PRECIOUS METALS UPDATE and SILVER TRADE ALERT (3:00 pm EST)
Today silver prices are finding support at $20, which is the low limit of our target range for a correction to the final bottom of silver's current medium-term cycle (which is several weeks overdue). We are also seeing an intermarket bullish divergence to gold (as silver is making new weekly lows, but gold is still above its low from last week), and prices are closing in the upper third of today's range. This is all happening inside a potential "pivot point" time frame for both metals. It looks like a good time to buy silver as this could be the end of the current medium-term cycle and the start of a new one. If the new cycle is bearish, we would expect prices to run back up to around $23. But if the cycle turns out to be bullish, we could see a rally with prices going as high as $30. We thus have a favorable risk vs. reward situation setting up here. I am going to enter a long position in silver today. We can set our initial stop loss for this trade on a close below $19.
Gold may rally too (it is also at a "pivot point"), but gold prices have just scratched the top of our target range ($1770 - $1810), and its possible they could still fall lower. Next week we enter a strong reversal zone for precious metals (March 13 - 21), so its possible gold's medium-term cycle bottom could happen then (unless it happens this week -even today). An ideal scenario that could play out here would be for gold to make a new low (and cycle bottom) next week while silver does not for another case of bullish divergence next week. Once gold's medium-term cycle has bottomed, we don't expect prices to rally as strongly as silver, but a rise back to $1950 would not be out of the question, so we may consider going long in gold if a new bottom forms next week. Let's stay on the sidelines of gold for now.
It's important to note here that our longer-term view of gold is that a 23-year cycle has most likely topped out, and gold prices are now generally headed down over the next year or two to make a final 23-year cycle bottom (which could get back to the $1000 level). Shorter-term, our next medium-term cycle rally will probably be the last significant surge up in gold prices before the final steep fall to that 23-year cycle bottom. We will therefore be looking to sell short at the top of the next medium-term cycle (which should be under $2000).
Today silver prices are finding support at $20, which is the low limit of our target range for a correction to the final bottom of silver's current medium-term cycle (which is several weeks overdue). We are also seeing an intermarket bullish divergence to gold (as silver is making new weekly lows, but gold is still above its low from last week), and prices are closing in the upper third of today's range. This is all happening inside a potential "pivot point" time frame for both metals. It looks like a good time to buy silver as this could be the end of the current medium-term cycle and the start of a new one. If the new cycle is bearish, we would expect prices to run back up to around $23. But if the cycle turns out to be bullish, we could see a rally with prices going as high as $30. We thus have a favorable risk vs. reward situation setting up here. I am going to enter a long position in silver today. We can set our initial stop loss for this trade on a close below $19.
Gold may rally too (it is also at a "pivot point"), but gold prices have just scratched the top of our target range ($1770 - $1810), and its possible they could still fall lower. Next week we enter a strong reversal zone for precious metals (March 13 - 21), so its possible gold's medium-term cycle bottom could happen then (unless it happens this week -even today). An ideal scenario that could play out here would be for gold to make a new low (and cycle bottom) next week while silver does not for another case of bullish divergence next week. Once gold's medium-term cycle has bottomed, we don't expect prices to rally as strongly as silver, but a rise back to $1950 would not be out of the question, so we may consider going long in gold if a new bottom forms next week. Let's stay on the sidelines of gold for now.
It's important to note here that our longer-term view of gold is that a 23-year cycle has most likely topped out, and gold prices are now generally headed down over the next year or two to make a final 23-year cycle bottom (which could get back to the $1000 level). Shorter-term, our next medium-term cycle rally will probably be the last significant surge up in gold prices before the final steep fall to that 23-year cycle bottom. We will therefore be looking to sell short at the top of the next medium-term cycle (which should be under $2000).
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