[NOTE: Today’s analysis is a quote from today’s Gold Trading Alert (it’s two key parts). Normally, those are reserved to those, who subscribe to the Gold Trading Alerts or the Diamond Package.
This quote is provided as a courtesy and is available exclusively on GoldenMeadow.eu and GoldPriceForecast.com. Also, please note that the trade in NEM has never been featured publicly, we are disclosing publicly it only now, when subscribers are taking profits.]
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Briefly: in our opinion, no speculative positions are currently justified from the risk-to-reward point of view at the moment of publishing this Alert.
Yes, we are taking profits from all three assets that we’ve been featuring in the previous weeks: GDXJ, NEM, and FCX. Congratulations!
Yes, I’ve been writing about not planning to take profits from NEM until it slides further, but given today’s strength in NEM (it rallied slightly more than GDXJ, and it broke above its declining resistance line), I changed my mind.
If one has short positions in other assets in the precious metals sector (like gold or silver), I also think that they are no longer justified from the risk-to-reward point of view.
I will most likely write about re-entering short positions in all three of them in 1-3 weeks, but for now, the risk of a bigger correction in the USD Index (and a rally in the precious metals sector – and FCX) is simply too big to justify holding these positions.
I will also send out another Gold Trading Alert later today – most likely with my preferred way of going long in PMs or by taking advantage of this correction in some other way.
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The USD Index rallied right into its monthly turning point, and it moved slightly above its upside target of 108.8. Given how steep the rally was, the RSI above 70, the turning point, and the importance of the very long-term resistance provided by the 61.8% Fibonacci retracement (based on the 2022-2023 decline`) that I commented on recently, it seems likely to me that the breakout above the latter will not hold.
Yes, ideally, we would have sold before the rally, however, given the information that we had back then, it seemed that the PMs and miners would fall more as the USD Index would rally. The USD Index has indeed rallied, but PMs reacted with significant strength (and in tune with GDXJ’s triangle-vertex-based reversal).
Also, please note that FCX declined most heavily since early October, which was the exact opposite of what the USD Index did.
If the USDX is to correct in a more meaningful way, then FCX might also correct visibly – say to $42 – 42.5 or so (the previously broken neck level of the H&S pattern). That’s big enough and likely enough for me to prefer to wait it out with profits in hand and planning to re-enter close to the above-mentioned target.
The GDXJ is up in a significant way, and so is NEM. Gold stocks tend to perform particularly well at the beginning of upswings, so seeing both of them strong today is another bullish sign.
Moreover, in NEM’s case, it’s a breakout above the declining resistance line. This suggests that we might see a bigger correction, even though the previous one was shallow.
We entered this short trade right at the final top – on Dec. 12, 2024, and it became profitable immediately. It moved back up today, but overall, I’d say the profits here are quite pleasant, especially for just a trade that lasted just 3 weeks.
The next slide lower is likely to be even more profitable, so stay tuned.
As far as gold’s technical picture is concerned, I think that Anna really nailed it today and I have little to add on top of that. Long story short, if gold rallies above its current resistance, it might then jump to about $2,705 - $2,710. What I’d add on top of that is that given how strong gold is today vs. the USD Index, and how strong gold stocks are in all this, a mover higher in gold seems likely here. And this makes the above-mentioned target quite likely.
Right after posting this analysis, I’ll take a quick break, grab something to eat, and reset my mind a bit, and then I’ll get back to the charts, and I’ll prepare another Gold Trading Alert for you (most likely in 1-2h). The reason is that I want to take the opportunity to profit also on this correction, but I’d like to take a bit more time to select the proxy or proxies for it.
As always, I’ll keep you – my subscribers – informed.
On a side note, your free premium access to Rick’s Gold & Bitcoin Radar is still active, and if you haven’t checked out Rick’s Trading Room, it might be a good idea to do so – there was an interesting short trade in bitcoin featured there as well as an extra (beyond the regular scope of the service) trade in the E-mini S&P 500 futures. What I find particularly interesting is how Rick uses his Hidden Pivot method to set very tight stop losses.
