Volatility Cometh | Gold & Silver Analysis

The U.S. elections are fast approaching, and I have no idea what the outcome will be, but I do expect volatility. An uncertain result—or worse, a disputed result—could send shockwaves through markets. Back in 2000, when the hanging chads debacle had to be adjudicated by the Supreme Court, stocks fell hard because markets hate uncertainty. History may not repeat, but it does rhyme.

The point being that I don’t recommend holding leveraged trades into such an event. I plan to hold on to my physical metals and perhaps even hedge my positions. I believe precious metals have much further to go on the upside, but don’t be surprised if we get significant moves in both directions in the next few weeks. Eliminating leverage for the time being reduces your risk as volatility soars.

The alternative is to take a long-term approach and just buy physical Gold or Silver, then let them gather dust in a drawer or a vault.

Ahead of the elections, we also have the Non-Farm Payrolls on Friday, which, if the ADP is anything to go by (it has little correlation to the NFPs), should be higher than the estimated 114k and could alter expectations for another rate cut of 25bp next Thursday.

Simply put, get ready for some turbulence ahead.

GOLD Prices

Gold Shares Chart

As for Gold, the trend remains firmly up. Only a break of $2619-$2600, the low on Oct. 10, followed by a lower high, would signal a trend change to the downside.

That said, we have come a long way from $1823 in October 2023 to $2802 at the close today. A 54% gain in Gold in twelve months— not too shabby. But nothing goes straight up forever, and the air is getting thin up here. $2850 is still doable, imho, perhaps even $2950, but after such a good run, I don’t expect $3000 to be broken at the first attempt.

Pile on the aforementioned volatility and I believe the next big move will be to the downside. The principal target would be $2600. Then up we go again.

SILVER Prices

Shares Silver Trust

The trend remains strong to the upside in Silver too. Only a break below $30 in SLV and around $33 in Silver would be a warning that the trend is turning down. Until that happens, I am still looking north to $36-$37 in Silver next.

However, if the pending storm is not in a teacup but more like a category 5 hurricane, following a 100% gain since September 2023, Silver could fall to as much as $28 or worse. Silver would also have a hard time going much higher if and when Gold heads south, imho.

So, while I believe Gold and Silver have much higher to go in 2025, focus on buying the dips, because the risk-reward is turning down sooner rather than later and there will be some big reversals along the way. Much depends on the next few weeks. We may even get a stock market crash after all.

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