The Precious Metals Are Setting Up For Big Moves Higher

After six long years, the precious metals are finally setting up for BIG MOVES higher.  Even though the gold price has increased significantly over the past two months, we haven’t seen anything yet.  Of course, gold has already enjoyed big moves in other currencies such as the British Pound where it has reached an all-time new high.

However, we have to be a bit more patient for gold to reach a new high in the U.S. Dollar as the Federal Reserve has a monopoly on the world’s printing press. But, it is important to understand that gold has broken through a KEY LEVEL and is giving the green light to the market that a new bull market has begun.

I wrote about gold breaking out of this key level back on June 20th, in my article, FINALLY… GOLD BREAKS OUT THROUGH KEY 5-YEAR RESISTANCE LEVEL, I posted this chart:

As of trading yesterday, the gold price closed at $1,509, but reached a high of $1,520.  Thus, the gold price surged by $160 once it broke above that critical 5-year resistance level:

However, as I stated, this is just the beginning stage for much higher gold prices moving forward.  Why?  Well, the Fed and Central banks haven’t solved any problems since the 2008 financial crisis.  Rather, the central bankers have papered over the problem with money printing and a zero-interest-rate policy. According to a few sources, there are $14 trillion in negative-yielding bonds in the world.  Thus, bondholders are paying the central banks to borrow money from them.

Economists and analysts suggest that negative interest rates are a sign that the financial market has entered into unchartered territory.  Unfortunately, they don’t understand the TRUE underlying reason for negative interest rates.  While some economists have stated that negative interest rates are the central bank’s policy to force investors to put their funds into the economy, the real problem is that global debt is too high and the net energy profit in the system is falling.

I will get into this in more detail in upcoming articles and videos, but put simply, if the NET ENERGY that drives the economy is falling, then the interest rates must fall as well.  So, get used to even lower interest rates and even more money printing by the Fed and Central banks.  And, as the central banks continue with even lower interest rates and money printing, it means that BIG MOVES in the precious metals are coming.

IMPORTANT: While the precious metals have broken through key levels and will reach new highs in the future, we must understand that CORRECTIONS will take place. We should not be surprised if gold and silver experience significant corrections before moving into the next stage.

Now, while the gold price has enjoyed a MAJOR BREAKOUT, we are still waiting for silver to make its move.  Yes, the silver price has broken above an important symmetrical triangle formation that I wrote about several weeks ago, but it must close significantly higher above its 200 Month Moving Average (MMA) of $16.82 to be in the first stage of a new BULL MARKET:

So, why is this 200 MMA (Red Line) such a critical level?  Well, it was the next important level to take out after silver broke through the 50 MMA (Blue Line).  I will be doing a new YouTube video on the precious metals this weekend, so please subscribe to my channel to receive updates.

As I have stated several times, while the FUNDAMENTALS are the underlying price drivers, the KEY TECHNICAL LEVELS provide the big punch as Traders, Investors, Hedge Funds, and Institutions all jump aboard.  We can clearly see this taking place as silver approached the important 200 MMA.  Please look at the following intraday silver price charts:

When the silver price first approached that key $16.82 level during Asian trading Tuesday night, it touched it several times and bounced off of it and corrected lower.  Then in the next chart, we can see that as the silver price finally broke above that $16.82, it enjoyed a MINI-BREAKOUT to $17.00, and then eventually to $17.20:

Once silver broke above the $16.82 level (200 MMA), we see that it corrected right back down to the same level during trading yesterday (Thursday):

Now, I am going to repeat myself. THERE IS NO COINCIDENCE that silver traded off this important 200 MMA of $16.82.  So, these KEY LEVELS mean something to traders and the charts are showing it right in front of our eyes, whether you believe in technical analysis or not.

Thus, when silver broke above that 200 MMA, it quickly shot up to $17.20 as it came on the radar of TRADERS, INVESTORS, HEDGE FUNDS, and INSTITUTIONS. These key levels act as a magnifying glass for the market.  When they are broken, we see a HUGE increase in trading volume and investor interest.

I discussed this in my newest interview with Chris Marcus of Arcadia Economics:

In my interview, I explained that even though the silver price chart had broken through key levels, the Silver SLV ETF didn’t until this week on Tuesday:

We don’t see the daily price action in this monthly chart, but once the SLV broke above its 50 Month Moving Average of $15.35, it jumped to $16.20 before correcting. And, if you notice the trading volume of 400 million shares traded in the SLV ETF in July, it was much higher than the monthly volume in early 2016 when the SLV price went from $13 to $19.  Furthermore, the SLV ETF trading volume in August is already at 170 million shares, and we still have three more weeks remaining in the month.

So, this 50 MMA in the SLV ETF will be a KEY LEVEL to remain above this month.  Again, I will discuss this in my newest video this weekend.  However, if we compare the trading activity of the SLV ETF to ROKU, a new high-tech stock, we can clearly see how insane the market has become:

After ROKU, an entertainment streaming content provider, bottomed in December at $27, it exploded 350% to $122 yesterday.  All of those large single-day stock price moves occurred after earnings releases.  Yesterday, ROKU surged 20% after Q2 2019 results reported a large growth in subscribers.  However, the company continues to lose money, which doesn’t seem to be a concern to Wall Street or Investors anymore.  It’s all about the growth, forget about profits or increasing debt levels.

