Gold and Silver Update
By: Florian Grummes
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1. Market Update
Since mid of November Gold is basically moving sideways while Bitcoin is up nearly 40% during the same timeframe.
There is zero confirmation that we have already seen the final low in the Gold-market. Expect more sideways action followed by the final sell-off down towards $990 - $1,025. If instead the bulls can start a recovery from current levels it will end up as another bear market rally somewhere in early spring.
Bitcoin on the other hand looks very bullish and has very strong momentum. My favorite scenario here is some form of a ascending triangle in the coming months.
Disappointing year 2015 for precious metals:
Gold in US-Dollar = -9.59%
Gold in Euro = +0.20%
Silver in US-Dollar = -8.26%
Silver in Euro = +1.67%
GDX = - 23.37%
GDXJ = -17.63%
HUI = -30.62%
Overall a disappointing performance for the sector. Bitcoin is up 41.8% during the same time frame.
The GDX holding up better than GLD. At the final bottom you want to see the miners ETF positively diverging from the physical Gold ETF.
The point & figure chart for Gold continues with a buy signal. It will switch to sell signal if Gold closes below $1,050.
2. Bitcoin with stellar performance
I am looking for a consolidation soon to start. Don't chase it here. Stay patient and wait for a dip down to the 50MA ($383). In spring 2016 I expect the breakout above $500. This should trigger a run towards the next target around $800.
3. The Midas Touch Gold Model
Larger Image
Since 11th of December the model is back to Neutral/Sideways Mode.
4. Gold Daily Chart
Nothing new here... Gold can do two things from here: Either we're getting a bear-market rally into January or Gold will resume the downtrend after this sideways consolidation. There is no reason for any new position in the current environment. Stay at the sidelines and let the market tell you once he has made up his mind. Overall we are facing limited downside risk but the bear market could extend in time yet we are very close to a huge opportunity in the gold market on the long side!! Remain patient but alert and do your homework to be ready once we are hitting $1,025 and lower.
5. Recommendations:
Swing-traders who followed my recommendation to sell Gold short between $1,175 - $ 1,180 should now move their stops to $1,083. It has been a spectacular ride and we are short since more than 8 weeks with massive gains and the bulls still did not threaten our stops. You might be able to ride this winning trade down to $1,025 where you should cover everything.
As well I recommend to place a multiple scale in "Gold long" order between $1,025 and $980. E.g. 1/4 @ $1,025, 1/4 @ $1,010, 1/4 @ $1,000 and 1/4 @ $990.
Investors recently got a couple of chances to buy physical Gold below $1,050. Continue to buy with both hands if Gold moves below $1,050 again until you have 10% of your net worth in physical Gold and Silver.
6. Long-term personal beliefs (my bias)
Gold is in a bear market and headed towards $1,035 - $980. Once this bear is over a new bull-market should start and push Gold towards $1,500 within 2-3 years.
My long-term price target for the DowJones/Gold-Ratio remains around 1:1. and 10:1 for the Gold/Silver-Ratio. A possible long-term price target for Gold remains around US$5,000 to US$8,900 per ounce within the next 5-8 years (depending on how much money will be printed...)
Fundamentally, as soon as the current bear market is over, Gold should start the final 3rd phase of this long-term secular bull market. 1st stage saw the miners closing their hedge books, the 2nd stage continuously presented us news about institutions and central banks buying or repatriating gold. The coming 3rd and finally parabolic stage will end in the distribution to small inexperienced new traders & investors who will be subject to blind greed and frenzied panic.
There is zero confirmation that we have already seen the final low in the Gold-market. Expect more sideways action followed by the final sell-off down towards $990 - $1,025. If instead the bulls can start a recovery from current levels it will end up as another bear market rally somewhere in early spring.
Bitcoin on the other hand looks very bullish and has very strong momentum. My favorite scenario here is some form of a ascending triangle in the coming months.
Disappointing year 2015 for precious metals:
Gold in US-Dollar = -9.59%
Gold in Euro = +0.20%
Silver in US-Dollar = -8.26%
Silver in Euro = +1.67%
GDX = - 23.37%
GDXJ = -17.63%
HUI = -30.62%
Overall a disappointing performance for the sector. Bitcoin is up 41.8% during the same time frame.
The GDX holding up better than GLD. At the final bottom you want to see the miners ETF positively diverging from the physical Gold ETF.
The point & figure chart for Gold continues with a buy signal. It will switch to sell signal if Gold closes below $1,050.
2. Bitcoin with stellar performance
I am looking for a consolidation soon to start. Don't chase it here. Stay patient and wait for a dip down to the 50MA ($383). In spring 2016 I expect the breakout above $500. This should trigger a run towards the next target around $800.
3. The Midas Touch Gold Model
Larger ImageSince 11th of December the model is back to Neutral/Sideways Mode.
4. Gold Daily Chart
Nothing new here... Gold can do two things from here: Either we're getting a bear-market rally into January or Gold will resume the downtrend after this sideways consolidation. There is no reason for any new position in the current environment. Stay at the sidelines and let the market tell you once he has made up his mind. Overall we are facing limited downside risk but the bear market could extend in time yet we are very close to a huge opportunity in the gold market on the long side!! Remain patient but alert and do your homework to be ready once we are hitting $1,025 and lower.
5. Recommendations:
Swing-traders who followed my recommendation to sell Gold short between $1,175 - $ 1,180 should now move their stops to $1,083. It has been a spectacular ride and we are short since more than 8 weeks with massive gains and the bulls still did not threaten our stops. You might be able to ride this winning trade down to $1,025 where you should cover everything.
As well I recommend to place a multiple scale in "Gold long" order between $1,025 and $980. E.g. 1/4 @ $1,025, 1/4 @ $1,010, 1/4 @ $1,000 and 1/4 @ $990.
Investors recently got a couple of chances to buy physical Gold below $1,050. Continue to buy with both hands if Gold moves below $1,050 again until you have 10% of your net worth in physical Gold and Silver.
6. Long-term personal beliefs (my bias)
Gold is in a bear market and headed towards $1,035 - $980. Once this bear is over a new bull-market should start and push Gold towards $1,500 within 2-3 years.
My long-term price target for the DowJones/Gold-Ratio remains around 1:1. and 10:1 for the Gold/Silver-Ratio. A possible long-term price target for Gold remains around US$5,000 to US$8,900 per ounce within the next 5-8 years (depending on how much money will be printed...)
Fundamentally, as soon as the current bear market is over, Gold should start the final 3rd phase of this long-term secular bull market. 1st stage saw the miners closing their hedge books, the 2nd stage continuously presented us news about institutions and central banks buying or repatriating gold. The coming 3rd and finally parabolic stage will end in the distribution to small inexperienced new traders & investors who will be subject to blind greed and frenzied panic.
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