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Gold, silver spiking higher on geopolitical fears

Commentaries & Views

Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It's a showdown of global proportions, so don't miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

After Friday’s big rally in metals, we are seeing a repeat this morning. The terrorist attack in Kenya last night and the continuation of the issues with Iran are causing global fears, pushing metals to highs not seen in months.

What does this mean in the big picture of gold and silver? Although we are long both gold and silver, this action is actually more bearish for long-term pricing than bullish. This entire rally went from being driven by a solid technical pattern to one of fear.

Markets that are driven by fear are doomed to fail, and we would expect this rally to fail miserably. We will maintain our long-term bullish views on the metals; however, in the short run, we are looking for a place to sell. We are expecting a 2-3% sell-off in the next couple of days before this rally resumes. The move up is too fast and can’t be maintained. The bigger the rally from these events, the bigger the sell-off we will see.

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