Why would investors pay attention to gold or silver when they can make BIG MONEY in stocks like ROKU??  And, if we look at ROKU’s monthly trading volume, it’s right up there with the SLV ETF:

In May, ROKU’s trading volume reached 325 million shares. Thus, ROKU’s notional trading amount was approximately $25 billion in May compared to $6 billion for the SLV ETF  in July. 

Regardless, investors have gone utterly insane by driving up stocks prices of ROKU and even Beyond Meat, ticker BYND.  As we can see in the chart below Beyond Meat’s stock price exploded nearly ten times its IPO price of $25 in May to $240 in July:

When investors are provided with these types of companies to bet on in the GRAND STOCK MARKET CASINO, then it’s no surprise that gold and silver have been overlooked for the past six years. However, that is about to change for the precious metals as the Fed, and Central banks take the next big step to prop up their fiat currencies.

Lastly, while gold and silver are finally showing some life as they break through key levels, we are just in the beginning stages for much higher prices in the future.  Please check out my newest Precious Metals video update this weekend.

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DisappearingCulture
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DisappearingCulture

“For the majority of the last 20 years, the western Central Banks, under the direction of the BIS, have been able to use the precious metals derivatives markets to “manage” the price of gold. As long as counterparties who are “synthetically” long gold and silver are willing to settle the derivatives trade in cash or ETF shares, gold derivatives can be created in infinite quantities and used to keep a lid on the price of gold. But since late spring, it seems that the attempts to use the paper gold and silver markets on the Comex and LBMA to drive… Read more »

Ranger
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Ranger

Gold is great for the banks and the wealthy. The commoners will not benefit. Once gold reaches a certain point of price for buyers, the bankers YET AGAIN AS THEY ALWAYS DO will find a way to crash the price and then buy it back for nothing. If not, they’ll just order their henchmen aka Congress to confiscate it.

DisappearingCulture
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DisappearingCulture

Read the article I posted a link to above. Government does not always have the power to define the value of gold in a fiat currency ad infinitum.
It will not be confiscated. First of all they don’t know who has it. And police are not going to come to people’s doors [risking their lives] to confiscate what is far less than 1% of the national debt.

DisappearingCulture
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DisappearingCulture

Government would confiscate digits from bank accounts, 401k’s, IRA’s, mutual funds, etc. long before the grueling effort they don’t have the manpower for to get a tiny, tiny fraction of that in metal.

Shamus
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Shamus

I’d like to see that law (set up for gutless Europeans) applied in the U.S. How many banks would be set afire in 48 hours after seizing the mere kibbles that each commoner holds in their account? In effect, starving them out. The state capitals would be next to fall. No I predict those in “charge” enjoy keeping their heads on their shoulders, because those politicians homes would be next in short order. (look what happened to Rand Paul)

Shamus
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Shamus

Interesting theory Ranger… however I don’t see a compliant America following and believing in their precious leaders anymore. Should the lid come off the U.S. finances, causing a depression, the mayhem from the commoner will be frightening to behold!…. and at this point, no one will yield a coin to those *sshats in Congress, the Whitehouse, or any other bloodsucking federal agency.

Slvrwllwn
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Slvrwllwn

Steve, when will we see the BIG KAHOONA which hurl physical gold and silver into the stratosphere regarding astronomical prices? Specifically having to do with the running out of fossil fuel altogether from around the world?

Marko
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Marko

I love your posts

OutLookingIn
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OutLookingIn

So, just who’s taking the other side of all those short contracts in silver?
My last post had the open interest in silver at 238,508 contracts.
Just before the weekend start, they have now grown to 243,791 contracts!
Back in July, the September call options in silver were 19,561 contracts.
They are now 28,850 calls, a gain of 6,238 calls with only 18 days before they expire!
The December long call options number is just north of 80,000 contracts.
The pressure is building. Will the massive shorts be handed their heads?
Or will the longs get smashed? Somehow I can’t see the price of silver collapsing.

DisappearingCulture
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DisappearingCulture

Great question[s]; few have the answer[s]

From Canada Eh
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From Canada Eh

There appears to be a growing correlation between the recent advance in the Gold price – and the growth in Negative Yielding Debt, see chart …

https://pbs.twimg.com/media/EBq_1zpUcAA2Hs6?format=jpg

Jan
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Jan

No, there is no correlation (until proven otherwise). You could find charts like price of avocado vs. price of Bitcoin:comment image

Correlation? No. Randomness. Yes.

James Randolph
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James Randolph

So, which one? Which is the better of 2 different directions I could take here? Something I can eat vs Something I just can’t quite wrap my head completely around, Crypto-Currencies, created out of thin air and whose value is determined by “self-regulation” and “trust me, I’m here to help you”. BitCoin.”Waving my hand, or other Crypto-Currencies creates value by waving my hand”? I’m not as ignorant about Crypto-Currencies as my post might suggest. “If” I have a point it is; Unlike Crypto-Currencies, investments in the precious metals retains a core intrinsic value. Crypto’s and their like rely on belief… Read more »