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Precious Metals Projections

Gold Price Technical Analysis

Craig and Chris on Precious Metals Projections Banner

In today’s episode, listen to Craig Hemke and Chris Vermeulen discussing the dynamic landscape of the precious metals market, as well as:

  1. How do assets impact investment profitability?
  2. How do asset cycles inform investment strategies?
  3. What is the current state and future outlook of the gold market, considering external factors like the stock market?

Watch the full video below: 

 

Craig: Hello again, and welcome back. sprottmoney.com presents the December Precious Metal Projections, just some of the content you get for free from Sprott Money every month. And joining us, as usual, is our friend Chris Vermeulen, of thetechnicaltraders.com. Chris, always good to see you, my friend.

Chris: Yeah, same here, Craig.

Craig: Hey, as we get rolling, it is now December the 8th as we record this. There are a few days left to get onto sprottmoney.com, check out the holiday gift guide, and scroll through and see if you can't find some gifts to give this holiday season. What do we have, 16, 17 shopping days left before Christmas? That's time. Sprott Money'll turn around, get it right out to you real quick. There's all kinds of great things that you can give to anybody on your shopping list, particularly good for, like, kids and stuff, you know. Rather than just give them a gift card to Apple iTunes or something, you know, get them a silver round, or a couple of them, and educate them a little bit about sound money, and what the value is of sound money. So, there you go. Just go to the site, as Chris is showing you, and you can click around and see what you like, and like I said, they'll get it right out to you. You can do it through the site. You can give them a call at 888-861-0775.

Chris, let's, it's been an interesting start to the month of December. Last Friday, we ended the month of November, actually, on Thursday of last week, first time spot gold had ever finished a month north of $2000. We then finished, Friday, with the highest weekly and daily close that it's ever seen in the futures market. And then, anybody that follows the precious metals, you know what was coming next, and we've certainly had it.

Before we get to the charts, let's kind of go some context, though. December is typically a pretty strong month for the precious metals. The last five or six has averaged maybe a 3.5%, 4% gain for gold. What can you tell us about seasonality as it relates to the precious metals?

Chris: Yeah. When we look at seasonality-wise, this year has been moving very similar, even for the SP500, which we can touch on later. But seasonality has definitely been in play this year. How the markets have typically moved over the past 30-so years has been how this year has moved out, and we've seen a very strong push up, through October, into November for gold. And typically, right at the end of November, beginning of December, we see gold pull back just a little bit before it has a end-of-year, another push higher. And so, we're really just, we're starting to see this pullback in gold, in miners, in silver, and they've all had, as we'll go over the charts, a very strong, kind of, impulse push to the upside, clearing away, breaking through resistance levels, and we're getting that first pullback of what looks to be a new uptrend in the, in especially in the miners, and that could be a very strong signal, because we might actually have a very strong support level, plus, seasonality-wise is in favor for a rally to literally spark any day here, and push us up to the end of the year. So, we're kind of in this phase right here. We're just seeing everything pull back, and then we could see a nice, strong push right up into the end of the year, and then another, maybe a little pause in January, and then it continues to push higher right into February. So, we're still in this upward trend, and of course, as you know, nothing goes straight up. So there's always gonna be a rally, a pause, a rally, a pause, another rally. So we just have to, you know, understand the underlying trend, which is, you know, turning to the upside for the, especially for the precious metal miners.

Craig: Right. You know, and in December, you know, we usually get a little tax loss selling as well. That kind of impacts the miners. That, for me, usually wraps up, you seem like around the 15th or the 20th of the month. A lot of times, you get a late December rally. It's interesting, too. You know, I noted that highest monthly close of all time in spot gold, north of $2000. How significant is it, do you think, to the generalist trader, Chris, to see not only a high monthly close, but if we can hang in there through the month of December, and finish the quarter at a new quarterly high, north of $2000, would that mean much, do you think, to a regular trader?

