Precious Metals Charging Higher As Stocks Keep Pushing On a String / Commodities / Gold and Silver 2021

Stocks keep cooling off at their highs, and calling for acorrection still seems to be many a fool‘s errand. Does it mean all is fine inthe S&P 500 land? Largely, it still is.

Such were my yesterday‘s words:

(…) It‘s still strong the stock market bull, and standingin its way isn‘t really advisable. With the S&P 500 at new highs, and theanticipated slowdown in gains over Friday, where is the momentary balance offorces?

Still favoring the bulls – that‘s the short answer beforewe get to a more detailed one shortly.

The anticipaded gold rebound is underway, and my open longposition is solidly profitable right now. In line with the case I‘ve been making since the end of January, thetide has turned in the precious metals, and we are in a new bull upleg, whichwill get quite obvious to and painful for the bears.

Little noted and commented upon, don‘t forget thoughabout my yesterday‘s dollar observations, asthese are silently marking the turning point I called for, and we‘re witnessingin precious metals:

(…) The weak non-farm employment data certainly helped,sending the dollar bulls packing. It‘s my view that we‘re on the way to makinganother dollar top, after which much lower greenback values would follow. Giventhe currently still prevailing negative correlation between the fiat currencyand its shiny nemesis, that would also take the short-term pressure of themonetary metal(s).

What would you expect given the $1.9T stimulus bill,infrastructure plans of similar price tag, and the 2020 debt to GDP oh sosolidly over 108%? Inflation is roaring – red hot copper, base metals, corn,soybeans, lumber and oil, and Treasury holders are demanding higher yieldsespecially on the long end (we‘re getting started here too). Apart from the keycurrency ingredient, I‘ll present today more than a few good reasons for theprecious metals bull to come roaring back with vengeance before too long.

Finally, I‘ll bring you an oil market analysis today aswell. So, let‘s dive into the charts (all courtesy of www.stockcharts.com).

S&P 500 Outlook and ItsInternals

A strong chart with strong gains, and the volume isn‘tattracting either much buying or selling interest. That smacks of continued accumulation,with little in terms of clearly warning signs ahead.

The market breadth indicators are all very bullish, and pushing for new highs, as thecaption points out precisely.The intermediate pictureremains one of strength.

Credit Markets and Technology

High yield corporate bonds to short-term Treasuries(HYG:SHY) ratio is powering higher significantly stronger than the investmentgrade corporate bonds to longer-dated Treasuries (LQD:IEI) one. The bullishspirits are clearly running high in the markets.

Technology (XLK ETF) as the leading heavyweight S&P500 sector, keeps charging higher vigorously after not so convincing post-Augperformance. Crucially, its current advance is well supported by thesemiconductors (XSD ETF – black line), meaning that apart from the rotational theme I‘ve been beenmentioning last Thursday, we have the key tech sector firing on all cylindersstill.

Gold & Silver

Let‘s overlay the gold chart with silver (black line).The disconnect since the Nov low should be pretty obvious, and interpreted thesilver bullish way I‘ve been hammering for weeks already. Please also note thatthe white metal has been outperforming well before any silver squeeze caughteveryone‘s attention.

Let‘s go on with gold and the miners (black line). Seethat end Jan dip I called as fake? Where are we now? Miners are no longerunderperforming, and the stage is set for a powerful rise.

Just check the gold miners to silver miners view to getan idea of how much the white metal‘s universe is leading everything gold.Another powerful testament to the nascent bull upleg in the precious metals.

Continuing with gold and long-term Treasuries (blackline), we see that the king of metals isn‘t giving in. Instead, it‘s rising inthe face plunging Treasuries that are offering higher yields now. No, theyellow metal is decoupling here, as the new precious metals upleg is gettingunderway.

The greenback is the culprit – and again in my yesterday‘s analysis, I called theheadwinds it‘s running into. The world reserve currency will indeed get underserious pressure and break down to new lows as the important local top is beingmade.

From the Readers‘ Mailbag - Oil

Q: "Hi Monica, I am glad I found you after you'disappeared' from Sunshine Profits! As you had been back then already coveringgold and oil at times, I wonder what's your take on black gold right now. Alittle great birdie told me oil will be the next Tesla for 2021 - what's yourtake?"

A: I am also happy that you found me too! Thankfully, my„disappearance“ is now history. I‘ll gladly keep commenting, in total freedom,on any question dear readers ask me. Back in autumn 2020, seeing the beatendown XLE, I wrote that energy is ripe for an upside surprise. I was alsofeaturing the fracking ETF (FRAK) back then. Both have risen tremendously, andit‘s my view that the oil sector (let‘s talk $WTIC) is set for strong gainsthis year, and naturally the next one too. Think $80 per barrel.

Part of the answer is the approach to „dirty“ energy thatstrangles supply, and diverts resources away from exploitation and exploration.Not to mention pipelines. Did you know that the overwhelming majority of‚clean‘ energy to charge electric cars, comes from coal? And that the only coalETF (KOL) which I also used to feature back in autumn, closed shop? Oil isclearly the less problematic energy solution than coal.

These are perfect ingredients for an energy storm to hitthe States by mid decade. I offer the following chart to whoever might thinkthat oil is overvalued here. It‘s not – it‘s just like all the othercommodities, sensing inflation hitting increasingly more.

Summary

The stock market keeps powering higher, and despite therather clear skies ahead, a bit of short-term caution given the speed of therecovery and its internals presented, is in place. Expect though any correctionto be a relatively shallow one – and new highs would follow, for we‘re far awayfrom a top.

The gold and silver bulls are staging a return, as lastweek‘s price damage is being repaired. The signs of a precious metals bull, ofa new upleg knocking on the door, abound – patience will be rewarded withstellar gains.

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.

MonicaKingsley

Stock Trading Signals

Gold Trading Signals

www.monicakingsley.co
mk@monicakingsley.co

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