Calling the Precious Metals Bull / Commodities / Gold and Silver 2021
S&P 500 paused to a degree, but bonds didn‘t – we‘refar from a peak. That though doesn‘t mean a brief correction (having a properlook at the chart, sideways consolidation not reaching more than a preciouscouple of percentage points down) won‘t arrive still this month. It‘s aquestion of time, and I think it would be driven by tech weakness as the sectorhas reached lofty levels. It‘ll go higher still, but this is the time for valueand smallcaps.
And when the dollar starts rolling over to the downside(I‘m looking at the early Dec debt ceiling drama to trigger it off), emergingmarkets would love that. And commodities with precious metals too, of course –sensing the upcoming greenback weakness has been part and parcel of the goldand silver resilience of late. Precious metals are only getting started, butthe greatest fireworks would come early spring 2022 when the Fed‘s failure toact on inflation becomes broadly acknowledged.
For now, they‘re still getting away with the transitorytalking points, and chalking it down to supply chain issues. As if these couldsolve the balance sheet expansion or fresh (most probably again short-dated)Treasuries issuance (come Dec) – the Fed is also way behind other central banksin raising rates. Canada, Mexico and many others have already moved while UKand Australia are signalling readiness – the U.S. central bank is joined by ECBin hesitating.
Don‘t look for the oil breather to last too long – blackgold is well bid above $78, and hasn‘t made its peak in 2021, let alone 2022.As I wrote on Friday, its downswing that works toincrease disposable income (serving as a shadow Fed funds rate in the zerorates environment), would prove short-lived. The real economy would have tocome to terms with stubbornly high oil prices – and it will manage. The yieldcurve is starting to steepen modestly again, and fresh spending initiativeswould breathe some life into the stalling GDP growth. Next year though, don‘tbe surprised by a particularly weak (even negative) quarterly reading, but wearen‘t there by a long shot, I‘m telling you.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
S&P 500 looks getting ripe for taking a pause – therising volume isn‘t able to push it much higher intraday.
Credit Markets
HYG strength indeed continues, and it‘s a good sign thatquality debt instruments are joining – the reprieve won‘t last long though(think a few brief weeks before rates start rising again).
Gold, Silver and Miners
Gold and silver continue reversing the pre-taperweakness, and miners are indeed joining in. I‘m looking for more gains withevery dip being bought.
Crude Oil
Crude oil hasn‘t peaked, and looks getting ready toconsolidate with a bullish bias again. $85 hasn‘t been the top, and the energysector remains primed to do well.
Copper
Copper is deceptively weak,and actually internally strong when other base metals are examined. As moremoney flows into commodities, look for the red metal to start doing better – commoditieshaven‘t topped yet.
Bitcoin and Ethereum
Bitcoin and Ethereum consolidation has come to an end,and the pre-positioned bulls have a reason to celebrate as my prior scenario–stabilization followed by slow grind higher is what‘s most likely next – cameto fruition.
Summary
S&P 500breather is a question of time, but shouldn‘t reach far on the downside – thecredit markets don‘t support it. Commodities are catching up in the (dovish asassessed by the markets too) taper aftermath, and precious metals are sniffingthe dollar‘s weakness a few short weeks ahead. With fresh money not needed torepair commercial banks‘ balance sheets, it flows into the financial markets,and the taper effects would be negated by the repo operations – yes, I‘m notlooking for a liquidity crunch.Thank you for having read today‘s free analysis, which isavailable in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, whichfeatures real-time trade calls and intraday updates for both Stock TradingSignals and Gold Trading Signals.
Thank you,
MonicaKingsley
Stock Trading Signals
Gold Trading Signals
www.monicakingsley.co
mk@monicakingsley.co
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