Chris: I think it shows signs of strength. I mean, we did have a monthly close way up here last month. I haven't looked at the quarterly chart in a very long time. Let's actually take a look at that. I mean, it's definitely been pushing up. At this point, it just looks like it's just channeling to the upside, right? It keeps pushing to kind of higher closes on the monthly. Or, sorry, the quarterly. And, you know, so, it's in a strong uptrend. I think, you know, the precious metals really kind of broke out of this multi-year base in 2019, and it's really just kind of correcting, and trying to figure out, you know, is it gonna continue to pause longer? Is it gonna pull back a bit, or is it gonna explode and pop to the upside? I think every time there's a monthly close and a quarterly close, to some new highs, it's usually a pretty good sign. It means there's obviously more strength, there's accumulation going on. Doesn't always mean it's gonna break out and take off, but it is a sign that there's people being nervous, they are constantly flowing into gold, and it's getting accumulated. It is not getting sold off. So, it is grinding its way higher, and holding its value.

Craig: Well, that'll be something everybody watching us should keep an eye on as we get deeper in the month. Like you said, nothing is ever straight up, and bull markets in gold, in particular, are usually characterized by three steps forward and two steps back. Regarding those two steps back, we were looking pretty good, as I said, last Friday the 1st. And it has been a very challenging week all the way up to here, Friday the 8th, with the latest jobs numbers in the U.S. Seemed like everybody got a little overly optimistic in terms of rate cut expectations and what the bond market had done. Kind of seeing all that work through now. However, on the short-term charts, we've had some kind of funky candles on there. What do you see in the short term?

Chris: Yeah. I mean, well, we definitely see the seasonality-wise, like, right here, where gold bottoms out in October, and kind of works its way up to the end of November, and then we have that December pullback. But as you can see, this is a not a very good type of candle. This is, like, a blow-off exhaustion move, a short squeeze. I think it hit new highs. There's also people saying, "If it hits new highs, I'm gonna buy." So, there's this huge technical kind of trigger, and then suddenly, massive money stepped in and just started unloading gold, it's had a little bit of a pause, and now it's starting to break down as you and I are talking right now, and I feel like this is more of a technical level that just got breached and ran the stops, sucked in anybody who had orders put out there to buy long if the market breaks to new highs. And a really good... Let's just step back at the monthly really quick here. So, when we look at this, I think we have all seen this chart, know the big pattern here, but right where we broke this high up here is where we started to see the big explosive move, and we really can see that on the 10-minute chart.

So, this is the 10-minute chart, and this is right where gold broke out, right through here, to new all-time highs. As soon as...there was a big wave of money piling in, and then suddenly, soon as it broke, there was a technical move, where I think shorts got squeezed out. Automated buy orders kicked in to cover the shorts. People bought long. They had orders set to buy gold if it hits new highs. And literally, that became the crowded trade. It just, when everybody does the same thing at the same time, and price just moves straight, typically, it's a sign of exhaustion. It usually, the market is gonna go the exact opposite way that everybody just went. And that is exactly what we've seen. It's been consolidating here for several days. Now it's breaking down, with more massive volume, and it is not a very good sign. This whole spike, like, a lot of people are getting really excited about it. It is exciting, but it really is, to me, it's not a... I don't see it quite as a legitimate move. I see it as just the market running stops. It's not like it actually ran up there from pure, real demand. It was just a trigger of all kinds of stops and buy orders, that is literally popping and dropping. It's just a fake-out, right? It's just, the market probably sees a lot of orders out there and says, hey, we can get up there. We can trigger a ton of people to lose a ton of money, and be able to bet offside, and, you know, crush the price here. So, as we all know, gold is somewhat manipulated, so somebody's probably making millions off this move, if not much more.

Craig: Well, and it's worth noting, it began at about 6:15 Eastern, Sunday night.

Chris: Yeah.

