Will the going get tough on gold and silver? | Update close 5 June

Prediction for Gold and Silver at close 5 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)

1682 (1729)
Trend ↑ (↑) ↓ (↑) ↓ (↑)
% Risk
85 (83) 85 (90) 25 (38)
Allocation 100% (100%)

Gold/USD live price

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.

29 May: 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


(Previous week in brackets)

17.35 (17.80)
Trend ↑ (↑) ↑ (↑) ↓ (↑)
% Risk
55 (46) 75 (68) 65 (88)
Allocation 100% (100%)

Silver/USD live price

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.

29 May: 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.

GOLD/SILVER Ratio Price Risk Analysis

(Previous week in brackets)

96.50 (96.30)
Trend ↓ (↓) ↓ (↓) ↑ (↑)
% Risk
55 (64) 25 (50) 15 (6)
Allocation 50/50 AU/AG (50/50 AU/AG)

Gold/Silver Ratio live price

The Gold/Silver ration 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.

29 May: 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 in a 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

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

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