Gold Waved the White Flag and Began Its Great Decline / Commodities / Gold and Silver 2022
As predicted, the dollar growsstronger while gold goes in the opposite direction. Can we expect a temporarycorrection next?
It’s happening! The massive upswing in the USD Index and the slide in theprecious metals market are here.
Just like you knew in advance. I’mreceiving multiple messages where you’re sharing your gratitude with me, andI’m extremely happy that you’re enjoying the results that you were able to getthanks to my help.
All right, what’s next?
First of all, I would like you to keepperspective.
Thehuge slide that we saw on Friday is most likely just a first step lower. A bigstep, but just the first one, nonetheless.
Here’s how the situation looks from along-term point of view.
The Big Picture
Gold is below its previous lows but not significantly so. Neitherthe RSI nor MACD indicators suggest that the decline is over – based on theanalogy to 2013 that I described more thoroughly on Friday (and in many previousanalyses – you knew about this analogy’s existence for months).
Here’s what the situation looks like in the case of the HUI Index –a proxy for gold stocks.
After the breakdown below the long-term support line (based on the2016 and 2020 bottoms), gold stocks consolidated a bit. This means that thebreakdown was verified. This, in turn, openedthe door wide open for more significant declines.
Therefore, the fact that miners just declined significantly onFriday – and moved to new yearly lows – is not surprising. It’s a perfectlynormal consequence of the breakdown, and something that’s in perfect tune withthe analogy to 2013 (and to a smaller extent with the analogy to 2008).
As we zoom in, you can see how big Friday’s daily decline reallywas.
The Little-Huge Detail
Will we get a temporary correction fromthe current levels?
We might, or we might not. I previouslyplanned to take profits at – more or less – current price levels, but I droppedthis idea based on the fact that we’ve already seen two corrective upswingsfrom below $30 in the GDXJ.
Without those two previous corrections,seeing a correction now would have been very likely. However, they did happen,so now it’s relatively unclear if we’re going to see a corrective bounce ornot.
There’s an old Wall St. saying “when indoubt, stay out,” but what most people miss about this saying is that it makessense as long as one is thinking about a single time-frame. In this case, it isthe very short-term outlook that is unclear (next several days or so), and as aconsequence, I’m not participating in a very short-term trade.
However, the short-term / medium-termoriented trade – the one that’s based on the likely biggest part of the currentdecline in the precious metals market is very likely to continue. Consequently,I’m remaining on the short side of the precious metals market, and even if wesee a corrective upswing here, I won’t mind that.
Notevery correction / price move is worth trading –only those with very favorable risk-to-reward ratios. In this case, thecorrective bounce ratio is not that favorable. Our profits this year arealready huge, so waiting out a relatively short period before they increaseeven more (of course, I’m not promising any kind of performance) should berather easy.
Instead of a small corrective upswing, wemight see a sharp drop to $20. Missing huge profits on the latter would be muchworse than having to wait out a very short-term correction.
Thank you for reading our free analysistoday. Please note that the above is just a small fraction of today’sall-encompassing Gold & Silver Trading Alert. The latter includes multiplepremium details such as the target for gold that could be reached in the nextfew weeks. If you’d like to read those premium details, we have good news foryou. As soon as you sign up for our free gold newsletter, you’ll get a free7-day no-obligation trial access to our premium Gold & Silver TradingAlerts. It’s really free – sign up today.
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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Disclaimer
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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