Craig: And so, it wasn't like it gapped up $60 higher right at the open. It went sideways, and was unchanged at 6:15 Eastern, 15 minutes after the open. And then that happened, and yeah, I think you're absolutely right. Air pockets were hit, and you got this...and it only took about 15 minutes to move up $50. So, I wish we could take some white-out and just erase that whole 24 hours. Then you just have some consolidation, a little weakness today, you know, with rate hike [crosstalk 00:09:34]

Chris: Yeah, a little pullback at resistance, instead of this...

Craig: Yeah.

Chris: ...giant reversal on multiple time frames.

Craig: Right. And then, you know, and again, that just leads to more liquidation, because the average trader, or hedge fund, looks at that and goes, "Oh, wow. That looks..." Whatever. Anyway, let's look at the weekly chart, though.

Chris: Yep. Okay.

Craig: And, again, now there's a pretty nasty candle on that too. I kind of like to chide people on my site that say it's a triple top and a quadruple top. I mean, to me, there's double tops and there's double bottoms. Everything else is a trading range.

Chris: Right. okay.

Craig: And we have been consolidating between about $1700 and $2000 now. Now, you could make the case maybe this was a false breakout. But I don't know. That's just me. What do you see?

Chris: I mean, at this point, that's what it feels like. It just feels like the market ran up, ran a bunch of orders, triggered a bunch of people. Like, the market's always trying to shake everybody out of their position.

Craig: Yeah.

Chris: And I kind of, at this point, that's what it looks like. I mean, it's not a good sign when you have a long, a big rally or an upper wick, and then a huge reversal. We saw that over here. There was, you know, big rally up, and a reversal down, and it sold off. We saw a huge rally up here, and the next bar, it sold down. So, these aren't very strong signs. Every time we've seen this, I mean, these pullbacks from the highs have been pretty substantial. We're looking at, like, 20%, 21%. This last one here wasn't nearly as bad, but 12%. So, I mean, it averages out to about a 17% pullback from this type of move. So, I'm not a huge fan of these bars. To me, it's a, very much so a, the uptrend is now paused. This is a kind of a reversal bar. And, you know, the monthly chart, to me, shows a really good... I like candle analysis, and when we look at the monthly chart, when we have a major top up in these areas, where these upper wicks are, when you have a reversal-type candle, usually you have two or three bars after that that follow that trend. So, you have a reversal bar, then you have one, two, three down bars, and then, kind of, that bar momentum is, like, stalled out.

So, I always look for the next three bars to happen, after a major reversal, to be in favor of that reversal. So, we've got, obviously, here was a never-ending stream of selling. So, we could have, you know, a couple months of maybe gold struggling or trading sideways, but there is definitely demand for gold versus the miners and silver. Money keeps rolling into it. I think people in the global economy are getting nervous. They're accumulating gold, which is why it's holding up, and poking to new highs. So, gold, I think, is very, very much of a slow beast. It's much more conservative, and I don't see it having, like, huge downside. But it might not, you know, wanna take off too much until the perfect storm kind of brews, or maybe it can recover from these reversal bars. But we are coming into a sweet time in the market, when gold, silver and miners tend to do well.

Craig: Right.

Chris: The last time we had a pre kind of major bear market correction, we saw gold trade sideways for, like, a year and a half. And then gold, silver, and miners all put in a multi-month rally, just before the stock market went into a full-on financial reset. And we have been putting in a, you know, a multi-year consolidation. It's poking up here, and trying to break, and we could see, you know, gold, silver, and miners actually have a run for a few months, just before we see the equities market crash. I mean, we tend to see precious metals, and energy, actually, do fairly well in this stage. So, there is a, it's a bullish scenario that this shake-out, this big news-based move, will fizzle out, potentially in a few days, and it'll restabilize, and it might wanna keep going higher. And the gold miners are starting to show signs that they are starting to reverse trends, and they're starting to go higher, which supports that we could actually get a nice rally in gold, and it'll push up to all-time highs and keep going, and the miners might start to participate.

