As shown below, I was one of the early few to post about the fact that the recent pump in Gold to 1640 was entirely a complete fake-out. Meanwhile, many traders were expecting new highs.
This post will be a re-post to help fellow traders to know whats coming in-case they did not get a chance to see my prior idea.
I will refrain from repeating everything I said in my prior idea (please read it carefully for full analysis if you are interested).
That being said, we can expect a re-test of 1500 in the near-term which should provide some support at the gap fill, but ultimately, Gold will re-test 1450 then likely touch 1390 for a brief time before hanging around the 1400-1440 level for 1-3 weeks as it enters a bottoming process in early and mid May. Below 1390 is possible, however, I am NOT forecasting it at this time.
Silver will follow a similar pattern and find support near 12 but ultimately fall to around 10. Below 10 is possible, however, I am NOT forecasting it at this time.
Someone's been looking at 2008 closely trying to draw parallels, and I agree. We may see even an even deeper dive as investors realize paper market is deriving from physical, and deliveries aren't taking place. I'm seeing a 50%+ on physical silver where it's still available, which is unprecedented. Short tech/retail, and then possibly flipping long silver, which I'm hesitant due to counter party risk. If virus is 0.8% death rate, I think we're looking at over a million cases in the US alone right now. Fed can't print over the whole junk bond market with less than 10 trillion, we're headed towards some interesting times.
PaulDeep19131
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@Doomandbloom, Correct. It’s not specifically about 2008/9, but rather, precious metals fall with equities in bear markets. When metals originally started to sell sharply with equities 3 weeks ago that was a hidden situation telling investors a bear market was near.
I agree with you that there likely will be at least a million cases in the US as well.
If we follow 2008/9 exactly then Gold would drop 30% from the temporary top of 1705. If that equates to valid then we would see 1200 Gold. I highly doubt based on key technicals Gold would fall that low unless equities fell another 30% from current levels. Possible but not worth noting yet and it would be too speculative at this point.
I do however see the floor in Gold to be in the 1350-1390 range and we certainly will not make new temporary or all time highs in Gold until we test 1400 or lower.
Those on this site posting that Gold will make new highs have little knowledge of how the corrective cycle and trends function. People also fail to analyze COT. I was one of the first on here weeks ago to suggest Golds 1705 was the temporary top and sharp selling was inevitable.
Cheers and thanks for the comment.
BangkokEye
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@zSplit, Excellent analysis.
ppstudent
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It seems like an illusion because we are witnessing zero rates and insane govt borrowings to help bring stimulus to the economy. I think a combination like that is setting a higher floor for gold.
ppstudent
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beautiful charts...the only caveat is that very strong support is in the 1450-1460 range, almost like a brick wall. The question is does it penetrate that wall for a short time and I believe that is part of the rising channel from year 2000.
PaulDeep19131
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@ppstudent, Thanks man. Yes we will drop below 1450, it may just take a little bit. I believe almost for certain we will test 1390-1400 (perhaps over futures) virtually for sure over the next 6 or so weeks.
When Gold hangs around somewhat of a low price for at-least 2 or so weeks straight without much upside movement, and when any small rally fades, you will then know we are bottoming as that is how Gold cycles function.
- zSplit
ssholtskog
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Thank you for the analysis.
Do you think GLD is an ok way to be exposed to gold? (waiting for the bottom, but preparing)
SamadeusM
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Why are you never posting reasonings for your ideas? only firm predictions. IT WILL. or ot WILL NOT. It would be easier to follow :)
shaunoo95
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Would your thoughts on buying gold/silver differ if you were located in Australia? The AUD is almost in an exact opposite position to the USD, with one being at its lowest in a long long time, while the USD is looking strong atm. Do you think it may be a bad idea to hedge against the AUD right now incase it has any sort of recovery over the next couple years?
BangkokEye
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Thank you for your analysis. I closed my long position based on this earlier today in Asian trading.