A Golden Opportunity For Precious Metals

Via Dana Lyons' Tumblr,

The popular gold-based exchange traded product, “GLD”, is testing the Down trendline from its 2011 peak.

https://www.zerohedge.com/sites/default/files/inline-images/20180118_gld.png

I think most participants would likely characterize recent markets as exciting — or, at least, interesting. That’s because, despite historically depressed volatility indices, there has certainly not been a lack of movement. Stocks are soaring, bond yields are jumping, the U.S. Dollar is plunging and oil prices are climbing. And that is to say nothing of the new crypto-currency asset class which, depending on what time you look, is either melting up…or crashing.

One of the few assets not partaking in this wild ride is precious metals — somewhat ironic given the level of passion and excitement that the asset class usually incites. In reality, the price of gold, as measured by the popular exchange traded product, the SPDR Gold Trust (ticker, GLD), began the year smack dab in the middle of basically a 2-year trading range. And the GLD hasn’t moved more than about 10% above or below that mid-point during that time. You can say essentially the same thing for the price of silver, as determined by the iShares Silver ETN (ticker, SLV).

Gold bugs might just get their opportunity to finally move the needle here soon, however. At least, they have a potential catalyst close at hand, based on the chart of the GLD. How so? The fund is presently testing the Down trendline stemming from its 2011 all-time high. Should the GLD be successful in breaking out above that trendline (presently near ~127), it may open the way for further, perhaps considerable, gains in the near-term.

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It is a similar chart story with the SLV as it too is testing its own post-2011 Down trendline near 16.25 after bouncing off of its post-2008 Up trendline in December.

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So, after drifting through multi-year doldrums following a potential longer-term bottom in early 2016, precious metals finally have a chance to join in the excitement of the rest of the world markets. If GLD and SLV are able, again, to overcome their respective long-term Down trendlines, they could be off to the races in putting in that long-awaited next up-leg following their 2016 rallies.

Of course, the developing potential breakdown in the U.S. Dollar Index may well serve as a tailwind for precious metals in their attempted flight higher. If the DXY cannot hold or reclaim its recent lows, it runs the risk of potentially meaningful further losses. If so, there’s no guarantee, but such a development would presumably aid in the precious metals’ breakout attempt.

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Comments

Save_America1st stizazz Thu, 01/18/2018 - 11:35 Permalink

@ author Dana Lyons

You do realize that a chart of a totally controlled and fully manipulated paper fake "gold" market is not reliable, don't you???  Those who control paper gold created that chart every single day for the past 20+ years.  There is no true "market" for gold just as there is no true market for anything else anymore.  

The only thing we can rely on is that when "they" slam the fake paper prices that your chart is based on then that's when we buy as much phyzz as we can.  That's it.  

In reply to by stizazz

blueskyranch gmrpeabody Thu, 01/18/2018 - 10:59 Permalink

PMs began to challenge fiat in 2008 and by 2011 the Central Banks (CBs) coordinated monkey hammers to beat them into submission. PMs will always be real money but most people think of their price in fiat.

Cryptos are only being noticed by .govs because they are working on ways to tax the capital gains. When (if) cryptos challenge fiat, .govs will find innovative ways of hammering them or simply declare them illegal unless declared. CBs are the long arm of .govs around the globe and they will protect fiat until the day they roll out .gov crypto. 

In reply to by gmrpeabody

chubbar ParkAveFlasher Thu, 01/18/2018 - 10:53 Permalink

Gold bugs have fuck-all to do with whatever happens in gold. For the real story, see what is happening in the trenches.

In the first 12 trading days of January, over 17% of annual gold production (ex China/Russia) has been demanded in physical and those demands have been transferred from COMEX over to the London LBMA facility. Gold and Silver physical delivery on the LBMA is in SEVERE backwardation now.

A few days ago, over 94% of ANNUAL Silver production was traded on the open market in ONE day. Normally, in commodities, only 3% of production is traded within the time frame of 1 day.

