Friday’s rally was explosive in paper gold and silver, but don’t get too excited because they’re not decisively out of the woods. Meanwhile, physical bullion and coin inventories remain elusive with premiums through the roof for retail plebes. Given all the issues piling up from war to warnings of societal collapse, the precious metals are destined to have their day in the sun sooner than later. In a Bloomberg interview posted at the end of today’s analyses, Nouriel Roubini flipped from being a gold skeptic to recommending it as a buy on his radar. Below is an excerpt from the “Gold and Silver Outlook for Fall 2022” published on Sep. 28, and a few subsequent headline articles to consider:

“My reasoning behind today’s gold and silver chart analysis is four-fold and complicated, as there’s a good chance that they landed into a bottoming zone due to geopolitical and monetary policy actions that surfaced over the last week.” – TraderStef

• Flashback – Coin Demand Doesn’t Drive Gold Price – Jan Nieuwenhuijs, Apr. 26
• London Gold Dealer Runs Out of Bullion – Bloomberg, Oct. 1
• Bank of England intervenes again, warns of UK financial instability – CNBC, Oct. 11
• Europe Preps For Gold Standard Since 1970s Part 2 – Jan Nieuwenhuijs, Oct. 17
• Fed Set to Raise Rates Another 0.75, Discuss Smaller Hikes – WSJ, Oct. 21
• The Fed Is Going to Wimp Out in the Inflation Fight – Peter Schiff, Oct. 26
• Banks in Russia face shortage of gold bars, huge demand – MenaFN, Oct. 26
• Physical Silver Demand Soars, Dealers Offer Huge Buy-Back Premiums – ZH, Oct. 27

• India Pushing Citizens To Deposit Their Gold In Banks – Bloomberg, Oct. 27
• Mystery Buyers Behind Central Bank Gold Boom – Bloomberg, Oct. 31
• A Bodyguard of Lies – Propaganda and the War in Ukraine – Jim Rickards, Nov. 1
• Central Banks Buying Gold At Fastest Pace In 55 Years – OilPrice.com, Nov. 2

• Canada Orders China Companies to Divest From Miners – WSJ, Nov. 2
• Mystery Whales Baffle Gold Market, Central Bank Purchases – Bloomberg, Nov. 3
• ‘Bad’ Unemployment Print Sparks Dovish Buying Panic Everywhere – ZH, Nov. 4
• Wall St climbs as jobs data supports smaller rate hike prospects – Reuters, Nov 4
• Dutch CB: Gold Revaluation Solvency Backstop – Jan Nieuwenhuijs, Nov. 5
• Hedge-fund giant Elliott warns looming hyperinflation could lead to ‘global societal collapse’ – MorningStar/Dow Jones Newswire, Nov. 5

Let’s move on to the gold and silver charts. Be mindful that a window of opportunity for swing or scalp trading paper ETFs, mining stocks, or futures contracts, does not necessarily equate to the timing for buying physical metal as a long-term investment or insurance policy. To view a larger version of either chart below, right-click on it and choose your “view image” option.

 

Gold Spot weekly chart as of Nov. 4, 2022 Close…

 

Excerpt from Monday July 18, 2022 weekly gold chart analysis:

“The Plunger Candle (aka Shooting Star) that printed in March was a reliable indicator that a correction was coming. The subsequent Down Channel is clearly defined on the chart. An explosive stage in the USD rally pushed gold down through several support areas.”

Excerpt from Wednesday Sep. 28, 2022 weekly gold chart analysis:

“Persistent inflation moved the Fed to lift interest rates again in July, but the market interpreted negative GDP growth in 1Q22 and 2Q22 as recessionary and the Fed’s July FOMC commentary hinted a pivot or pause before the end of 2022 (aka Taper Caper). That sentiment gave the stock market… and gold a seasonal tailwind in mid-July to pivot off the $1,680 low and 200 Exponential Moving Average (EMA) to print an $1,808 high in mid-August. The dollar rallied again and gold rolled over and breached the lower 2018 trendline, 200 EMA, and 38.2% Fibonacci level. This week’s low at $1,615 (just above $1,611 lateral support) did not last long following the BoE’s pivot to QE this morning, which spiked gold to a high of $1,663 by lunch time in New York… Note that there hasn’t been a Death Cross of the 50 & 200 EMA. If positive sentiment sticks and central banks follow BoE’s pivot sooner than later, monetary policy alone will rally the metals no matter what the geopolitical situation may be.”

