Another Good Time to Add to Precious Metals

I have written bullishly many times fundamentally about the precious metals complex, but I have only written bullishly twice before on the technical outlook.

One was on 5/31/19, where I wrote http://theboywhocriedgold.com/is-this-it/

The other was on 10/24/19, where I wrote http://theboywhocriedgold.com/the-next-leg-in-gold-possibly-confirmed/

From 5/31/19-9/4/19, Gold would move from ~$1,290 to ~$1,550. ~20%

From 10/24/19-1/8/19, Gold would move from ~$1,490 to ~$1,600. ~7%

I must admit my second call was a bit pre-mature as gold did not breakout immediately after the post. Red vertical lines mark post dates.

I believe it is likely that we either breakout before February 20, or we finish filling out the larger triangle and breakout closer to March 12.

As always, the biggest winning trades will come from the miners and silver.

I will use the first move as reference because of not only ease, but since I believe this move will more likely mirror the first than the second.

From 5/31/19-9/4/19…

Gold Miners (GDX) would move from ~$21.00 to ~$30.50. ~45%

Silver Miners (SIL) would move from ~$22.50 to ~$31.50. ~40%

Silver would move from ~$14.50 to ~$19.00. ~31%

Fundamental catalysts this time?

Coronavirus!
Federal Reserve Incompetence.
Interest Rates

These are new deaths each day reported out of China. Statistics of all kinds out of China are always to be looked at with skepticism. I am not going to get into it, but these numbers are likely significantly lower than the truth. The effects of fear would be enough to hurt an economy as people would be more prone to staying in, but large cities are on lockdown anyways. I do not yet have a motive attributed to portraying the spike in deaths.

https://systems.jhu.edu/research/public-health/ncov/

Below, is the Federal Reserve balance sheet. It grows when the Fed buys assets in the market. They do this to inject liquidity and relieve stress in financial markets. What you need to know is when that line is going up it is bullish for gold. It suggests risky times may be near, and at the least, it suggests money creation.

https://fred.stlouisfed.org/series/WALCL

Lastly, gold competes with bonds. Gold does not pay interest so when interest rates fall it is a tailwind for gold. The US 30-year yield broke down from a longer term triangle.

I zoomed in to show that I envision another such event. If you look closely you will see the head and shoulders technical pattern.

In conclusion, draw your lines. We will know if gold and the precious metals complex is on the move upward again with a decisive break of $1,585. A break below 2% on the US 30-year treasury yield could be seen as a lead or confirmation of the move.

Other markets to watch to confirm the move.

A breakdown above $7 on the Yuan. Proxy for trade war and now coronavirus.