Behind the scenes there is MASSIVE offtake of physical gold, so much so that COMEX doesn't do anything other than send those contracts onto the LBMA to be delivered upon, COMEX is all but admitting it can't deliver either Gold OR Silver. It's likely that some illegal activity is being covered up over at the LBMA as well but the rules there are much more opaque. Watch for fireworks soon because this system can not withstand the current level of physical demand!

In reply to by ParkAveFlasher

Montana Cowboy Cole The Bar Thu, 01/18/2018 - 15:22 Permalink

It always happens that people confuse a shortage of metal in consumer form with a true shortage. When silver was hard to get, I personally spoke with Ross Hanson, the owner of Northwest Territorial. He said he has silver stacked to the ceiling. He was just unwilling to increase his production capacity for a short demand burst. Unless you have delivery defaults, news of shortages are bullshit.

In reply to by Cole The Bar

Montana Cowboy chubbar Thu, 01/18/2018 - 14:50 Permalink

I have been listening to these delivery default threats for decades. The problem is that they NEVER occur and they NEVER will. First, the physical supply of gold is massive. It never gets consumed and it never perishes. Every ounce ever mined is inventory, whether it is in a Comex/LBMA warehouse or not. The same is true for most silver. You and I are nothing more than remote Comex warehouses because stackers don't consume. The second big problem is that the longs at Comex always complain that the shorts have no metal to deliver. Those shorts are mostly bullion banks that do have the metal (JPM and silver). But the longs, mostly in on just margin, have no cash to call for delivery. This is why you will NEVER have delivery defaults. You could make a much better argument that the markets are being up-rigged by longs with no cash than down-rigged by shorts with no metal.

If you subscribe to the metal down-rigging theories, they why have supplies not been able to get depleted at alleged fire-sale prices for decades? And if supplies can't get depleted under bargain pricing conditions, how can metals endure price escalations. Of course, anything can go inverse the dollar. But that is not a real price escalation.

The reason metals can't do what Bitcoin did is because the metals seem endless in their supply and BTC is absolutely limited. According to the 2016 global mining stats, new gold is being mined at the rate of about 12,000 troy ounces per hour 24/7/365. Can the world absorb all this at a time when 75% of Americans can't come up with $400 in an emergency? Sort of begins to sound like the same problem as endless Fed note creation that metal bugs are running away from. Frying pan....Fire.... You know.

Wake me up when there is a delivery default. Until then, its just more of Boy.... Wolf.... You know.

In reply to by chubbar

Montana Cowboy YUNOSELL Thu, 01/18/2018 - 21:03 Permalink

Major Crock-O-Shit. This story, and several other whoppers, have been made up by those gurus who have been predicting delivery defaults for so long, they are now looking for a place to hide. The best example is Rob Kirby. He has been predicting delivery defaults since the stone age. His credibility is now so shot that he manufacturers incredible stories that explain why he is right even though he has been wrong. He is the one that originally made up this story about longs being secretly paid off to forgo their delivery demand. This would need to happen at least thousands of times to have any effect on a market price discovery. Yet nobody can produce even one example of such a payoff actually happening. Did you subscribe to this bullshit without even one such event to serve as evidence? Show us that event. Show me just one trader that got paid off. Its a unicorn.

Another one of Kirby's whoppers that circulated among gold bugs is that large quantity purchases of physical gold are actually selling at 200% of Comex price. What a crock. Who would pay 200%, or even 101%, when you can just buy a Comex contract and call for delivery at 100%? I know the narrative. Comex has no gold blah blah blah. But there has never been a delivery default.

Stop getting your facts from The Church of Gold and Silver (coin dealers and miners). You are being lied to by gurus that have no opposition. They can get away with preaching all kinds of bullshit because there is nobody with any financial interest in opposing them.

