Our research team believes the recent downward price activity in Gold and Silver are indicative of past price patterns we saw in Gold over the 2007 to 2012 rally. Throughout almost every rally in precious metals (Gold), there have been a number of moderate to serious price corrections taking place within that extended rally. The current downside move is moderately small compared to historical price rotation in Gold and potentially sets up a massive upside potential rally to levels above $2100 per ounce.
Weekly Gold Price Pattern from 2007 – 2017
This chart, below, highlights the downside price rotation that took place just before and as the US stock markets collapsed in late 2008 and 2009. Notice how Gold collapsed nearly 28% right as extreme market weakness began to become present in the US stock market. Then, pay attention to how Gold rallied from $730 in multiple upside price legs to a peak just below $1900 – well above 110%. Could the same pattern already be setting up in 2020?
Weekly Gold Chart Trend is Clearly Up
This current Gold chart highlights what we believe is a similar price pattern where Gold collapsed as the downturn in the US stock market took place between October 2018 and December 2018. Subsequently, Gold then rallied to levels nearing the previous peak levels (near $1380), then rallied even further to $1540. We believe the current downside price rotation is similar to the downside price rotation that took place in August/Sept 2010 – just before Gold rallied from $1050 to $1890 (+85%). If a similar type of rally were to take place from the current $1587 lows, the peak price of Gold may be near $2935.
Gold/Silver Ratio Weekly Chart Scream Bargin
This last chart highlights the true potential for a Silver rally based on historical levels of the Gold to Silver Ratio. There has never been a time in history since 1990) that the Gold to Silver ratio has been this high (93.9). Historically, traditional levels are closer to 74~76. If gold rallies above $2100 and the Gold to Silver ratio contracts to the historical 74 to 76 level, Silver will likely rally to levels above $40 to $50 per ounce. If gold rallies to our projected peak level of $2935 and the ratio reverts, Silver could rally to levels well above $65 per ounce.
This downside move in both Gold and Silver are an incredible opportunity for skilled traders. Don’t miss the opportunity to get into a precious metals position near these levels – before the real rally begins.
As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.
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Chris Vermeulen
www.TheTechnicalTraders.com