding real "money" simply by receiving it in exchange for some of your "paper promises."

Where could metals turn around toward new highs? If the price declines lately are just "corrective" in nature, where might their drop find chart support?

Two charts below, utilizing highly predictive Fibonacci Retracement percentages, courtesy, Peter Degraff, can offer us some clues.

Prices could certainly plumb even lower without disrupting the bullish case, but these figures do offer a magnetic frame of reference, to which millions of traders around the world pay attention daily.

When might the next leg up get underway?

Technical Analyst, Gary Savage, who has a good record of ironing out such things, has stated in the public space that an intermediate (weeks to months) term correction is underway. He feels that the final washout (as low as $1,700?) "could be another six to eight weeks out."

But then there's this: During the evening of August 12, both gold (-$76) and silver (-$2.30 ) declined sharply, stopped near initial downside targets, then turned around in just one session.

What this could mean is that, just like how Mr. Market fooled most people who thought that silver would struggle for the rest of the year to get through multiple resistance areas between $20 and $26, let alone almost touch $30. Then look what happened in less than a month?

And even more amazing, how about gold? Cutting through its all-time US$ high at $1,923 and notching several closes above $2,000 soon thereafter!

What this tells me is that trying to predict when or where a given price point is going to be reached with these "restless metals" is about as risky as not buying any in the first place.

Yes, normally, we could expect a two month "consolidation/washout" of weak hands, before new tries to take out $30. But were the last six weeks normal? In a vibrant bull run like this, virtually anything is possible, and it behooves both you and me to keep that sort of thing foremost in mind.

For sure, if you're one of those people who either have not purchased as much as you want – higher premiums notwithstanding – or still have not even begun to accumulate, then, pray tell, why not?

The late Jesse Livermore, one of the most famous speculators who ever lived, once said, "It was never my thinking that made me the big money, it was being right and sitting tight, got that!"

Yes, maybe you'll have another six weeks to get your metals' shopping done before we see gold above $2,000 again and silver above $30. But then again, maybe not...

Either way, the big swings we're seeing may be offering one of the last and best opportunities you're going to presented with for quite some time to come.

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com as well as the LODE Cryptographic Silver Monetary System Project. He has investigated precious metals’ mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sector observations withr eaders, the media and North American investment conference attendees.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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