In reply to by YUNOSELL

Richard640 Pandelis Thu, 01/18/2018 - 10:26 Permalink

THE WRITER OF THIS IS PATHETIC-how dumb does he think people are--he is a subscription peddlar--what? we are to pay him for identifying a down trendline that is being tested-LOL-!!

Any child of 5 can see that...besides technicals don't matter any more in managed markets...and gold is the most managed--to the downside--Doofus apparently can't see this in the daily gyrations of gold.

In reply to by Pandelis

Richard640 Pandelis Thu, 01/18/2018 - 10:26 Permalink

THE WRITER OF THIS IS PATHETIC-how dumb does he think people are--he is a subscription peddlar--what? we are to pay him for identifying a down trendline that is being tested-LOL-!!

Any child of 5 can see that...besides technicals don't matter any more in managed markets...and gold is the most managed--to the downside--Doofus apparently can't see this in the daily gyrations of gold.

In reply to by Pandelis

Hugh_Jorgan Pandelis Thu, 01/18/2018 - 10:31 Permalink

Crypto is more hopium. It is a new veiled .GOV fiat sitting under the grow lamps right now. The entire crypto phenomenon t WILL be co-opted by .GOV once they feel it is trusted and entrenched.

I'm guessing safety valve will return to PMs in a decade or two... or a maybe only a year or two. Invest as you see fit. What will be left of the world as we (who are over 45) once knew it by then? That's anyone's guess.

In reply to by Pandelis

lester1 Thu, 01/18/2018 - 10:26 Permalink

Sold my Bitcoin with gains last month. Glad I did. It's been fun, but gold now is starting to rise. 

 

Bought Goldcorp stock and Newmont Mining. 😎👍

The Real Tony Thu, 01/18/2018 - 10:29 Permalink

I never liked Peter Munk after American Barrick bought out Arizona Star 3 weeks after I sold all my shares in the company. At least I get to see Peter watch the gold and silver manipulators pound the prices downward.

1.21 jigawatts Thu, 01/18/2018 - 10:31 Permalink

I'm still on the fence whether to buy more or not. 

Won't the (((money changers))) just sell trillions of paper contracts when they want to monkey hammer the price down again? 

 

USofAzzDownWeGo Thu, 01/18/2018 - 10:47 Permalink

paper gold was created to suppress the price of physical. thats how the jewfuck central bankers work. Same thing with the vix etfs but to prop the markets up by shorting them. 

Yen Cross Thu, 01/18/2018 - 11:02 Permalink

 OKay--- Let's get this straight.  It's all about nominal yields/

 That's why the $usd is being sold, not so much anymore as yields rise.

  The euro carry trade is getting ready to unwind. Look at usd/jpy. That equity correlation is busted!

  Look at an overlay of eur/jpy and equities :-D   Now overlay usd/jpy with equties and eur/jpy.

  STR= Sell The Ripsk<   The risk is to the downside, and VIX is coming to life.

Wise Gold Thu, 01/18/2018 - 11:05 Permalink

Nice try here.  The gold analysts at shepwave have been nailing gold and they are not focused on that trend line.  They say that the important factors are the recent trends and the correlative strength.  So far their every buy and sell signal in gold has been dead on.  Stocks too. 

Keltner Channel Surf Thu, 01/18/2018 - 11:10 Permalink

God, I love trading the miners/juniors, beautiful 3X short this morning, trades very clean and powerful (you quickly learn to adjust your position size down, but will still get more than with other firecrackers, such as TNA/TZA) -- 'clean' meaning very strict algo control intraday that can be trusted. 

Provides at least one big move nearly every day, with the standard problem of getting precise entries to maximize gains not any more difficult in theory (unless you're prone to chase, as it can fly half a screen in 15 sec.), but MUCH more rewarding.

Also, you don't need to worry about the stupid 10:30 Wed oil report impact, as with equities, and can also trade many post-FOMC announcements with more confidence than jitterbugging stocks.

Haven't touched the Russell in 2018, and don't miss it a bit.