Craig: So, it's interesting, Chris. It's almost like a tug of war. I mean, the seasonal factors, like you said, that are maybe more fundamental, versus the technical factors of those nasty candles. It'll be interesting to see where we go from here, that's for sure. Let's just, kind of, in our final moments, let's talk about the miners. Because it's almost like they become a value play, Chris. You know, you've got all the growth stocks, and then you've got these miners that, especially producers, that pay a nice dividend. The chart, and let's start with the GDX, and then we'll wrap up with the SILJ, the chart of the GDX looks like we got another major bottom. What do you think?

Chris: Yeah. I think it's put in a multi-year bottom. It's kind of got this major resistance area, and we're kind of just settling back down. I mean, it popped up. This, to me, is like a launchpad. It's just kind of, it's just fizzling out. It's just kind of putting in its time, waiting for the right, perfect storm for the precious metals space to go. And this is, what is it? This is the monthly chart. So, I mean, we're looking at the big view. It's channeling down, but it is starting to try to put in some traction. We have potentially a higher high here on the monthly chart. And when we zoom in to the shorter term, if we were to drop down to the daily chart, we can start to see it's getting some momentum. Let me just clear these lines out. I mean, it's still a pretty noisy chart. It's all over the place, but we could argue, you know, it's got this kind of neckline through here. You could say there's an inverse head and shoulders, and, you know, we've broken through this neckline, with some pretty good momentum. It's pushed up, and now it's pulling back. So, we do have a series of higher lows. We've got a series of higher highs. And this is the first pullback out of this basing formation. And typically, the first pullback can be a buying opportunity. It is settling down into support. It's settling down to this 50-day moving average. And, you know, it had a very strong impulse wave. It broke a very clear resistance area. So, that is always a really good sign. And yeah, it's got potential here to kick into high gear, and ramp back up into the mid-$30s by the end of the year.

Craig: Fight that tax loss selling. And, I mean, I can remember multiple years where the last two weeks of the year, even without the metals rallying, you know, people are moving back into the mining shares after tax loss selling, you know, or they're selling Newmont and buying, you know, Barrick or something like that. And you get these really... So, it's something to keep an eye on. And I, you know, what's been really frustrating for a lot of people this year is the silver miners, for anybody that's been involved in them, because it has just been lower highs and lower lows, as you can see on that chart.

Chris: Yeah.

Craig: Painful. However, even blind old me can see a double bottom, maybe, there. So, what do you think?

Chris: Yeah. I mean, it looks like a pretty clear double bottom. And, I mean, we've got an impulse wave, which is when you, especially when you get a double bottom... And let me just grab the tool here. So, once we start to break these, kind of, these internal highs... We broke a series of highs here. We broke a more significant high right here. We broke another high over here. We broke another one here. My general rule of thumb is if you get a strong rally and it breaks through two resistance levels, then you have enough, it has a lot of upward momentum. You've just broken through two ceilings. So, typically, after you've broken through two, that first pullback is a buying opportunity. It means it's settling down. It's just taking a pause and a breather before it goes higher.

So, we've had this really strong move in silver miners, and now we're getting that first pullback. It's pulling back to the 20-day. And seasonality-wise, that is exactly what happens historically, is we get this pullback here for the first week of December, and then suddenly, traction can kick in, and we could start to see this really take off, and start to rally back up, potentially, up to these, $10.70 or even higher. Let's just zoom out on the chart a little bit. There's quite a bit of potential for it to come way back up here. That's a pretty decent run if it was to have one of these explosive moves. I mean, the nice thing about this is a very explosive move. This is a very quick, sharp pullback. And it can, if it continues this momentum, we can actually draw where that upside target is. This, the SILJ here has got potential to rally up to $11.50, which brings us back up into more or less these two tops, and percentage-wise, from where we are as you and are speaking, that's about a 20-plus percent gain. And what's interesting here is, actually, the 0.618 target happens to be right at this next level. So, as I always say, if something goes up, hits the 0.618, and pauses for a couple bars, we almost always go up and hit that 100%. And both of them happen to be more or less at previous resistance, or a major, kind of, little double top here. So, there's a very bullish case that the shift is starting to take place, and we might have an explosive move for metals going into the close this year.

