Gold/Silver: Your "Black Gold" year end play
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
It was quite a week in the markets with no shortage of volatility. One thing to remember about volatility is that it happens slowly and then all at once. When charting volatility, you have to ask yourself, is this just another spike, or is this a trend? This week's three most significant "volatility events" were Evergrande, the Federal Reserve meeting, and China's crackdown on cryptocurrencies. The people expecting a 20% correction in equities will have to wait for another catalyst or, as my models show, Q2 of 2022, when deflation has another chance of resurfacing. Now a 20% correction in Bitcoin, that's entirely possible.
I have a few takeaways from this weeks volatility:
1. Evergrande is not the "Contagion" event people were expecting. Bond/Treasury yields did not tick downward and finished the week much higher in the U.S. and the European sovereign yields I track. Multiple benchmark indices continued to make higher highs on the charts.
2. The Fed should announce the taper in November and have their first rate hike in the Fall of 2022. They will allow inflation to run "red-hot" while the economy does the same.
3. China's announcement that all crypto-related transactions would be considered illegal makes an interesting case for investors to shift back to Gold or Silver. If you would like to learn more about the strategies we are implementing or get the top three things I'm watching delivered in your mailbox every week, please register here: "the top three things"
Daily Gold/Silver Ratio
Last week I wrote an article on Platinum, and congratulations to those of you who were able to add below $900/oz. I believe that Platinum could be another spectacular performer once the auto industry solves its chip shortage. Silver, despite recent weakness, is beginning to outperform Gold, and I want to highlight the ratio above. Gold appears to be caught between the $1835 high and the $1685 support due to rising rates and elevated inflation. If you want my recommendation on a product to shield yourself from inflation, consider Crude Oil. Silver has the opportunity to rebound, provided that solar spending accelerates. To further help you understand the quantitative analyses of the precious metals markets, we created a free "Gold Trends Macro Book," updated with silver slides. You can request yours here: Free Gold Trends Macro Book.
Daily Crude Oil Chart
With companies like Goldman Sachs revising their year-end target on Crude Oil from $80 to $90, and inventories well below the 5-year average, we are currently putting on a strategy for the year-end. If you would like to learn more about the strategies we are implementing or learn more about technical analysis, we created a guide to provide you with all the steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Precious Metals.