2020 Gold forecast, Silver, Gold/Silver Ratio, 17 April

Prediction for Gold at close 17 April


Gold Price Forecast relative to
Long Term Monthly
(LT-M) – Medium Term Weekly (MT-W) – Short Term Daily (ST-D) – and Hourly (not shown) data

(Previous week in brackets)


Gold/USD LT-M MT-W ST-D
1678 (1681)
Trend ↓ (↓) ↑ (↑) ↓ (↑)
% Risk
Weight
80 (82) 72 (65) 80 (90)
Allocation 100% (100%)

Gold/USD live price


Daily Trend turned down after peaking on Tuesday at 1747. Yet gold finished just 3 dollars below the previous weeks close. The chart pattern suggests a corrective move from an uncompleted advance that started on March 16. A drop can always be deep especially since the Weekly shows a potential bearish divergence if it turns down. Strong markets always show bearish divergence on several occasions and especially on the shorter term tools. As we haven’t seen a confirmed bearish divergence on any of the time frames we put 100% trust into the experience of expecting this correction to end soon. This market remains in an uptrend as long as the price holds above 1450. No change!

Note: Gold and Silver are the ONLY non-fabricated alternatives to maintain trust in a fiat currency society. For the latter to survive the only solution is a devaluation against Gold and Silver based on smartly controlled conversion conditions. That can (only) be achieved if Countries are prepared to hold a bid for Gold in the market that lowers their average debt to GDP to a more realistic level of well below 80 after the closure of the monetary floodgates. For Italy of France as an example as they hold a large amount of gold in reserves, the gold price should reflect a level that brings their public debt to under 100% of GDP with a European average of well below 80%. For Italy who’s debt to GDP is likely to rise to at least 150%, the Gold reserves must then represent about 800 billion Euro more than today. 800 billion divided by 2,452 tonnes of gold = €10,150 + €1,500 = Goldprice €11,650. Simple as that. Similarly for the USA this means say achieving a drop of public debt by some 4 Trillion or so. That would represent a gold price of around $17,000. An additional 30% devaluation of the US Dollar would be necessary to come in line with Europe. Numbers will come out different of course but this would be the general sense for justifying a trusted reset.

10 April: Stay will full allocation. The trend is still up even though short term risk weight looks a little toppish and LT Monthly goin g sideways in the higher risk region. Teechnically, the most significant signal comes from the sudden price drop mid March, which we already analysed as a ‘normal’ reaction in a major uptrend. The most likely scenario is to only see an end to a secondary wave advance in a few weeks time, after which this market can build foir a major advance in this primary cycle which started Dec 2015. Having examined the Supercycle trend based on quarterly data last week and concluded this Gold/US$ price could or rather should be driven to a multiple of the current level, there is a strong fundamental economic reality the makes the case for this scenario. A return to a normalised relationship between Total public debt vs GDP and allow for short term to be rolled into Long term debt can only be achieved by a major devaluation of fiat currency against Gold and Silver and possibly even certain crypto assets. There is simply no alternative. The question is how that can be achieved in an acceptable format which includes respect for private ownership. This scenario is possible without creating a gold standard and it will likely involve a ‘give and take’ formula for sovereign nations with larger gold reserves such as Germany, Italy, France, China, Russia, USA and others. We will look at this scenario in coming weeks, unless something unfolds in the meantime.


SILVER FORECAST

(Previous week in brackets)

Silver/USD LT-M MT-W ST-D
15.13 (15.40)
Trend ↓ (↓) ↑ (↑) ↓ (↑)
% Risk
Weight
43 (45) 40 (35) 80 (90)
Allocation 100% (100%)

Silver/USD live price


Silver this week has shown the exact same wave pattern as gold which puts support at around 14.00 without violating the advance that started on March 18 from that low volume surprise low of 11.63. We are still 30% above that recent low.
Silver looks a lot stronger technically than gold as it has a confirmed bullish divergence upon turning up after the collapse during the 2nd week of March. No Change.

10 April: No Change. Stay with full Silver allocation in portfolio. The price formation since the May 2011 high has been nothing short of spectecular for any generation of participants.The sudden drop below the 2015 and 2018 lows came rather unexpected especially in light of reduced mining activity as a result of Corona lock down and other market parameters. The corresponding increase in the Gold/Silver ratio to that max print of 128 is simply very unrealistic and could only be achieved on very low volume in the physical silver market. This new reality however has not changed the technical outlook which remains very bullish because, based on history, we can now expect bearish divergence in all time frames until this market turns down again, or is permanently reset at a much higher level. The latter could be part of a wider devaluation of fiat currency.


GOLD/SILVER Ratio Price Risk Analysis

(Previous week in brackets)

GOLD/SILVER Ratio LT-M MT-W ST-D
110.00 (109.00)
Trend ↑ (↑) ↓ (↓) ↓ (↑)
% Risk
Weight
73 (72) 60 (65) 37 (15)
Allocation 50/50 AU/AG (50/50 AU/AG)

Gold/Silver Ratio live price


The biggest reason to be short the ratio now is the massive bearish divergence on the monthly risk weight. The price high of June 2019 at 93.00 was showing an overbought risk weight level of 92. With a price high of 128.00 and a brisk weight level of 73 the divergence itself is unprecedented. We wait for equilibrium at 50-60 level. This means a doubling of the silver price relative to gold from current levels.

10 April: The ratio has traded above 65 for nearly 4 years. It looks virtually impossible for the Long term risk weight to not develop strong bearish divergence. It requires stronger silver price acceleration for that to materialize which should only be a few weeks out at most. This could trigger that long awaited trend towards the equilibrium level nearer 50. No Change!


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