Silver Weekly Price Forecast – Silver Markets Form a Hammer

Silver markets have pulled back a bit during the course of the week, but as you can see have turned around to form a bit of a hammer. The hammer sits right on top of the bottom of the overall uptrend line of the ascending triangle, so therefore I think it is only a matter of time before we rally. If the market can break above the top of the weekly candlestick, then it is likely that we break out to the upside, perhaps going towards the $28 level. On the other hand, if we break down below the candlestick, then it is likely that the market could break towards the $24 level, maybe even the $20 level on some type of selloff.

SILVER Video 02.08.21

Keep in mind that silver has a huge correlation to the industrial demand, but with Jerome Powell and the Federal Reserve suggesting that they are nowhere near tightening monetary policy, that could weaken the US dollar just enough to make the silver market go higher. Gold has really taken off, and perhaps will continue to drag silver along with it. Nonetheless, this is a market that is very difficult to risk manage, mainly because the cost involved per text.

Because of this, I would be very cautious about the position size, and only add to the position as the trade works out. Either way, it looks like we are probably going to get a significant move relatively soon. That being said, the market is likely to continue to see noisy behavior, but eventually I fully anticipate seeing some type of impulsive candlestick that we can follow right along with.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Forecast – Silver Markets Quiet on Friday

Silver markets have gone back and forth during the course of the trading session on Friday after initially gapping lower, and now it looks as if we are trying to digest the gains and figure out where to go next. This not a huge surprise, considering just how explosive silver was during the previous session. That being said, the market is likely to be very choppy in the short term, but that is not overly surprising considering that silver tends to be very erratic.

SILVER Video 02.08.21

There is an argument between whether or not we are going to follow the US dollar, as it has such a huge negative correlation, or are we going to follow the industrial demand going forward? Looking at this chart, you can see that there is a lot of noise just above, especially near the $26.50 level. We also have the 50 day EMA sitting in that general vicinity, which of course is an indicator that a lot of technical traders will pay close attention to. If we break above there, then the $27 level will be targeted, followed by the $28 level as it would fill a gap that had formed back in June. At that point, I think there is a significant amount of resistance it could come into the picture in and cause problems.

To the downside, it is very likely that the market could go looking towards the previous uptrend line, assuming that it can even break down below the $25 level. All things been equal, this is a market that is going to be very noisy and choppy, but looking at this chart, it is obvious that we are trying to form a little bit of a base.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Test Of Resistance At $25.60

Silver Gains Ground Ahead Of The Weekend

Silver continues its attempts to settle above the 20 EMA at $25.60 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently located in the range between the support at the 50 EMA at 91.90 and the resistance at the 92 level. If the U.S. Dollar Index manages to settle back above the 92 level, it will move towards the resistance at 92.15 which will be bearish for silver and gold price today. Stronger dollar is bearish for precious metals as it makes them more expensive for buyers who have other currencies.

Gold failed to settle above the resistance level at $1835 and pulled back towards $1825. The nearest significant support level for gold is located at the 50 EMA at $1815. If gold gets to the test of this level, silver will find itself under pressure.

Gold/silver ratio did not manage to settle back above 71.50 and is slowly moving towards the 71 level. In case gold/silver ratio manages to test the 71 level, silver will get more support.

Technical Analysis

silver july 30 2021

Silver is currently testing the resistance level at the 20 EMA at $25.60. If silver manages to get above the 20 EMA, it will gain additional upside momentum and head towards the next resistance level which is located at yesterday’s highs at $25.80.

A move above the resistance at $25.80 will push silver towards the next resistance at the 50 EMA at $26.10. If silver manages to settle above the 50 EMA at $26.10, it will head towards the resistance level which is located at $26.30.

On the support side, the nearest support level for silver is located at $25.50. If silver declines below this level, it will move towards the support at $25.30. A move below the support at $25.30 will open the way to the test of the support at $25.00. In case silver gets below $25.00, it will move towards the next support level at $24.70.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Friday, July 30 – Gold Broke Above Consolidation

The gold futures contract gained 2.01% on Thursday, as it broke above its July 15 high of $1,835. Precious metals’ prices have followed weakening U.S. dollar after Wednesday’s FOMC Statement release. This morning gold is retracing some of yesterday’s advance, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.4% lower, as it’s trading slightly below $1,830 mark. What about the other precious metals? Silver is 0.1% higher, platinum is 1.1% lower and palladium is 0.5% higher. So precious metals’ prices are mixed this morning.

