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Crosswinds in Gold & Silver

crossroads

It is still uncertain whether the lows are in for Silver and Gold at $28.73 on June 13 and $2304 on June 7, respectively, and we are now heading higher. However, taking a step back and looking at the big picture, the risk to the downside is limited in both metals relative to the potential upside ahead. That said, until we get confirmation that the lows are behind us, I plan to sit tight on the long side.

 

SILVER

june 20 silver prices

SLV has broken out of a very clear bull flag formation. The turn up in the MACD Histogram signaled a breakout was coming. This suggests the bottom is already in place, at least in the short term. However, the weekly chart is far more sanguine.

june 20 silver prices

The weekly chart allows for a further drop to $26.40. The RSI and both MACDs are still turning down from extreme overbought levels. This does not negate the risk of a higher high above $33, but it does warrant caution. 

 

ELLIOTT WAVES / FIBONACCI LEVELS

$28.20-$28.50 remain the ideal levels for the low in Silver. $28.50 based on ABC analysis and $28.20 being the 32.8% Fib of the rally from $20.85 to $32.75, a standard correction level.

 

POSITIONING

june 20 silver prices

The Banks remain extremely short, at their highest level since 2017. This is typically bearish. The Banks are heavily short Gold too.

 

GOLD

june 20 silver prices

The daily chart for Gold is encouraging because the extremes in the RSI and the MACDs at the peak of $2454 have substantially corrected to neutral levels or below and are now beginning to turn up. A break of $2360, the prior peak, would increase the probability of higher highs next. 

However, the risk of a deeper drop remains to as much as $2150 in a “worst-case” scenario.

 

CONCLUSION

Time frames matter”. In the short term, Gold and Silver are turning up; they could even reach higher highs next. But the weekly charts and the COT data are bearish by comparison, imho. The risk is that we hit those higher highs and then the metals dump to lower lows.

Yet if we focus on the big picture, a trend of higher lows and higher highs, this is still a raging bull market. I don’t recommend shorting in such a market, but I don’t plan to add to my already substantial long position either. It’s time to be patient once again and wait for the market to tell us what it plans to do.

 

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About the Author

David Brady has worked for major banks and corporate multinationals in Europe and the U.S. He has close to thirty years of experience managing multi-billion dollar portfolios including foreign currency, cash, bonds, equities, and commodities. David is also a CFA charter holder since 2004.

Using his extensive experience, he developed his own process utilizing multiple tools such as fundamental analysis, inter-market analysis, positioning, Elliott Wave Theory, sentiment, classical technical analysis, and trends. This approach has improved his forecasting capability, especially when they all point in the same direction.

His track record in forecasting Gold and Silver prices since has made him one of the top analysts in the precious metals sector, widely followed on Twitter and a regular contributor to the Sprott Money Blog.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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