We have witnessed this morning Silver hitting and slightly surpassing the technical and psychological price resistance barrier of $18 and we ask what this means for silver prices moving forward.
Last week we focussed on silver and the various reasons why it could prove attractive moving forward, but usually as a laggard to gold and then eventually in percentage terms exceeding it.
This week we have focussed more on gold, highlighting that it has proven over time to be an effective hedge against inflation, why hovering around $1500 is a consolidation phase eventually with a break out due either to the upside or the downside and yesterday’s video which has not proven popular in terms of views but probably is the most important message we have conveyed so far that Investment managers, hedge & Pension Funds are now beginning to view gold as an alternative to bonds and other defensive assets in a multi-asset class investment portfolio.
Now if you haven’t heard any of these videos we place them in the description box below.
Today is very important, it appears that silver has started to break out from its holding pattern of $1700 – $17.50 and gold too has broken the $1500 barrier again.
At the time of writing, and we accept that prices may change by the time the video is published in a few hours’ time, gold is standing at $1504 and silver at $18.04. This means that gold is up $14 from the opening of this week and silver is up 50 cents.
It is possible that this is the break-out or direction confirmation we have been talking about or it could be a market testing move.
Next Wednesday we have the FOMC deciding upon interest rates. Last week, The International Monetary Fund lowered its expectations for global growth in 2019 to 3%, the lowest rate since the financial crisis. This week we have seen Existing home sales in the US fall in September from 5.5m in August to 5.38m in September. Durable goods orders also fell in September from plus 0.3% in August to -1.1%. and new home sales were down 5,000 from August but were in line with expectations.
Now next week we have major economic data being announced including GDP, Consumer Spending, Core Inflation, Non-farm payrolls, Manufacturing PMIs – a barrage of critical financial and economic data – but on Wednesday the FED will be announcing its interest rate decision and we can only surmise that they will be aware of the other data to be announced afterwards.
All expectations are based on a 0.25% cut and today we are seeing traders get ahead of the curve as it were and are now trading gold and silver ahead of that announcement. Now it is quite possible that prices may fall back – but we are alerting you, our subscribers, that this could be the break- out we have predicted. Now we have to get real here too. By breakout we are not saying $20 silver and $1600 gold next week, we have already given our forecasts for the year end.
However, it is quite possible that we are witnessing new support levels at $1500 and $18.00 – it is equally possible that traders are testing overall market reaction to see whether these levels are to form support or to confirm resistance. If it’s the former than prices are of course moving higher, if it’s the latter they are moving lower – either way today is a significant move.
Stock markets so far are relatively steady, and the dollar index is hovering around 97.5 and President Trump who is facing increasing impeachment calls is calling for the FED to reduce rates next week – his twitter feed is beginning to light up.
We suggest you watch this carefully, we stated on the weekend that next week will be the exciting week for precious metals, they may have started today – however this pans out, you can rest assured that we shall update you more thoroughly in our weekly update which will be published tomorrow.
In any case, we strongly urge you to view our videos of the past 2 weeks – they state the case for gold and silver in terms that pumpers and equity analysts won’t do – so that you can make the right decisions for yourself in the end:
Gold vs Bonds in an Investment Portfolio
Gold vs Dow Jones – A Brief Assessment
Is Gold An Effective Hedge Against Inflation?
Why is Gold Hovering Around $1500?
Is Silver An Effective Hedge Against Inflation?
The Truth about the Gold to Silver Ratio & is it Important?
Silver’s Rocket Will Be Financial Not Physical
Silver’s Future Looks Bright – But When?