Yesterday’s Advance GDP and the Unemployment Claims releases have been worse than expected. Today we will get Personal Income, Personal Spending and Chicago PMI Releases, among others.

Where would the price of gold go following Wednesday’s FOMC news? We’ve compiled the data since January of 2017, a 53-month-long period of time that contains of thirty six FOMC releases. The following chart shows average gold price path before and after the FOMC releases for the past 36 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.49% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, July 30

  • 4:00 a.m. Eurozone – German Preliminary GDP q/q
  • 8:30 a.m. U.S. – Personal Income m/m, Personal Spending m/m, Core PCE Price Index m/m, Employment Cost Index q/q
  • 8:30 a.m. Canada – GDP m/m, IPPI m/m, RMPI m/m
  • 9:45 a.m. U.S. – Chicago PMI
  • 10:00 a.m. U.S. – Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations
  • 9:00 p.m. China – Manufacturing PMI, Non-Manufacturing PMI

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Will Silver Outperform Gold In Q3 2021?

Sentiment towards the precious metals complex turned bullish after Fed Chair Jerome Powell stated that the rising cases of the Delta variant may weigh on a recovery in the labour market and that the central bank was still “along away” from considering raising interest rates.

The main takeaway from the Federal Reserve’s July policy meeting was that the central bank remains firmly committed to their massive quantitative easing program, while allowing inflation to run hotter than usual, for some time yet.

Currently, Silver prices are trading near $25 an ounce, which presents an incredible opportunity for traders to gain exposure in the metal before it really takes off.

Silver is not only an excellent inflation hedge, but it’s also a key component in everything from electric vehicles, renewable energy to 5G technology. Based on our proprietary research, photovoltaic demand for silver could exceed 3000 tonnes in 2021, while the 5G rollout – which is only just beginning – will be a major driver of demand for years to come.

Goldman Sachs see silver prices rising to $33 an ounce in H2 2021, boosted both investment and industrial demand for the precious metal – and our research suggests similar.

In my opinion, Silver is still definitely the best trade right now and any substantial pullbacks should be viewed as buying opportunities heading into August.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Prediction – Prices Surge Following Rise in Jobless Claims

Silver prices surged higher as the dollar dropped following a softer than expected Q2 GDP report. Jobless claims also increased more than expected while pending home sales declined. These reports followed the Fed’s decision on Wednesday to keep interest rates unchanged.

[fx-broker slug=fxtm]

Technical analysis

Silver prices surged higher on Thursday, increasing slightly more than 2.6%.  Support is seen near the 10-day moving average at 25.21. Resistance is seen near the former breakdown line which comes in near 25.74. Momentum is positive as the fast stochastic generated a crossover buy signal.  Medium-term momentum is positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram also generated a crossover buy signal pushing through the zero-index with a rising trajectory which points to higher prices.

Jobless Claims Rise More than Expected

According to the Labor Department, jobless claims eased to 400,000 for the week ended July 24. That level is nearly double the pre-pandemic norm and was above the 380,000 estimates. However, it was a decrease from the previous week’s 424,000. Continuing claims edged higher to 3.27 million.

Silver Price Forecast – Silver Markets Have Explosive Move to The Upside

Silver markets have clearly turned around quite drastically during the trading session on Thursday as we are above the 200 day EMA again as markets have jumped quite drastically. With the GDP numbers missing ever so slightly during the trading session we have seen a little bit of US dollar softness, which of course helped the market out. Now that we are above the 200 day EMA, it is likely that we could go looking towards the 50 day EMA which currently sits at the $26.18 level.

SILVER Video 30.07.21

We might get a little bit of a pullback, but as long as we can stay above the most recent lows, I think this market has the opportunity to build up a little bit of a basing opportunity. After all, when you look at the longer-term charts, there is a massive ascending triangle that we are still trying to respect. The ascending triangle course is a bullish sign and could send this market much higher. Currently, it looks as if the $29 level is massive resistance but that is a long way from here some not overly concerned about it.

