Why Gold's Latest Rally Is Nothing to Get Excited About / Commodities / Gold and Silver 2022
You don't have to be a fortune tellerto predict some of the precious metals’ behavior in the market. Any incomingsigns take the shape of a bear.
What a signal-rich week that was! Atleast if you’re interested in forecastinggold and predictingsilver prices.
The USD Index rallied, but that was theleast interesting of the important developments, as it had already reversedduring the preceding week. So, the fact that the USD Index continued itsmedium-term uptrend last week is not that noteworthy.
It needs to be said, though, as thatcontinues to be an important factor for the future of the precious metals market.To be clear – the implications for the PM sector are bearish.
What about gold, the key precious metal?
Gold is so far almost unchanged thisyear, despite the initial decline and the subsequent rally. Overall, gold is upby $3.20 so far in 2022, which is next to nothing.
Gold rallied on a supposedly dangeroussituation regarding Ukraine, but it failed to rally above the combination ofresistance lines and very little changed technically.
On a side note, I would like to remindyou that, based on our own reliable source in Ukraine (one of our team membersis located there), the risk of military conflict (in particular, a severe one)is low, and it seems that the market’s reaction was greatly exaggerated.
Anyway, moving back to technicals, let’skeep this $3.20-up-this-year statistic in mind while we take a look at what’sgoing on in silver and mining stocks.
Silver declined on Friday, but it’s stillup by $0.97 so far in 2022. This means that on a short-term basis, silvergreatly outperformed gold.
What’s up with mining stocks?
The GDX ETF – a proxy for generallysenior mining stocks – is down this year by $0.38, which is 1.19%.
At the same time, the GDXJ ETF is down by$0.87, which is 2.07%.
In other words:While silver is outperforminggold on a short-term basis, gold mining stocks are underperforming it.Junior mining stocks (our shortposition) are declining more than senior miners, and in fact, they aredeclining the most out of the entire precious metals sector.
Silver’s outperformance, accompaniedby gold miners weakness, is a powerful bearish combination in the case of the entire precious metals sector.
If the general stock market is going toslide, silver and mining stocks (in particular, junior mining stocks) arelikely to decline in a rather extreme manner.
The thing is…
We just saw something in the general stockmarket that we haven’t seen since early 2020 – right before the massive declinethat triggered the huge declines in the precious metals sector.
The RSI Index just moved below 30 for the first time since pre-slide moments. Just likewhat we saw back then, the S&P 500 is now declining on increasing volume.
Yes, RSI below 30 is generally consideredoversold territory, but the direct analogies take precedence over the “usual”way in which things work in markets in general. In this case, the situationcould get from oversold to extremely oversold. Let’s keep in mind that stocksdeclined very sharply in 2020.
One could say that times were different,but were they really? The key difference is that the monetary authorities arenow already after the bullishmoney-printing cycle and are handling inflation by aiming to increase interestrates, while they had been preparing to cut them in 2020.
The situation regarding the pandemic isnot that different either. Sure, back in 2020, it was all new, we had massivelockdowns and there was great uncertainty regarding… pretty much everything.Now, the situation is not entirely unexpected, but given the explosive natureof new COVID-19 cases (likely due to the Omicron variant), it’s still quite newand uncertain.
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 targets for gold and mining stocks that could be reached in the next few weeks. If you’dlike to read those premium details, we have good news for you. As soon as yousign up for our free gold newsletter, you’ll get a free 7-day no-obligationtrial access to our premium Gold & Silver Trading Alerts. It’s really free– sign up 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
* * * * *
About Sunshine Profits
SunshineProfits enables anyone to forecast market changes with a level of accuracy thatwas once only available to closed-door institutions. It provides free trialaccess to its best investment tools (including lists of best gold stocks and best silver stocks),proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.
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.
Przemyslaw Radomski Archive |
© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.