Gold/Silver: was that the top or was it a correction?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
That was the most asked question I fielded this week with heavy volatility fueled by unreliable reporting coming out of Europe. Gold had accelerated up to 1975/oz on Thursday with Ukraine's uncertainty and the dramatic reduction in interest rate expectations. One month before the conflict, the market priced in a 50 basis point hike in March, and news of war breaking out, drove that down to a 10% chance. If you have been working closely with me or have an account with us, the chances are that you have been slowly reducing your long Gold, Silver, Oil at the top end of the range while covering your short Equities exposure on the downside. While Gold has most likely seen a near-term top, it is still a positive environment for the next 3-4 months, given the economic state. As the dominant economic outcome, we will continue to fluctuate between stagflation and deflation and incrementally build positions back in Precious Metals, Energies, Grains and resume shorting U.S. Equities on bounces. To further help you understand the macro environment, we created a free "Gold Trends Macro Book". This monthly updated booklet will provide you with all the quantitative analyses of the precious metal markets. You can request yours here: Free Gold Trends Macro Book.
Daily Gold Chart
Looking at the charts, we will slowly start building positions again as the Thursday night "panic buyers" tap out with sizable losses. We have identified levels leading down to the most recent higher low on the charts and have outlined major three and four start supports highlighted in the morning express. Our primary focus will be using the 10-ounce contract for ease of scaling in and out of the market. To learn more, we completed a new educational guide that answers all your questions on how to transfer your current investing skills into trading "real assets," such as the 10 oz Gold futures contract. You can request yours here: Trade Metals, Transition your Experience Book
Daily Silver Chart
Our approach to Silver will be similar to Gold but using the 1000 ounce contract on extreme washouts ($1.00+ selloffs). We will also balance that panic selling with longer-dated calculated risk call spreads going out to July and September. If you enjoy Technical Analysis, I went back through 20 years of my trading strategies to create a Free New "5-Step Technical Analysis Guide to Gold but can easily apply to Silver." The guide will provide you with all the Technical analysis 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 Gold.
Daily S&P Chart
We see the Federal Reserve making several policy mistakes by overtightening into a slowing economic environment. With volatility high and trending, we believe the market will give us ample opportunities from both the long and short side of the market and cannot rule out a bounce up to 4450-4600. At that point, we will direct clients that are overweight U.S. Equities to tactically scale into the short side of the market using the Micro S&P and Nasdaq.