After four brutal stair steps into a downtrend since March, gold is attempting to solidify a bottoming phase after the Bank of England (BoE) was forced to bail out its pension-bond market in September. Despite the U.S. stock market disappointment with Jay Powell’s post-FOMC fedspeak this past Wednesday, markets rallied all day Friday after the dollar plunged more than 2-full points on the heels of a less than stellar unemployment report. Gold’s rally was substantial, but price action on the weekly chart did not take out the Down Channel’s overhead trendline, 200 EMA, and 38.2% Fibonacci level at $1,680. Nearly identical price action occurred in late September after the BoE bail out. The $1,611 lateral support is more relevant as each week passes without a break lower. As of Friday’s close, we have a Triple Bottom within a choppy and tight horizontal channel and a solid Hammer Candle that could lead to additional upside. Keep in mind that there’s plenty of overhead resistance to work through that requires a significant increase in buy Volume to accomplish.

The DMI-ADX remains in a negative but indecisive trend, Momentum, Money Flow, and Commodity Channel Index (CCI) remain unremarkable, StochRSI is thrusting upwards due to Friday’s rally, and Volume is higher over the last few weeks but not increasing. My conclusion is the same at it was in September: “Gold is still not out of the woods and the chart is neutral until the DMI-ADX reverses to a bullish strength-of-trend signal. In the meantime, there will be opportunities in the near-term to scalp any upside price action.”

Silver Spot weekly chart as of Nov. 4, 2022 Close…

 

Excerpt from Monday July 18, 2022 weekly silver chart analysis:

“The first week of March printed an indecisive Spinning Top and the subsequent Down Channel broke through $21.49 lateral support during a concurrent spike in the dollar. Similar to the gold chart, silver is resting upon a confluence of support that includes highs from late 2020, a 61.8% Fibonacci retracement level at $18.70ish, and the lower trendline of a busted Down Channel that’s drawn back to 2021… I have laddered positions into the $SLV ETF since late June, as the paper market has fallen into the all-in-sustaining-costs (AISC) abyss of silver mining production. Meanwhile, retail premiums on physical bullion coin are sky-high and supplies are intermittent since the summer of 2020.”

Excerpt from Wednesday Sep. 28, 2022 weekly silver chart analysis:

“Silver followed gold’s short-lived seasonal rally from an $18.12 low in mid-July to the $20.83 high in mid-August. A subsequent $17.53 low printed during the last week of August and rallied to a $20 high by mid-September. This week’s low was $17.95 and spiked to a $19.02 high following the BoE’s pivot to QE monetary policy today. Silver’s lows are bouncing along the same confluence of support noted in July.”

Silver’s rally was larger than gold on a percentage basis this past Friday, but is in a similar technical situation as gold. The price action continues to pivot off a confluence of support noted in July’s analysis and has formed a Triple Bottom, but Friday’s price action failed to decisively break above the 50 & 200 EMA, the overhead trendline drawn back to the high in June, the 50% Fibonacci level at $20.84, and more importantly the $21.49 lateral resistance that provided support from late 2019 until June of this year. Overall, the technical studies are stronger than gold on the weekly.

The DMI-ADX is indecisive, Momentum, Money Flow, and Commodity Channel Index (CCI) are rising with some conviction, StochRSI has trended upwards in positive territory since late July, and Volume is relatively flat but consistent. Note that there hasn’t been a Death Cross of the 50 & 200 EMA. My conclusion is the same at it was in September: “In order for silver to end its current malaise, it must breakout from the (black) overhead trendline, the $21.49 lateral, and leave the 50 EMA in the dust. The chart is neutral until the DMI-ADX reverses to a bullish strength-of-trend signal. In the meantime, there will be opportunities in the near-term to scalp any upside price action.”

“MegaThreats”, Fed Will “Wimp Out”, Buy Gold – Nouriel Roubini, Oct. 26

 

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