Craig: Right. I mean, that's the thing, that, those mining, that, especially the SILJ would, if the SILJ were to go up 25% from here, you would think that would foreshadow, or coincide with a rally in the actual metal. So, something to think about. And like I said, that seasonality chart you shared right at the beginning, that's significant. That's something people need to keep in mind. Chris, as we wrap up, please tell everybody a little bit about what you do at your service, and then, you always talk about the best asset now. What are you seeing?

Chris: Sure. Well, yeah. Let's jump over to the best asset. So, I call it the BAN strategy, which stands for "best asset now." And some of the best assets on our list is actually the ARKW ETF. This is one that we've been long. And, I mean, it just keeps poking to some new highs here, new multi-month highs. So, this is one of the best assets that we're in here. I really like it. This is, I mean, when you look at the grand scheme of things, this is, oh, I don't have this chart set to go far enough back, but in the grand scheme of things, I mean, it's still down very sharply from the highs in 2021, but overall, these are very strong, powerful waves. And, you know, if the stock market keeps rallying, and there's potential we get a very big, explosive move into the end of the year, and we actually maybe even hit all-time highs in the indexes, to really, to do something similar to what gold has just done, where it pokes to new highs, and everyone piles in, all the big shorts that are offside cover, if we get that end-of-year rally in the stock market, seasonality-wise, it's pointing to the same thing, we could see some of these best sectors here really pop, and scream higher. Like, these, some of these ETFs, like, can rally 5%, 8%, 10%, 12% percent a day, if we get that perfect type of storm. And we might see some very explosive, and have a very strong close to the end of the year this year in equities.

Another one that we are long is URA. It's been kind of treading water a little bit the last couple weeks, but it's had a very strong run, and in the grand scheme of things, the big picture of uranium, which, I don't have this chart set to go back far enough, but, you know, it is kind of breaking out, it's testing old resistance, and it is primed and ready for a very big rally, again, of probably another 15%, 20% very easily, if we get an end-of-year squeeze. So, these are a couple of the best sectors that we're in, that we're long. We are also long the Bitcoin, the BITO ETF as well, which has rocketed higher. I don't think I have it on this particular list right here, but... Yeah. So, that's what I more or less cover. I cover indexes, precious metals, the sectors. Subscribers can go to, or interested individuals can go to thetechnicaltraders.com. And I go through the charts, just like you and I did, but I go through all the indexes, and bonds, and oil, and all those things, every morning, before the opening bell. And they can follow along. And whenever I have a trade, I share the trades that I do, and the trade signals I get, and we trade together. And I focus on ETFs. So, I keep it pretty straightforward. I don't get into individual stocks, but we're catching tides or waves in the markets and sectors.

Craig: Chris, that's fantastic. And I know you've always been one of Eric Sprott's favorite technical analysts. And so, what greater vote of confidence can you have than that? Again, Chris Vermeulen, thetechnicaltraders.com. Please be sure to check out his site. And of course, please be sure to check out Sprott Money. Not just during the holiday season, all year long, you know, we talk about the long-term charts. And if you're a stacker of physical metal, that's where your focus should be. Not so much this noise, the daily charts, you know, and the engulfing candles and stuff. It's that long-term chart that you need to pay the most attention to. So that makes it always a good time to stack. And so, there you go, sprottmoney.com. Check them out, and if anything, as you leave this podcast, give them a like or a subscribe on whichever channel you've been watching, because that helps them spread the word, and is very beneficial as well. Chris, thanks so much for your time. Happy holiday season, and we've had a great year. I look forward to doing this again in 2024.

Chris: Sounds great. Yeah. Merry Christmas. Happy New year. And we'll see you in the new year, guys.

Craig: You got it. And from all of us at Sprott Money, happy holidays. Have a great new year, and we'll see you in January.

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About the Author

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities.

Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

*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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