What next for gold and silver? | Update close 29 May

Prediction for Gold and Silver at close 29 May, 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 (1733)
Trend ↑ (↑) ↑ (↑) ↑ (↓)
% Risk
83 (82) 90 (89) 38 (70)
Allocation 100% (100%)

Gold/USD live price

This week there is not much news to go by other than our dry risk weight analysis. Unless we consider the fundamental re-alignment of balance sheets by some bullion banks. With daily risk weight turning up at a potential bullish divergence level (38) vs the Weekly (90), mass psychology in the gold market still looks buoyant. Just from a historic chart perspective we believe that the strength of gold is likely to deliver bearish divergence in both the weekly and monthly time frame before we see a major top in this primary advance. As world economies are very slowly returning back to normal it is possible that we can see an intermediate top in Gold/US$ in the next few weeks. If that top looks very strong and imminent we may choose for a small temporary reduction without violating the need to holding on for a longer term and much higher target price. No change for now to remain fully invested in gold.

22 May: Nature’s currency, gold, is the only one currency that has survived throughout history. Gold is the ultimate monetary asset and currency of exchange, which is, since everything else is evidently failing, why gold will return to that role at some future date.
For that to work a pre-reset negotiation requires unilateral coordination which is easy on paper but harder politically. In reality it only needs G7+ to come to an understanding and everyone else must follow. If there is a will there is a way.
It also requires solidarity between nations and willingness to share some wealth to make this work including fiscal harmonisation. This would be the ultimate system reset involving some form of managed confiscation of hard assets and the introduction of a digital currency only in exchange for gold.
In theory this creates the financial space for major infrastructure and climate improvements worldwide and long term employment in construction and engineering.
A massive devaluation of fiat against gold of say an average 1000% is the kind of equity injection that allows fresh funding into badly needed global maintenance.
If agreed by G7+ countries and based on existing gold reserves reported, it would deliver an immediate new normal at the stroke of a pen. Impossible? All things being equal, yes. But things aren’t equal anymore, hence nothing is impossible even if it takes another major conflict to realize that. Because the need for big funding is now so very imminent, that reset could come as an early surprise. The elite is smart enough to design a reset that works for most. And with Elite we don’t mean career politicians.

What is our gold chart telling us today? Daily risk weight showing some sign of temporary weakness. This could develop a bit of price pressure building a bullish divergence within two weeks or so. As longer term time frames are expected to first create bearish divergence in a primary advance, as is the case now, Gold vs USD (and other currencies) is along way away from traditional peaking.
Private investors that own gold should not sell any gold under 15k/oz. And this still makes gold at current levels a buy. No Change


(Previous week in brackets)

17.80 (17.15)
Trend ↑ (↑) ↑ (↑) ↑ (↓)
% Risk
46 (45) 68 (58) 88 (87)
Allocation 100% (100%)

Silver/USD live price

Silver showed expected strenght with a 4% higher close in Friday 29 May versus the previous week. The Monthly time frame has incredible potential to develop a more explosive price move. Whether this becomes reality remains to be seen as we have been spectators of several strange and unexpected moves in recent years. This time though the physical silver market seems to tell us that bullion banks have less room for manipulation. A very strong and sudden move upward into the 20’s would be indicative of some badly needed adjustment going on between physical and paper silver. And that would only be the beginning of a larger move as otherwise liquidity would dry up quickly. Investors holding on the physical silver could thus benefit dramatically by not being tempted to sell into strong rallies as there will be more to come. No Change in staying fully invested in Silver.

22 May: The 40% rally from the 12 handle low in March tells is that long term support is holding. On a linear chart this gives an ultimate objective of the parallel line through the peak of 2011, now at 55.70. Short term this is meaningless and a more likely scenario is a future need to changeover to the inflation signalling log chart. The potential for silver to advance rapidly remains very high and strong. Patience to witness an equilibrium ratio to gold is key. No change

GOLD/SILVER Ratio Price Risk Analysis

(Previous week in brackets)

96.30 (100.32)
Trend ↓ (↓) ↓ (↓) ↓ (↑)
% Risk
60 (64) 38 (50) 4 (6)
Allocation 50/50 AU/AG (50/50 AU/AG)

Gold/Silver Ratio live price

Daily risk weight turned down again at an already low risk level. This is indicative of a real trend whilst Monthly and Weekly risk weight is moving steadily ina downward direction. Interesting observation could be that the price acceleration from 90 to 128 looks like an irregular Elliott Wave major top and now dropping towards a primary 5 wave down bottom which could go as low as 64.00-65.00 handle. This type of outlook and potential target is still a long way away, hence more reason to remain slightly over invested in Silver and keep the ratio invested balance at least even versus Gold. No Change.

22 May: We blew straight through 100 mid March and returned the past week for a brief moment and closed around this level on Friday. Looking at the Netdania chart on mobile on Wednesday I happened to clip this rare moment of an exact 100 ratio.

With Daily risk at an oversold level it may take a few more days before the downtrend resumes driven by the stronger downtrends shown in all technical tools for the Longer time frames. Holding on to a full ratio of precious metals investment between Gold and Silver is the correct risk assumption.
One note about Platinum. Owning PT can’t be bad at this stage. It can best be bought, in smaler quantities, via an exchange like Bitpanda that offers physical backed digital contracts. Platinum has been exceptionally weak for a number of years now. One day we will wake up with a massive rally that sets the direction for a minimum of 100% advance. The recent 560 low showed strong bullish divergence in Monthly, Weekly and daily time frames. Pt should be a safe spec for a longer hold and as part of a smaller diversification of the precious metals portfolio

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

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