Contributed Commentaries
Gold/Silver: Check out this gold seasonal strategy
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
It was another challenging week for Precious Metals, with Gold futures trading back near one-month lows. At the same time, it is hard to believe that with a downtick in headline inflation data and an uptick in initial claims, Gold cannot sustain a rally. Realistically Thursday's data print should have marked the "bottom," and August's three-week seasonal bull market should be well underway. Looking to the Far East, headlines out of China show a deteriorating economic outlook and increased pressure on policymakers to boost monetary and fiscal support. Last Tuesday's Chinese CPI headlines delivered a deflationary -0.3% that will become the wake call for additional stimulus. Remember, China is the world's second-largest economy and one of the largest consumers of commodities and natural resources. Once the stimulus happens, Copper should bottom, and Silver should reverse higher.
Daily Silver Chart
It has been a rough August for Silver investors after falling 3% last week and an additional 4% this week. If you look at the previous three months of price action, it is simple to see that Silver remains comfortably within a $4 price band with $22 as support and $26 as resistance. The 200-day moving average provided little support and now sits near $23.50. Traders should be cautious about placing additional bullish bets until we have definitive bottoming action or a technical reversal on the charts.
Our long-term thesis remains that tightness in the physical markets, a decline in mining supply, and solar and electric vehicle demand should offset any potential for prices to decline below $22. Strains on the electrical grid and the almost certainty of additional Chinese stimulus should help cement a floor on Copper and Silver prices.
We updated our "5-Step Technical Analysis Guide" and integrated our "Top 5 trade ideas for Q3." Please download and review our Copper, Gold, and Silver strategies. 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: New 5-Step Technical Analysis Guide.
Daily Gold Chart
Monthly Seasonal Chart
Like Silver, Gold futures have struggled, slipping another 1.4% on the week, and have repeatedly been a victim of a stronger U.S. Dollar and rising Treasury Yields. Seasonally Gold futures tend to make a near-term bottom in the second week of August and generally rally until the last. This tendency has occurred in 12 out of the past 15 years. Ultimately it will take some concrete evidence that inflation is behind us and a "Fed Pivot" is here to assault a fresh attack on $2000. The market then must punch through resistance levels at $2025 to make a run for all-time highs. We will likely need some substantial breakdown in economic data for that to happen.
Having the flexibility to enter and exit the market quickly makes it essential for Precious Metals investors to have a futures trading account alongside their core Physical Precious Metals holdings. If you are interested in speculating on the rise and fall of the price of Precious Metals on a shorter-term basis, such as two weeks or two months, or If you have never traded futures or commodities, check out this new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.
 |
