If you haven’t been paying attention to what’s going on in gold, silver and platinum in the past 3 days, please read this research article carefully. If you have been paying attention to the movement in precious metals, read on to find out why this movement is so important. Here we go…
Precious metals have been on the rise for much of the past 24 months. However, certain forces have attempted to stifle the upward advance as global investors take a more fearful stance on the global economy. When the COVID-19 virus event occurred, there was a large negative movement in Gold and Silver.
This type of low price rotation is a common pattern as traders are forced to liquidate precious metal positions to cover the margin requirements related to long open positions in a downward price movement. After the wash move was complete, we saw that precious metals, particularly gold, rose back to previous price levels, while silver was around $ 16 ~ $ 17 for a while before rising further. .
Our research team has been warning that Silver will become the Metals Superhero in the near future and we recently issued more research posts to support the upward price movement we’ve seen in Silver before the current big breakout breakthrough. Read some of our previous posts here.
September 24, 2019: Is silver about to become the superhero of precious metals?
May 29, 2020: METALS NEAR THE CRITICAL MOMENT FOR A NEW PARABOLIC RALLY
July 13, 2020: MEASURED GOLD AND SILVER MOVEMENTS
WARNING TRIP HAS BEEN TRIGGERED!
If you understand something about precious metals and how they work as a hedge against perceived risk in global markets, then you already understand what I’m about to say … This big breakout move in silver and gold is a massive warning shot Worldwide. lean towards global investors. The idea that the US stock market may continue to rise to frothy levels as COVID-19 erodes the global economy, credit, debt, and trade is silly. Yes, certain stocks are generating decent income and returns, but we are talking about a possible global economic contraction of almost 20% to 30% or more in the next 16+ months. Currently, more than 40 million US workers are unemployed and many states are already reissuing “closings” due to sudden increases in cases of the COVID-19 virus.
The first warning shot has not been fired for all to see. It was big, loud, and easy to see for anyone with more than two brain cells. This is how Precious Metals tells us that many global investors do not believe that current valuations in the US and global stock markets are legitimate. It also raises great concern for COMEX and other exchanges related to short open positions in gold and silver.
Short precious metal volumes have recently increased from 10.86% of total daily volumes to 15.29% in the last 7 business days. Historically, these levels have peaked at around 25% to 26% recently (Source: https://fintel.io/ss/us/wpm). We believe that institutional and private short sellers are being pressured by a 50-ton press right now and that COMEX may have a massive shortage of deliverable material if this recovery continues. Many larger firms will simply want to “receive” physical metals if they believe this is the beginning of a massive upside recovery.
SHORT VOLUME RATIO DATA
We are the authors of a Investigation article Last week, they suggested that multiple “measured moves” would be made in both gold and silver (). As of this morning, Silver had reached our expected measured movement target near $ 22.95 and has started to stagnate. Gold still has a long way to go to reach our target level near $ 1935. The fact that Silver has already reached the initial measured movement target suggests that Silver may contract and establish a new base of momentum in the next 3 days or more before trying to move higher. Gold, on the other hand, should continue to climb higher trying to reach the $ 1935 level, while Silver sets a new base (although the new base may last only a few days).
This Daily Silver chart highlights the big breakout move that took place recently and should send a big warning to all traders and investors around the world – something big is happening. Precious metals do not move like this unless there is massive risk in the markets. The only thing our researchers believe is likely to happen is an increase in new cases of COVID-19 that are pushing many states back to closure and destroying the small process of economic recovery that has just begun. We believe that the second phase of this process is the widespread problems of consumption, retail, real estate and massive pensions, debt and credit for consumers, cities, states and other entities. All of this may be just 2 to 5 months away from landing in our “deck”.
DAILY TABLE OF SILVER
The S & P500, Down Industrials, Transportation Index and SPY have recently stagnated after rotating close to higher resistance. The NASDAQ has pushed even further as traders build up on tech stocks that appear to be breaking trends. The US Federal Reserve will continue to try to support the markets for the rest of 2020 and early 2021, however the US presidential election and consumer destruction may affect the markets before we can to blink. Delinquencies are starting to skyrocket and the property market, which by all data measures appears to be moving ahead, is starting to fracture.
We believe that qualified technical operators should adopt a very prudent portfolio balance at this time or risk a massive event, similar to what happened in 2008-09. This move in precious metals is a great warning to anyone willing to pay attention. In Part II of this article, we’ll dig into the details and show you what’s likely to happen in the SPY and Precious Metals markets in the next 6 months or more.
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Chris Vermeulen
Head of market strategies
Founder of Technical Traders Ltd.
NOTICE: Our free research does not constitute a recommendation or commercial request for our readers to take action regarding this research. It is provided for educational purposes only. Our research team produces these research articles to share information with our followers / readers in an effort to try and keep you well informed.