And yes, Rick’s Gold & Bitcoin Radar (the same goes for Anna’s Quick Gold Alerts) is included in the Diamond Package, along with Gold Trading Alerts and other premium services, so those, who are members of this exclusive club will keep their access beyond this gift access without any further action being required on their part.
Summary
To summarize, while the big trend remains down for the precious metals sector (as well as commodities and FCX) and it remains up in the case of the USD Index, it seems that we’ll see corrections in both: PMs and USDX. Consequently, we are taking profits off the table in case of all our trading positions – congratulations!
Given how sharply the USD Index rallied and how likely it is to correct now, I think that even if one has a short position that is not profitable at this time (as they had entered it some other time than in late November when I previously wrote about entering short positions right after closing long positions), it might be a good idea to close it anyway – and plan to re-enter it after the correction at more favorable prices.
The big downside potential for the PMs and commodities in general remains intact for the following months, but as far as the next 1- 3 weeks are concerned, we might see a rally instead of seeing a decline, and it might be a good idea not to wait it out while watching one’s profits decline, but instead re-enter at more favorable price levels, or perhaps even profit from the correction itself.
As I wrote earlier, I’ll send you another Gold Trading Alert today with details of going long (or perhaps going short in case of the USD Index, this is also an option that I’m considering).
As always, I will keep my subscribers updated.
Thank you.
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To summarize:
Trading capital (supplementary part of the portfolio; our opinion): No trading positions at this time. We’re likely to go long in the precious metals sector later today.
Long-term capital (core part of the portfolio; our opinion): If it was available for you (the offer already expired for new investors), half in the silver bond and half in cash / cash equivalents (T-bills). If it’s not available for you, cash / cash equivalents (T-bills).
Insurance capital (core part of the portfolio; our opinion): Full position. If you’d like to buy gold or silver (for example through your IRA – you get a guidebook on that over here), I suggest that you do so through one of the top gold dealers.
Whether you’ve already subscribed or not, we encourage you to find out how to make the most of our alerts and read our replies to the most common alert-and-gold-trading-related-questions.
Please note that we describe the situation for the day that the alert is posted in the trading section. In other words, if we are writing about a speculative position, it means that it is up-to-date on the day it was posted. We are also featuring the initial target prices to decide whether keeping a position on a given day is in tune with your approach (some moves are too small for medium-term traders, and some might appear too big for day-traders).
Please note that a full position doesn't mean using all of the capital for a given trade. You will find details on our thoughts on gold portfolio structuring in the linked essay.
As a reminder - "initial target price" means exactly that - an "initial" one. It's not a price level at which we suggest closing positions. If this becomes the case (as it did in the previous trade), we will refer to these levels as levels of exit orders (exactly as we've done previously). Stop-loss levels, however, are naturally not "initial", but something that, in our opinion, might be entered as an order.
Since it is impossible to synchronize target prices and stop-loss levels for all the ETFs and ETNs with the main markets that we provide these levels for (gold, silver and mining stocks - the GDX ETF), the stop-loss levels and target prices for other ETNs and ETF (among other: UGL, GLL, AGQ, ZSL, NUGT, DUST, JNUG, JDST) are provided as supplementary, and not as "final". This means that if a stop-loss or a target level is reached for any of the "additional instruments" (GLL for instance), but not for the "main instrument" (gold in this case), we will view positions in both gold and GLL as still open and the stop-loss for GLL would have to be moved lower. On the other hand, if gold moves to a stop-loss level but GLL doesn't, then we will view both positions (in gold and GLL) as closed. In other words, since it's not possible to be 100% certain that each related instrument moves to a given level when the underlying instrument does, we can't provide levels that would be binding. The levels that we do provide are our best estimate of the levels that will correspond to the levels in the underlying assets, but it will be the underlying assets that one will need to focus on regarding the signs pointing to closing a given position or keeping it open. We might adjust the levels in the "additional instruments" without adjusting the levels in the "main instruments", which will simply mean that we have improved our estimation of these levels, not that we changed our outlook on the markets. We are already working on a tool that would update these levels daily for the most popular ETFs, ETNs and individual mining stocks.
As a reminder, Gold & Silver Trading Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent, we will send you an additional small alert before posting the main one.
Thank you.
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Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief