Gold's Exciting Boredom / Commodities / Gold & Silver 2019

Thelast few trading days in gold were quite interesting, but overall gold has beena quite boring market in the last couple of months. Gold’s volatility indexdropped to new lows as the current back and forth movement is just a small partof the same kind of movement on a broader scale. It’s more of the same. Andwhen gold’svolatility gets very low, interesting things tend to happen next over 80% of the time. Inother words, the situation in gold is now so boring that it’s a signal on itsown. In today’s analysis, we’ll dig into details.

It’stime for gold’s boring, yet effective signal.

ExtractingValue from Boredom

Thegold volatility index moved to new lows this year and it is not a one-timeevent. There were already two moves below the 2017 and 2018 lows and thecurrent move lower is the third attempt to slide even lower. The 50-day movingaverage is also at the levels that haven’t been seen previously.

Whatdoes it mean? It most likely means lower gold prices.

Wemarked the similar very low-volume cases with vertical dashed lines. The redones are the ones that were followed by gold’s declines and the green ones arethe ones that were followed by upswings in gold. We didn’t pay attention todaily moves, but to bigger moves that one can measure in terms of weeks. Itturns out that 16 out of 19 preceding signals (about 84% of them) were followedby gold’s declines. We’re not counting the last 2 signals as they are still “inplay”.

Theonly three bullish cases were actually single spikes lower in volatility. Itwas not a prolonged boredom, like the one that we saw in late 2012 / early 2013and it’s not like what we see right now. Consequently, it seems that the above-mentioned84% is likely understated in terms of the volatility-based probability ofdeclines in gold in the following weeks.

Many goldbugs and other investorswill view the lack of volatility as something neutral. After all, gold is notdoing much, so why should it have any implications going forward? The point isthat it does have implications as almost all low-volatility periods, especiallythe ones similar to the current one are, were followed by meaningful downtrends.

Naturally,there are also other signals that that need to be considered, but they alsosupport lower gold prices in the following weeks.

Let’sexamine the most recent ones.

Theprevious week started with a geopolitical-news-based rally in gold that quicklybecame invalidated even though the tensions that made gold rally in the firstplace, didn’t subside at all. Goldformed a weekly shooting star candlestick and it took place onrelatively big volume. At the same time, it happened despite bullish news. Thisis an extremely bearish combination for the following weeks and a finalwarning sign that gold price is about to really slide.
 
Today'sarticle is a small sample of what our subscribers enjoy regularly. In its fullversion that is reserved for our subscribers, it also covers short-term goldanalysis, silver with its near-term target, and the implications miners’strength we just saw on Friday. To keep informed of both the market changes andour trading position changes exactly when they happen, we invite you to subscribeto our Gold & Silver Trading Alerts today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Toolsfor Effective Gold & Silver Investments - SunshineProfits.com
Tools für EffektivesGold- und Silber-Investment - SunshineProfits.DE

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All essays, research and information found aboverepresent analyses and opinions of Przemyslaw Radomski, CFA and SunshineProfits' associates only. As such, it may prove wrong and be a subject tochange without notice. Opinions and analyses were based on data available toauthors of respective essays at the time of writing. Although the informationprovided above is based on careful research and sources that are believed to beaccurate, Przemyslaw Radomski, CFA and his associates do not guarantee theaccuracy or thoroughness of the data or information reported. The opinionspublished above are neither an offer nor a recommendation to purchase or sell anysecurities. Mr. Radomski is not a Registered Securities Advisor. By readingPrzemyslaw Radomski's, CFA reports you fully agree that he will not be heldresponsible or liable for any decisions you make regarding any informationprovided in these reports. Investing, trading and speculation in any financialmarkets may involve high risk of loss. Przemyslaw Radomski, CFA, SunshineProfits' employees and affiliates as well as members of their families may havea short or long position in any securities, including those mentioned in any ofthe reports or essays, and may make additional purchases and/or sales of thosesecurities without notice.

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