Gold/Silver: Where to add to positions?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
After punching through $2000/oz for the first time since July, Gold and Silver have found themselves in a peculiar position, suddenly competing with the launch of a Bitcoin ETF. Perhaps the $175/oz rally over the past three weeks left investors "itching" to find the next "quick buck." While Bitcoin has proven a viable asset class, retail investors and Central Banks will quickly purchase any correction in precious metals.
The Fed meets next week and is near completing its fastest interest rate hike cycle in American history. Many call this wreckless given the unprecedented Government Debt, leaving almost no foreseeable way out. Once the Federal Reserve pauses its interest rate hike cycle, they have historically cut rates within 7-9 months. According to the CME Group Fed Watch Tool, there is better than a 50% probability the Fed will cut rates by at least 25bps by July 2024, and should have bullish implications for precious metals. In addition, Geopolitical tensions and uncertainty remain on everyone's radar, with two very complex wars breaking out over the past two years. The risks of safely traveling abroad seem higher than ever before, and with the Global divide continuing to expand, one must ask themselves, are we on the verge of WWIII?
Daily Gold Chart
Gold futures have broken above the psychological $2000/oz and have opened the door for higher prices. Traders will note that several levels remain on the charts defined as "critical support," with the first being the 200 DMA at $1983, the psychological $1950, and finally, the 50 DMA at $1929. Gold will need a close above $2000 and a stronger session to extend the rally to $2050. 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.
Daily Silver Chart
Silver has lagged Gold's performance since peaking near $24/oz last Friday. Looking back to the start of the Russia/Ukraine conflict, we saw Silver prices rally from $21.50 to $27 within 30 days. To my surprise, further quantifying Silver's weakness, the Gold/Silver ratio has climbed to 87:1, the highest since the latest banking crisis. We recommend beginning to scale into the Silver market by Dollar cost averaging for core long-term positioning on any correction below $22 or the Gold/Silver ratio exceeding 90:1. To help you develop a technical trading strategy, we have recently updated our "5-Step Technical Analysis Guide," which 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.