Gold’s rally was just stopped by the resistance provided by its previous high and its 60-week moving average. Will gold now reverse?

The above chart features gold price in terms of weekly candlesticks. As you can see, it just approached its August high.

And gold failed to move above it once again.

The resistance held.

What is even more bearish is the fact that gold is likely about to form another weekly shooting star (reversal) candlestick, the second in a row. “Likely,” because the week is not over yet.

This is a very powerful bearish indication, especially that it has now been repeated.

Given today’s pre-market moves in gold and silver (both are up just slightly, with gold trading below $1,800), it seems that the reversal candlestick will soon be a fact.

This – along with the failed attempt to move above the August high – has profoundly bearish implications for the following weeks.

Gold, just like many other markets (i.e., stock prices), recently corrected slightly more than 38.2% of its previous move. Then it invalidated this small breakout. It happened more than once, so this bearish indication was strengthened.

The same goes for gold’s attempt to move above its August high – the one that failed. It too strengthened the bearish case for the following weeks.

Please note that the above is taking place shortly after two sell signals from the RSI indicator, which further confirms the bearish nature of the recent price moves.

Gold’s breakdown below the rising, short-term, black support line makes the short-term outlook even more bearish.

And now, based on this week’s failed attempt to rally once again, gold is likely to form a head and shoulders top pattern. For now, this formation is just potential, as we’ll need to see a confirmed breakdown below the neck level (dashed, black line) first.

Given rising real interest rates and the USD Index that has likely formed its medium-term bottom, the foregoing is very likely.

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Silver's recent upward move was most likely just a corrective upswing. What usually happens after such adjustments are completed?

As I emphasized many times before, silver's outperformance is rarely a bullish sign, and the fact that it recently took a very visible form only indicates that the next slide will be of medium-term size, not just something short term.

Silver just invalidated its temporary breakout above the 61.8% Fibonacci retracement.

Yes, that’s a retracement that’s higher than the analogous ones in stocks, gold, and mining stocks, and… This is yet another confirmation of silver’s short-term strength.

Once again – it’s not something bullish, but very likely something bearish.

This means that the recent sizable rally is nothing more than a – sizable, but still – correction within a bigger downtrend.

Looking at silver from a long-term point of view helps to see the forest, not just individual trees.

When looking at silver from a long-term point of view, it’s still obvious that the recent move higher was most likely just a corrective upswing.

What happens after corrections are over (as indicated by, i.e., silver’s outperformance)? The previous trend resumes. The previous trend was down, so that’s where silver is likely headed next.

Besides, the long-term turning point for silver is due in several months, and if silver repeats its previous 2022 decline, then it will bottom close to the turning point and also close to the $15 level– in the first half of 2023.

It’s likely to repeat its previous 2022, because that’s what tends to happen after flag patterns, and what you see on silver’s short-term chart between September and yesterday appears to be a flag pattern.

However, will silver only repeat its previous 2022 performance and not decline more than it already has?

Based on the analogies to 2008 and 2013, the latter is more likely. The 2013 slide was bigger than the initial decline that we saw in 2012. And the final 2008 slide was WAY bigger than what we saw before it.

Due to its industrial uses, silver is known to move more than gold, in particular when the stock market is moving in the same way as gold does. Since I think that gold and stocks are both likely to slide, silver is indeed likely to decline in a truly profound manner. Quite likely lower than just $15.

Consequently, my prediction for silver prices remains bearish, as does the outlook for the rest of the precious metals sector.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

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Gold’s rally was just stopped by the resistance provided by its previous high and its 60-week moving average). Will gold now reverse?

The above chart features gold price in terms of weekly candlesticks. As you can see, it just approached its August high.

And gold failed to move above it.

Last week, I wrote:

The resistance is provided by the weekly closing prices, and since the current week ends today (Dec. 2), it’s likely that gold’s rally was just stopped or that it will be stopped today.

The resistance held.

This week is not yet over, so don’t let the small size of this week’s volume fool you – it’s most likely not the case that gold is simply taking a breather. Zooming in provides extra details.

Gold, just like many other markets (i.a. stock prices), recently corrected slightly more than 38.2% of its previous move. And then it invalidated this small breakout.

During yesterday’s session, gold moved above this level once again, but only insignificantly so, and given the recent invalidation it’s unlikely that gold would be able to rally further.

If you click on the above chart and zoom it, you’ll see that right after the August top formed, gold also made a low-volume attempt to move higher. That was right before the start of the near $200 downswing.

