Gold, Silver Reversals, Lower Prices and Our Precious Profits / Commodities / Gold & Silver 2019

Gold,silver, and mining stocks reversed practically exactly at their double trianglereversal point and the short positions that we opened along with takingprofits off the table from the previous longpositions, became profitable almost instantly. There’s quite a decline to catchhere, and it seems that only a small part thereof had already taken place.

PMsReversing

Theabove chart clearly shows how important the triangle reversals were recently.The two first reversals were local bottoms before the final part of theupswing, and the third one – confirmed by two separate reversals from silverand miners – marked the rally’s final top. This is likely the case with gold,crystal clear with silver, and it might not seem to be the case yet in case ofthe miners.

Infact, at first sight it may appear that the outlookfor gold,silver, and mining stocks is bullish, because the decline in mining stocks isnot very big and thus miners are actually showing strength. This is notnecessarily the case.

It’snot one of the most popular goldtrading techniques, but the mining stocks can have this tendency toshow a kind of stillness (stiffness if you will) after the top, but they getback to their normal behavior shortly. Please note what happened on September 5th– on the first day of the September decline. Gold and silver took a big dive,but miners declined visibly less. Did it change anything? No. That was still amajor top, and when silver’s initial slide turned then into a pause, minerscaught up with the pace at which the metals had declined previously. Similaraction is likely to follow also this time.

TheGDX ETF declined back below the 50-day moving average and we saw a sell signalfrom the Stochastic indicator shortly after it reached above 80. That’s whatconfirmed both the  early-November andthe early-September tops. Moreover, please note that GDX’s Friday’s declinetook place on big volume, which further validates the theory that the top forthe recent decline is already in.

Movingto silver, please note that it ended the previous week at a price level that wehaven’t seen since August.

SilverAlso Hints at the Upcoming Decline

Thebreakdown below the November lows is confirmed by the weekly close andsignificant volume, but not yet by three consecutive daily closes. Still, giventhe fact that silver reversed almost exactly at its triangle-based reversal andafter touching its 50-day movingaverage make the confirmation of breakdown very likely.

Thenearest support levels are the intraday mid-August low, and the 61.8% Fibonacciretracement based on May – September rally. However, the decline to theselevels would be relatively small. Too small. The two short-term declines thatwe saw in September and in November are at least twice as big as what we sawrecently, and this means that if this rally is only to be “normal”, the movelower should be much bigger.

Thismeans that silver is likely to decline further – likely below $16.

There’sa good reason to believe that this decline will be more than just twice of whatit’s been so far.

TheUSD Index Throws Its Weight Behing the Coming Decline Too

Goldand silver plunged in early November in response to soaring USD Index. Sincethat time, the USDX declined and moved relatively close to its early-Novemberlow. Neither gold, nor silver moved close to their early-November highs. Allthey did was to correct part of their November decline. It took just one dailyupswing in the USD Index from the short-term lows to make silver break belowits own November low.

The linkbetween precious metals and the USDX strongly favors the continuationof metals’ weakness. If it wasn’t for the late-November and early-Decemberdecline in the USDX, both gold and silver would have probably already beentrading at much lower price levels. USD’s pullback triggered a pause in thedecline, which at the same time prepared the PMs for the next big downswing.

Goldand – especially – silver are already magnifying the bearish signs from theUSDX, and it seems that they will get much more of them in the followingday(s).

TheUSDX bottomed slightly below our target area (just one daily close below it)and it invalidated the breakdown below its rising support. Invalidations ofbreakdowns are strong bullish signs. We previously wrote that the invalidationof breakout that we saw in late-November was a bearish sign for the short termand indeed, a quick slide followed. We now saw something quite the opposite.The difference is that this time, the support that was not broken, is stronger.This means that this bullish invalidation is also more important than theprevious bearish invalidation.

Withsoaring USD Index and the gold-silver-USD link in place that magnifies USD’ssignals, the short-term outlook for the precious metals market looks verybearish. And it’s not too late to take advantage of it

Ourprofitable long precious metals position has been closed last week, and we’veentered another trade immediately. This time, on the short side of the market,and it’s going profitable again. The full version of this analysis features thefull details and targets of the already-profitable short, adjusted for currentgold seasonality and long-term turning points with the supports ahead. Joinus and profit along!

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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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