My wish is for subscribers at CrushTheStreet to have a safe and happy Christmas season as we wait for events to unfold in 2022. The geopolitical situation, economic malaise, U.S. political circus, and circumstances surrounding the pandemic have turned our world upside down and will certainly be a bumpy ride to unwind. Before continuing with today’s gold and silver analysis, consider reviewing “Fed Warns of Perilous Times Ahead – Gold and Silver Technical Analysis” published on Nov. 11 (Twitter thread), and Incrementum’s “In Gold We Trust” 2021 Chartbook.
Seasonality in gold and silver may not appear to parallel the recent past on a macro view, but on a micro level the price action is mirroring the volatility patterns. The pandemic has thrown a wrench into the cyclicality of all markets, and gold and silver are no exception. Gold is entering one of its most favorable periods to rally due to the purchase of precious metals during India’s wedding season.
BlackRock Inc. is forecasting a stellar year for gold…
BlackRock says ‘out of favour’ gold may see fortune turn in 2022… “Gold could climb in 2022 after a lackluster year, driven by a combination of real interest rates, US dollar performance and demand for haven assets, according to BlackRock Inc… Gold ‘appears relatively out of favour at the moment,’ said Evy Hambro, global head of thematic and sector-based investing at BlackRock. He said that the current negative investor sentiment toward bullion presents ‘more upside risk than downside risk next year… It’s real interest rates which are the most important driver for gold, and they’re driven by interest rate and inflation expectations… We see a strong argument for adding to gold for diversification today, given equity markets are around all-time highs and there is still significant pandemic-related risk.’” – TheEdge, Dec. 16
I remember when gold was the only metal that made headlines due to a major heist. Those days are over as professionals are now targeting shipments of silver bullion.
$11 million silver heist: Canadian police looking for suspects who stole pure silver bars… “Toronto police are asking the public’s help in their hunt for suspects… Bars of the precious metal were stolen from a shipping container in Montreal, Quebec, on January 2020…Since then, police have partially recovered some of the physical metal in Toronto, British Columbia and Massachusetts, USA… The stolen silver bars had distinctive markings, such as a serial number and ‘Korea Zinc’ stamp. However, according to police, the bars have been smelted into ingots to be sold with less suspicion.” – Kitco, Oct. 27
Let’s go to the gold and silver charts. To view a larger version of either chart, right-click on it and choose your “view image” option.
Gold Spot weekly chart as of Dec. 23, 2021 close…
Excerpt from the Nov. 11 weekly gold chart analysis:
“Gold is still not out of the woods despite a price rally through the $1,830 overhead resistance and printing a high of $1,868 on Wednesday… it might look decisive, but did not occur with a coincident spike in buy Volume… odds are higher for a Momo move when large buy Volume accompanies a rising price… The chart is ripe for scalping sweet spots. It is prudent to wait for a decisive break through $1,980 before layering large paper positions.”
I am seeing analysis that’s drawing a Half Staff Flag from the Aug. 2020 high to the Nov. 2021 high. As noted in my analyses since this past summer, that Flag ended with a breach above its topside trendline and rally to $1,900 in early spring, which failed to manifest a continuation move to the more important $1,980 overhead resistance. The subsequent pullback revisited the $1,670s and printed an Eve & Adam Double Bottom with a large Hammer candlestick in August. The pivot off that Hammer did not take out the substantial resistance at $1,830 until November. Despite the failure of that rally through $1,830, the price action continues its ride above the 100 Exponential Moving Average (EMA) and printed two higher lows that form a Symmetrical Triangle / Broadening Bottom pattern with an embedded Up Channel. The problem with lower highs since Aug. 2020, is that it reinforces resistance levels that must be taken out with conviction to manifest a sustained rally into early 2022. The technical indicators and studies are a mixed bag with bullish and bearish signals.
The 10, 21, and 50 EMA remain stuck together with negligible upward progress since late October, the DMI-ADX is still not set up for an upward Alligator Tongue power trend, the StochRSI is back to fighting for upside momentum, the Money Flow has turned upwards without coincident Momentum, and the falling Volume level is not indicative of substantial buying.
The price surge before Christmas was positive with a close at $1,808. For a significant rally to manifest in early 2022, it must coincide with an upside reversal in overall Volume and heavy buying. The chart is ripe for scalping sweet spots, but remain cautious and wait for a decisive break through $1,980 before layering large core positions in paper gold.
Silver Spot weekly chart as of Dec. 23, 2021 close…
Excerpt from the Nov. 11 weekly silver chart analysis:
“Silver is still not out of the woods either, despite a price rally through the overhead 50 EMA and printing a high of $25.26 today. A positive sign that $26 could print in the near-term is if the price action remains above $25 at Friday’s close… I cannot stress enough how important it is that a substantial rise in buy Volume take place to sustain the current upside momentum… The silver chart is ripe for scalping but refrain from layering large paper positions until $29 and $30 are left in the dust.”
Silver stackers and the silver squeeze crowd are not thrilled about the price action in paper markets, but demand for physical bullion, coins, and the premiums to purchase at retail are as elevated as last year. The Flag that dominated the silver chart since Aug. 2020 is no longer relevant, as it was getting long in the tooth and lacks the required Volume characteristics to carry any weight. What has developed is a bullish Eve & Eve Double Bottom or a bearish Complex Head & Shoulders pattern. The support they’re both married to is the $21.49 Fibonacci level that has a substantial number of long positions beneath it that were accumulated before the Jul. 2020 breakout. The technical indicators and studies are a mixed bag with bullish and bearish signals.
The rally that managed a break above the 10, 21, and 50 EMAs last month has reversed back below all three. The price action is currently riding above the 150 EMA with near-term overhead resistance at $23. The DMI-ADX, StochRSI, Money Flow, and Momentum are a duplicate of the gold chart, but the Volume is much worse.
That is where silver stands in the paper market. If gold catches a bid with a decisive rally on buy Volume into early 2022, silver will likely follow and slice through its overhead resistance. If $21.49 is breached to the downside on large selling Volume, expect a downward spike that is short-lived. Topside resistance going forward is $23, $25.70, then $29 and $30 for all the marbles. Stacking physical at these low prices is ideal, but wait for a decisive break through $29 and $30 before layering large core positions in paper silver.
Prince – Gold (Official Music Video)
Plan Your Trade, Trade Your Plan