The above happened even without the prior sell signal from the RSI indicator, and since we just saw the latter, a bearish outcome is even more likely.

Not to mention another signal from the silver-to-gold link (chart courtesy of https://goldpriceforecast.com/).

Silver, moved to its yesterday’s intraday high, while gold didn’t.

Silver once again moved higher to a much bigger extent than gold did in today’s pre-market trading, and while the size of both moves is not huge, it’s something that confirmed the previous indications, and it’s a bearish sign.

Why would silver’s outperformance be a bearish sign?

First of all, because the history shows that it worked numerous times.

Second, the silver market is much smaller, and it’s much popular with individual investors / investment public. The institutions simply can’t buy a lot of silver without moving the market, so they are not that interested in it – besides, it hasn’t performed well in the past decade. Individual investors, however, can usually freely enter the silver market, and due to multiple reasons, they often do.

The thing is that the investment public is often the last to the party – individual investors often buy close to tops, and they sell close to bottoms.

And you can see this in the price movement – silver soars relative to gold close to tops in their prices.

Since we just saw it in today’s pre-market trading, it serves as a bearish confirmation.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

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Przemyslaw Radomski, CFA
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Gold recently corrected a large part of its previous move, but later traded above an important resistance level. Will it be able to sustain this move?

The above chart features gold price in terms of weekly candlesticks. As you can see, it just approached its August high.

The resistance is provided by the weekly closing prices, and since the current week ends today (Dec. 2), it’s likely that gold’s rally was just stopped or that it will be stopped today.

Gold, just like many other markets, recently corrected ~38.2% of its previous move.

Yesterday, however, gold rallied above this important resistance level. Now, the question is: will gold be able to hold this move, or will it invalidate the breakdown shortly?

The RSI just moved above 70, and it’s a classic sell signal, which had worked many times before.

The weekly resistance that I wrote about earlier is an important factor as well.

Not to mention another signal from the silver-to-gold link (chart courtesy of https://goldpriceforecast.com/).

Silver moved higher to a much bigger extent than gold did in today’s pre-market trading, and while the size of both moves is not huge, it’s something that confirmed the previous indications, and it’s a bearish sign.

The reason is that the silver market is much smaller than the gold market is, and in addition to the above (and in relation to it), silver is much more popular with the investment public. The latter tends to buy close to the tops and sell close to the bottoms. Consequently, the particularly strong performance of the white metal indicates that the investment public is “buying like crazy,” and this, in turn, is a sign that a top is being formed.

The reaction (rally) to jobless claims yesterday is consistent with the preceding. Market participants are doing the opposite of what makes sense (so, it seems that it is the general public that is making the purchases). Weaker jobless claims mean the Fed has more leeway to raise interest rates, and higher real interest rates are one (the other is the USD Index) of the key fundamental drivers pointing to lower gold prices.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

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While comparing gold and bitcoin gives some idea of the patterns in the market, can the slide of junior miners be predicted by the same method?

Those of you who have been following my analyses for a while may be expecting me to write that it is based on the stock market's rally and thus only temporary, as miners will follow gold sooner rather than later. That’s their ultimate source of revenue (current or expected). While that’s true, right now there is another huge factor that’s likely contributing to the situation.

It's most likely the unfolding crypto-drama.

Remember when I previously commented on the link between juniors and cryptocurrencies? What I wrote back then was particularly important with regard to the less known (obscure?) ones with a shady background. In fact, some even call them “shitcoins.”

I wrote that for many individual investors, cryptocurrencies became the “new precious metals market.”

Alternative payment system? Just like gold, right?

There’s a flagship asset (gold, Bitcoin).

There’s a less expensive but obviously more useful asset (silver, Ethereum).

There are a number of little-known assets that are risky but have the potential to provide massive returns (high-quality mining stocks, low-quality mining stocks, especially low-quality junior mining stocks, altcoins, "shitcoins").While gold was not doing much, the wild rallies in cryptos got much more attention. That was finally exciting!

So, individual investors flocked from the precious metals market to cryptos. Not all investors, of course, but many.

While cryptos were on the rise and the overall sentiment was positive, investors dropped their PM holdings to buy cryptos as they forecasted that the latter would continue to rally “to the moon.” And while it didn’t matter that much for gold, as the yellow metal has powerful buyers and sellers that are not interested in cryptos, it mattered a lot to the junior mining stock sector as the buying power waned.

