Gold Investors Are Fast Asleep

Saturday, December 30, 2017

digital gold

Precious metals formed significant lows 2-weeks ago, and hardly anybody is paying attention. I think we will look back at this period as an excellent opportunity. And if I’m correct, this could be the last time we see gold in the $1,200’s for a long time.

The 4-year basing pattern lulled investors to sleep…it’s time to wake up. Back in October/November 2016, we would get 40-50 people to sign up for our free updates after an exclusive article. Today, we might see five. Everyone is talking about Bitcoin and they could care less about gold. I view this as an excellent contrary indicator. I included a chart of Bitcoin illustrating a potential head and shoulder top. Here is the article I wrote December 6th, 2017 Gold Investors Should Pay Attention To Bitcoin.

Supply Is Ample: Coin dealers have plenty of inventory and premiums are reduced. You can buy pre-1933 graded (MS 62) 1-ounce gold double eagles for the same price as a new American eagle. And have you checked the price of Platinum? Next to silver, it is the least expensive precious metal, cheaper than gold and even Palladium. Platinum should rally sharply when investors realize this mispricing.

Metals and Miners formed 6-Month lows in December. We could see some backing and filling, but prices should continue to trend higher. The multi-year basing pattern appears to be complete, and 2018 should be a breakout year for precious metals. I included a long-term chart of the DOW versus the CRB. Commodities are dirt cheap (versus stocks), and it should have your attention.

Short-Term Analysis: I was surprised miners didn't rally more on Friday when gold broke above $1,300. The lack of participation may indicate one of two things.

1) Miners will re-engage and rally on Tuesday when the market reopens.

2) Miners need more time to digest the sharp gains and prices will continue to consolidate or pullback next week.

I'm leaning towards the latter. I'll consider adding to my holdings if prices pullback. I'll advise members when I get ready to move and at what levels.

COMMODITIES VS STOCKS 

Here is a 60-year chart of stocks versus commodities. The ratio is at record lows, and commodities are dirt cheap versus stocks. Both the RSI and TSI are forming positive divergences similar to 1997-1999. The long-term chart argues for a major turning point in commodities. Note: The CRB is a basket of 19 commodities (39% allocated to energy contracts, 41% to agriculture, 7% to precious metals and 13% to industrial metals).

US DOLLAR

The dollar is behaving as expected and prices have declined sharply. However, the MFI is oversold, and we could see a 2-4-day bounce. The trend should break below September's 90.99 low early next year and confirm a new multi-year bear market.

GOLD WEEKLY

The 4-year base appears to be complete. The weekly chart produced a second white candle close above the 10-week EMA confirming a 6-Month low at $1,238.30. The fact that prices failed to reach the $1,200 target suggests an underlying strength. We expect gold to breakout above $1,400 and (at least) challenge the $1525 level in 2018. Our long-term forecast calls for prices to work their way higher and ultimately break above the $1,923 high in 2020/2021.

GOLD DAILY

Prices closed above the October and November highs on rising volume. We are just 2-weeks into a new 6-month cycle, and prices should rally nicely in 2018. However, the MFI is overbought, and we could see a short-term pullback. I was surprised miners didn't rally as gold broke above $1,300. If miners fail to unite on Tuesday, then a pullback in metals and miners becomes much more likely. If established, gold should find support around the 10/50-day EMA's.

SILVER WEEKLY

Prices closed above the weekly moving averages, and $15.63 should become a major low. Silver should break above the inverse head and shoulder neckline in early 2018. Once complete, we anticipate a rally to or above the 2016 high ($21.22). If the trend catches fire, we could see a rally to $25.00-$26.00 in 2018.

SILVER DAILY

Prices are above the intermediate trendline, and a 6-Month low is confirmed. Volume is rising, but the MFI is nearly overbought; a pullback is possible. I'll add to my USLV position if prices correct.

GDX

I was surprised miners didn't rally more as gold broke above $1,300. If prices don't engage on Tuesday, then we will continue to consolidate or get a brief pullback next week.

GDXJ

Same thing for junior miners. If prices don't engage on Tuesday, then we will continue to consolidate or get a brief pullback next week.

SPY

Stocks made it through year-end without much of a correction. Prices may correct in January. I'll look for a breakdown in the MFI trendline to signal a correction. The first line of support is the upper trend channel.

WTIC

Prices should be close to a top but no indication just yet.

BITCOIN

Here is a 12-Hour chart of Bitcoin courtesy of Cryptowatch. Prices declined sharply on December 22nd and then bounced. The rebound may have formed the right shoulder of a potential Head & Shoulder Top. The trend looks vulnerable and breaking below $12,000, and then $10,700 could trigger significant selling. The Head & Shoulder pattern, if achieved, suggests a decline to $5,000-$6000. Click here for my Bitcoin post to members.

I wish everyone a healthy and prosperous 2018.

Courtesy of https://goldpredict.com/

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AG Thornson

AG is the editor of www.GoldPredict.com report and creator of the Gold Predict Color Code. His members receive frequent updates and commentary regarding the gold, silver, and mining sectors. At his heart, he is a technician and prides himself on making his analysis easy to understand through the use of adaptive and creative charting techniques. You can reach AG at info@GoldPredict.com.