Given today’s decline in gold, it appears that we took profits pretty much right at the top on Friday – at least in the case of gold – but…
Was that the final short-term top?
To clarify, we had gone long on Jan. 2, and I then moved the profit-take level for gold higher – to $2,733 on Jan. 3. Friday’s (Jan. 10) intraday high in gold’s continuous futures contract was $2,735 and wrote about closing this positions in Friday’s intraday Alert. This is why getting the Alerts exactly when they are needed with very specific details is so valuable.
Moving back to the previous question - this is likely at least in terms of price, but I wouldn’t be so sure in general. The USD Index still didn’t correct in a more meaningful way, and it seems that the stock market could form a local bottom shortly, which could trigger a near-term rally in the PMs and miners as well. Also, we haven’t seen a more visible outperformance in the case of silver (vs. gold), which suggests that this part of the rally might still be ahead.
Besides, as you may remember, I wrote about the current price pattern in gold being similar to what we saw in 2011-2013. Based on that analogy, gold’s decline could now take the back-and-forth form, at least initially.
Of course, history rhymes instead of repeating to the letter, and the price moves that we see now are of a very short-term nature. This means that what took weeks back then could take just days this time. Consequently, we could see another rally as soon as this week, which might or might not take gold to its last week’s high.
In my view, the easy part of the rally is over, and I’m very happy that we’ve taken profits off the table. However, as you may remember, the plan was to switch to silver for the final stage of the rally, to also make money on its outperformance. This hasn’t happened – at least not yet.
What we might get during gold’s next (and final?) run-up is that show of silver’s (fake) strength.
Of course, if this is THE top, and the USD Index simply keeps on soaring and the stock market plunges, we’re unlikely to get another corrective upswing in the PMs. It seems more likely to me, though, that we will indeed get it.
Right now, silver is after a sizable daily decline, but if the stock market turns around and moves higher in the following days, I think silver will follow it higher.
The same goes for the mining stocks, but since this is not the initial stage of the rally, but – more likely – it’s final part, the odds are that silver will now be relatively stronger than miners.
Given the analogy to the late-2024 correction, Friday’s and today’s declines are relatively normal. We could still see another small wave up here.
Also, please compare the sizes of the December 2024 rallies in the GDXJ and silver. In case of the GDXJ that rally was about half of the entire rally, but in case of silver, that was a much bigger part of the entire rally.
This is why my current plan is to still catch that final rally in silver.
When might I write about going long?
It seems to me that the silver bottom will coincide with the bottom in stocks, and they are about to encounter an important support level – their previous lows – soon.
Technically, stocks are right after a breakdown below a head-and-shoulders pattern, which is a sell signal. BUT, it’s also true that this pattern tends to be followed by a correction, and this correction might be exactly what is needed to trigger the final upswing in the precious metals sector.
This corrective upswing might start shortly, but the November lows are about 5,700, which is a quite round number, which increases their technical strength.
So, unless I see something profoundly bearish and the above theory is invalidated, I plan to go long silver when the S&P 500 moves to 5,700 or close to it.
Meanwhile, the USD Index soared once again, but it doesn’t mean that it can keep on rallying without correcting. The correction will come, regardless of how bullish the medium-term picture looks like.
The 23.6% Fibonacci retracement (the one that characterizes particularly strong bull markets) is just below 108, which would be a good target in my view, as a decline to this level would approximately correspond to the previous high and lows. That’s where I also plan to take profits from the current positions in the UDN (inverse ETF to the USD Index).
So, for now, we remain on a stand-by regarding the precious metals market, which the good possibility of going long for a quick trade in silver.
As always, I’ll keep my subscribers informed.
Also, some of you asked if the webinar with Rick Ackerman will be recorded. Yes, it was recorded, and you can watch the entire recording here. As a reminder, Rick’s Gold & Bitcoin Radar is a part of the Diamond Package.
Now, as the webinar with Rick was a huge success – over 120 people were online on average during the entire webinar and on average very few people left during it, which shows that those, who attended, really enjoyed it.
The great webinar with Rick on Thursday, and profits in gold and miners on Friday were a good way to end the previous week, and we also have a great surprise for you this week.
Namely, this week, we’ll also going to host a webinar (Thursday, Jan. 16 at 11 AM EST; 5 PM CET), and this time it will be about something that everyone can relate to – it will be about improving one’s profitability and overall life quality by better dealing with trading-related stress and anxiety. This and patience (which is still related to the above) was the issue that popped up most frequently during the recent well-being survey, as well as in the survey that we conducted some time ago regarding the emotions that investors might have a hard time dealing with.
This webinar will be entitled Calm Mind, Clear Profits: Breathe Your Wealth Back and you will receive an invitation from Golden Meadow shortly. You’ll read more there, but for now, I just want to tell you that the webinar will be the first (free, no obligation) lesson of the course that will be launched on Golden Meadow on that day on that very topic. As such, it will include lots of value on its own and I got confirmation that it will include also very actionable details that you’ll be able to implement to better tackle stress and anxiety.
This is a huge step, as this will be the first course that we provide on Golden Meadow – so, as you can imagine, we want to make a great first impression. Trust me – you want to be there. I will be the host during the webinar, but the experts will be providing the key insights. You’ll read more, who the experts and other details shortly.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief