Holding physical gold and silver? | Update close 12 June

Prediction for Gold and Silver at close 12 June, 2020

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)

1729 (1682)
Trend ↑ (↑) ↓ (↓) ↑ (↓)
% Risk
87 (85) 85 (85) 73 (25)
Allocation 100% (100%)

Gold/USD live price

Whilst the Gold derivatives markets continues to dominate price discovery for traders and miners and thus determines the price of physical metals, it is becoming increasingly clear that holding physical gold and silver is the lowest price for risk insurance one can buy. There aren’t many companies in the world that can truly offer unencumbered ownership of physical gold unless you buy small quantities of the real metal from an online shop. For hedging speculative long physical gold or silver only writing calls or selling gold and silver futures is an acceptable lower risk trade. This weeks close pushed the price back up to where it was 2 weeks ago and the advance is far from over because we haven’t seen extremes yet in the longer term time frames whilst we expect a bearish divergence formation first in both the Monthly and Weekly risk weight periods. This means the price is likely to continue its primary uptrend well into Q4 at least. Unless a ‘reset’ event occurs sooner, but that also is pure speculation.
The short term bullish divergence as discussed last week (see below) materialized and we may now expect a break of the recents highs (1765) into the low 1800’s soon and finish an intermediate advance. It took only 2 months for the Gold market feature a large $300 rally and it has now taken a 4 week breather. This is very strong performance indeed and indicates massive fear of international monetary discomfort. No Change. Stay fully invested in Gold.

5 June: The highly emotional and fierce worldwide reaction to the execution without trial of a powerless man, George Perry Floyd Jr., is just one bubble bursting. And for the record, the pictures that went viral were nothing short of sickmaking. It is of significant importance and another representation of a world gone too far outside its natural flow. The strenght of Gold during the past 3 1/2 years already signals the need for several major adjustments to the way we are being believed to think. There will be more coming and it won’t all be pleasing to the eye or worse. This alone is a reason to take Real Money insurance very serious.

Technically we have risk weight in the short term time frames turned down whilst the Daily has begun to seek its next bottom. The picture looks like it could develop a bullish divergence between Daily Short Term risk vs Weekly Medium and Monthly Long term risk. This should then most likely develop within 2 weeks. The 3 1/2 year intermediate uptrend always produces bearish divergence in the Longer term time frames. Therefore no exit strategy should be considered yet.
A quick Elliott Wave analysis suggests we have completed a minor wave up, now in an ABC correction which could go as low as 1550 but will more likely find support much closer to the current 1680 level. Since our position is also an important core insurance investment there is no reason to become nervous. Quite the opposite in fact. A more significant drop would more likely be triggering a call to add to the position away from cash. No Change


(Previous week in brackets)

17.42 (17.35)
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
55 (55) 82 (75) 56 (65)
Allocation 100% (100%)

Silver/USD live price

With daily risk further down, Weekly up in higher risk area with Monthly up at a neutral level the technical picture has not changed much from last week. Still possible to drop into support at 16.80 level but this would diverge daily vs weekly in a positive sense for Silver, wich can then resume its long term upward trend. No change.

5 June: Interesting observation is that silver has not made its usual double sized correction relative to gold during last week’s corrective move. The narrative has not changed from last week even though nothing should surprise us anymore. We stay however focussed on our original prediction based on Long term risk pointing ‘UP’. Short term support should come in at the 16.80 level. No Change

GOLD/SILVER Ratio Price Risk Analysis

(Previous week in brackets)

98.45 (96.50)
Trend ↓ (↓) ↓ (↓) ↑ (↑)
% Risk
54 (55) 18 (25) 38 (15)
Allocation 50/50 AU/AG (50/50 AU/AG)

Gold/Silver Ratio live price

Last week’s technical analysis still holds. We expect the Short term Daily to advance a little further before the downtrend can resume in tandem with the Long term months risk weight trend (down). It means that Sillver still may underperform Gold for a few more days this coming week. No Change.

5 June: The Gold/Silver ratio held below 100 and looks to pause as short term risk got oversold last week. Looking for Short term to catch up with Medium and Long term downtrends which can then resume. This is the more likely scenario besides the long cushion of always returning to equilibrium, which in recent history should be closer to the 50-60 level. The multi-ages equilibrium of nearer 15 is not really important at this moment as that price level is too far out and was representative for a very different era. No Change

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Posted in A - All Financial Blogs | 2021 Forecast, GOLD / US DOLLAR FORECAST & PREDICTIONS.

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