Are Precious Metal Prices Set To Explode

Precious Metal Prices

Precious Metal Prices

The fundamental factors were incredibly bullish for Gold running into 2011 and after that, but Gold did not respond. What happened?  Even though the money supply was being inflated at a mind-boggling rate, the velocity of money had slowed down. Money was not changing hands fast enough, in other words, the masses had no access to easy money.  Hence, Gold tanked, as deflationary forces set in. These forces are still at play, and that is why we are neutral on Gold stocks but bullish on Gold and Silver bullion.

Very Interesting Read: Perception Wars; You see what you are directed to see

How did the Fed knock the hell out of Gold? They brought the velocity of money to a standstill and allowed deflationary forces to set in. That was the end for Gold.  So until M2 starts trending upwards it is likely that every Gold rally will fail.

The markets are totally controlled and manipulated; every boom and bust cycle was planned in advance of the event.  The chart below illustrates that the economy is far from healthy, in fact, it appears to be almost in a coma and is being forcefully kept a life through immense injections of hot money. Take away the hot money and this illusory economic recovery crumbles; if a market is healthy the velocity of money increases and vice versa. Look at the chart below, the velocity of money is dropping like a falling dagger.

M2 velocity of money supply

Until the M2 starts to trend upwards or Gold closes above $1350 on a monthly basis,  every rally in Gold will fail.

Precious Metal Prices Update July 2019

We have a bullish MACD crossover on the monthly charts, and for the first time years, the trend is mildly positive. Now if Gold manages to close above 1500, then a test of the 1800 ranges with a possible overshoot to 1920 is likely. Silver is a laggard, and it will only start to take off after the action starts to heat up in the Gold markets, but Silver is likely to outperform Gold Bullion in percentage terms.  The pattern (currently) is stronger for Bitcoin than it is for Gold; however, things could change fast. In the short term time frames though Bitcoin investors should consider waiting for Bitcoin to let out some steam before deploying new capital.

When it comes to Gold stocks, GFI looks interesting, and it is also the fourth-strongest stock in the sector in terms of relative strength. Entry points in the 4.50-4.70 ranges would be a good place to establish a position.DRD is another interesting play, albeit one that carries a bit more risky due to its volatile nature, and it would make for a good long in the 2.90-3.00 ranges

Other articles of Interest

SSE Composite Index: Is It Ready To Breakout or Crash Again (Oct 2)

BTC Price: What’s Next For Bitcoin (Sept 27)

Gold Charts In Multiple Currencies: Should You Get Into Gold    (Sept 16)

Bull Market Example: This Market Is The Best Example Of A Bull Market (Aug 31)

Trade War News: US Set To Win Trade War With China  (Aug 30)

Swedish Currency: Worst Currency But Outlook Could Turnaround (Aug 15)

CNN Ratings Continue To Slide In 2019 (Aug 5)

Semiconductor stocks: China’s is poaching Talent at breakneck speed  (June 29)