This second part of our multi-part article investigating the massive upward movement in prices in Silver recently should make skilled technical traders start to sweat a bit. In our opinion, nothing moves metals more than fear and a move like this in Silver recently is a very clear indication that global traders fear the current global economic capacity to maintain market valuation levels against an economy. and a larger and more sustained COVID. -19 virus crisis events.
WILL THE NEXT SHOT BE A DIRECT HIT?
A series of potentially destructive economic events line up in the next 6 to more than 12 months and all relate to the efficiency of the economic recovery in which many traders have deposited their long positions. Will the COVID-19 virus disappear before the end of 2020? Will American consumers / workers resume their earning capacity? Will US and global companies survive the contraction event taking place around the world? Will local city, state, and other entities survive the contraction in tax revenues, fees, and extended costs related to this massive destructive economic event? Will the stock market continue to rise in the face of all these problems and what other “unknowns” are about to happen to us?
The reality of the situation is that precious metals have already triggered a massive warning in our arc and skilled technical traders need to start paying attention. Precious metals do not rise 12% to 15% as Silver did for no reason. A massive new level of fear must have affected global traders to push silver prices above $ 23 recently. Silver, the “other precious metal” has been stagnant below $ 19 for many months, even as gold pushed well above the $ 1,750 level and above. This big break in Silver is nothing more than a phenomenal warning to all traders and investors. Be careful: the risks increase more.
We want to highlight some of our recent research publications to help you better understand what is happening with precious metals and what to expect in the future …
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
DAILY TABLE OF SILVER
This Daily Silver chart highlights the series of “measured moves” our research team wrote about on July 13, 2020. These $ 5.40 price advances seem to happen with some degree of regularity and we believe they will continue until a breakout Parabolic upside of this range takes place.That means that when an upward movement extends beyond the measured movement level of $ 5.40 and the price attempt to move dramatically higher, then the continuation of these measured movements may have ended.
Ultimately, our previous research on technical patterns in Silver suggests an upside price target of $ 25.50 to $ 26. However, more extensive market research suggests a move above $ 75 to $ 85 in silver ($ 3750 at $ 4995 + in gold) is not out of the question. What would it take for Silver to recover above $ 70 an ounce? Our research team believes that a broader consumer, credit and economic event is likely to take place for Precious Metals to recover to these levels. Fear generates a lot of action on metal prices and when investors fear valuation levels or future expectations, they often hedge their portfolios by investing in precious metals. When a big move happens, like what we just saw in Silver, we interpret it as “fear has materialized.” What are traders so afraid of? They probably fear current high price levels in the US stock market and future expectations related to consumers, trade, credit / debt and other factors in the global economy.
MONTHLY TABLE SPY
We have been writing about the potential of a series of economic events that will unfold over the next 6 months in which consumers, cities / states, and businesses simply collapse due to the lack of revenue capabilities associated with the COVID virus event. -19. Many years ago, we wrote that “isolated economic events that disrupt smaller market segments are more manageable than prolonged destructive events.” We believe that the current COVID-19 virus event will become a protracted economic event where an extended 20% to 30% contraction in revenue for many businesses, consumers, and municipal / state / federal governments could produce massive future risks that are still something “unknown”.
We also wrote about Super-Cycle events and warned all of our fans in August 2019 to prepare for a massively destructive Super-Cycle event that will take place in late 2019 and early 2020. We are the authors of this research post in July 2019 warning all our followers of the pending collapse in the US and in world markets related to supercycles and other technical patterns. What we expect to happen now is an extension of the crisis event until a fund is established.
This monthly SPY chart highlights some of the research that our team recently completed and also suggests that a broader market failure event (downward price rotation) may take place over the next 3 months or more (before the election presidential elections), where new deeper lows can be established. The GREEN ARC LINE in this chart represents our proprietary Fibonacci price range arcs, an adaptation to traditional Fibonacci price theory, which suggests that price levels are already between 7% and 9% above resistance principal. If the US stock market falters near current levels and begins to move lower overall, we should expect a series of moderately violent downside movements to target the $ 208 level in SPY, while that gold and silver extend their advance upward. Fear will lift the metals as the possible downside price event occurs in the SPY.
WEEKLY SILVER TABLE
Our next upside price targets in Silver are close to $ 28 (24% + more than current price levels). These measured price movements act as a stepwise process for the price to consolidate / base, start a moderate upward movement, peak, then repeat the process again. Beyond the $ 28 price target level, the next measured movement target is $ 32.50. If silver reaches the $ 28 or $ 32.50 level, you can assume that fear is very much on the global markets and that gold should already be trading above $ 2,100 (or more). The combination of gold and silver rising in unison should be a very clear warning that global traders do not trust the current valuation levels of the global stock markets.
This weekly gold chart highlights the following measured movement targets for gold. Although gold has not yet reached the current measured movement target, we do not believe it will take more than 3-4 weeks to print a price level above $ 1950. After this great move in Silver, we are moderately confident that Gold will continue picking up too. The most important question for Gold is what happens after $ 2000? Will it recover to $ 3750 as we predicted? Will it recover to $ 5500 or more?
Ultimately, the maximum levels of rising gold prices will be related to the degree of fear and uncertainty that is present as a result of the continuing consequences of the COVID-19 virus event and the series of income / profit based contractions that We believe they are just below the surface at this time. Over the next 6 months or more, we believe that a series of new crisis events will unfold that will highlight just how destructive the COVID-19 crisis has been. When consumers and businesses lose 25% to 35% of their earning capacity (or more) and more than 15% of the total US population has been displaced from work / business due to these closings economic, one should expect some kind of economic contraction to take place. Honestly, it would be silly to think that the US Federal Reserve can offset more than 150 million American consumers who spend on activities, home purchases, rentals, loan payments, and other activities. 25% of normal US GDP levels represent more than $ 5.5 trillion; that’s a huge success for the markets if it turns out to be real.
GOLD WEEKLY TABLE
We urge all of our followers to be very cautious and properly position their portfolios to address the risks we consider outstanding. Yes, the US stock market has rebounded substantially recently, but if you were paying attention to precious metals and what was really happening to US companies and consumers, you will suddenly realize than the US Federal Reserve as well as a healthy and strong US economy (like the one we had in 2017 and 2018).
The maximum peak in the US economy took place in January / February 2018. After that peak, our proprietary price modeling systems continue to suggest that the stock market and the US economy Supercycles to Longer terms suggest that the real fund in the markets will not happen until 2021 and 2023. We have a long way to go before we see where this last fund is really going to be established.
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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.