Fast-forward to the current situation, every other day we hear or read about yet another crypto scandal, while prices of cryptocurrencies are declining sharply.

This means that the above-mentioned effect could have been reversed. The investors who moved out of the junior mining stock sector in order to get into cryptos (in particular altcoins) could now be aiming to get out of that market (people tend to sell on declines, in fact, that’s why declines happen in the first place) and get back to what they “had liked” before – junior miners.

This specific phenomenon can be seen from a broader point of view when one compares the prices of gold and bitcoin.

As I wrote, the link is likely stronger in the case of altcoins and juniors, but gold and bitcoin have price data that’s more comparable, so that’s what I’m going to analyze.

Even though both gold and bitcoin moved higher between 2014 and now, they quite often moved in opposite directions in the short run. Short-term bottoms in gold, in particular, were usually followed by (larger or smaller) declines in bitcoin.

Interestingly, I originally featured the above chart many months ago, and please note that this tendency worked like a charm recently.

Gold formed a short-term bottom, rallied, and now Bitcoin slides. Why? Probably because people were fed up with Bitcoin’s inability to hold its ground, while gold soared. So they flocked to gold, silver, and - probably most intensely so - to junior mining stocks.

All right, so does this mean that as Bitcoin slides into the abyss, junior miners are now going to soar?

No.

No market moves up or down in a straight line, right? Well, neither does Bitcoin. How low is too low, then? That’s where technicals come in.

Remember when I wrote that Bitcoin was topping at about $50,000? Well, it did move a bit above that, but it didn’t trade there for long.

The flagship crypto fell like a stone in water, and it did so in tune with the technical principles. Bitcoin formed a bearish head and shoulders top pattern, and after breaking below the neck level earlier this year, it then corrected a bit, and then it plunged below $20,000.

All this is a textbook-example of how a head and shoulders pattern should work.

Now, the size of the decline based on this pattern is likely to be equal to the size of its head. I marked that with dashed lines.

Guess what – Bitcoin just moved to this target level (marked with green) recently. That is a strong indication that the bottom has been reached.The second indication comes from the huge volume that just accompanied the decline and the fact that the decline was quite sharp. The ROC (rate of change) indicator at the top of the above chart is close to -25 and when this happened and bitcoin was after a huge-volume decline, it then rallied.

What is even more interesting is that those were also the times when gold declined.

The sentiment itself is the final indicator that a short-term (!) bottom for bitcoin is in or near. Just go to any news website and look at what is being written about Bitcoin – it’s all scary and bearish. Or at least the majority of news/articles. That's what happens when prices fall to their lowest point. Remember what was written on those same pages when bitcoin was trading above $50,000? It was all sunshine and rainbows. All this time, I warned about the incoming slide. Very few listened then, just as very few want to hear about the upcoming slide in junior mining stocks.

Anyway, here’s how frequently people search for “crypto scam” on Google (chart courtesy of Google Trends).

The other distinctive peaks in those searches were in May 2021 (a major top and major decline in Bitcoin), early November 2021 (a major top in Bitcoin), and the end of January 2022 (a major bottom in Bitcoin).

The interest was this high only when there were major turnarounds in Bitcoin. And since it’s crystal clear that the previous move in Bitcoin was to the downside, it can’t be a top. Therefore, it’s likely that there’s a major bottom in Bitcoin.

Not necessarily the final one, but a major one for some time. A bottom that’s big enough to trigger a sizable rally in Bitcoin… And a sizable decline in the precious metals sector!

It’s easy to follow the herd. “Miners good, Bitcoin bad” is the current word out there. It’s also easy to repeat this mantra. But what’s easy and what’s profitable are rarely the same thing, which is why many tend to lose money over time. I’m not saying that each and every price move can be predicted – it can’t. However, as time goes on, following logical analysis and paying attention not to follow the herd often pays huge dividends.

My responsibility is to keep you up to date on my market views, which I strive base on logical analyses free of bias. Whether it’s possible for a human to achieve this kind of objectivity is another question, but, as much as I can, I aim to deliver analysis that’s as objective as possible. Right now, the way I see it, Bitcoin appears to have formed a short-term bottom, and mining stocks have either formed a short-term top or are about to do so soon.

Of course, I can’t make any guarantees, but in my view, the next move lower in the precious metals sector – especially in the junior mining stocks – is likely to be something epic.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim target for gold that could be reached in the next few weeks. We invite you to subscribe now and read today’s issue right away.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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