If we did turn around a break down below the most recent lows, then I think it opens up a move down to the $24 level, and then possibly as low as the $20 level after that. That obviously would be a major “risk off move”, but right now it seems as if market participants are not necessarily looking into that possibility. Short-term dips will more than likely be buying opportunities on silver, but I will say that silver is a market that is very difficult to jump in with both feet, you are much better off building up a position.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Rallies As Dollar Dives After Fed’s Comments

Weak Dollar And Dovish Fed Provided Strong Support To Silver

Silver is currently trying to settle above the 20 EMA at $25.60 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get to the test of the 50 EMA at 91.90. If the U.S. Dollar Index manages to settle below the 50 EMA, it will gain additional downside momentum which will be bullish for silver and gold price today. Weak dollar is bullish for precious metals as it makes them cheaper for buyers who have other currencies.

Gold also enjoys support from weak dollar. Gold has recently managed to get above the 50 EMA at $1810 and is moving towards July highs near $1835. A move above the resistance at $1835 will open the way to the test of the $1850 level which will be bullish for silver and other precious metals.

Gold/silver ratio gained significant downside momentum and is moving towards the 71 level. If gold/silver ratio declines below this level, it will continue its downside move and head towards the 20 EMA at 70.60 which will be bullish for silver.

Technical Analysis

silver july 29 2021

Silver has recently managed to get above the resistance at $25.50 and is testing the next resistance level which is located at the 20 EMA at $25.60. RSI remains in the moderate territory despite the strength of the current upside move, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If silver settles above the 20 EMA, it will get to the test of the next resistance level at $25.80. A move above this level will open the way to the test of the resistance at the 50 EMA at $26.10. In case silver gets above the 50 EMA, it will move towards the resistance at $26.30.

On the support side, a move below $25.50 will push silver towards the support at $25.30. If silver declines below this level, it will head towards the next support which is located at $25.00. A successful test of this level will open the way to the test of the support at $24.70.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Move Higher As Fed Stays Dovish

Fed Chair Jerome Powell Calmed Markets

Yesterday, the Federal Reserve left the interest rate unchanged and maintained the current pace of asset purchases.

As usual, Fed Chair Jerome Powell did his best to calm markets. He has once again reiterated that higher inflation was transitory and also added that the economy learned how to live with the virus, although the Delta variant of coronavirus remained a threat.

Most likely, the Fed will provide more details during the Jackson Hole conference in late August, but traders bet that the current pace of asset purchases will remain unchanged in 2021, which is bullish for stocks and bearish for the U.S. dollar.

Initial Jobless Claims Declined To 400,000

U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 400,000 Americans filed for unemployment benefits in a week. Analysts expected that Initial Jobless Claims would total 380,000, so the report was worse than expected.

U.S. has also provided second-quarter GDP Growth Rate report which indicated that GDP increased by 6.5% quarter-over-quarter compared to analyst consensus which called for growth of 8.5%.

It remains to be seen whether the disappointing GDP report will hurt stocks today as traders may stay focused on the dovish message from the Fed. Currently, S&P 500 futures are gaining some ground in premarket trading.

Gold Rallies As U.S. Dollar Declines

Gold has finally managed to get away from the $1800 level as U.S. dollar gained strong downside momentum after Fed’s comments. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has managed to get to the test of the support at the 92 level which was bearish for precious metals.

Silver has also enjoyed a strong rebound, and it is currently trying to settle above the resistance at $25.50.

Yesterday, gold mining stocks showed some strength, and they look ready for a strong start of today’s trading session.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Thursday, July 29 – Gold Price Higher as Dollar Weakens

The market fluctuated following the FOMC Statement release. On July 15, it has reached a local high of $1,835. Since then it has been going sideways. This morning gold is breaking above its over week-long trading range, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.8% higher, as it’s getting closer to mid-July local highs. What about the other precious metals? Silver is 2.1% higher, platinum is 1.0% higher and palladium is 1.1% higher. So precious metals’ prices are higher this morning.

Yesterday’s FOMC Statement announcement hasn’t been much of a market mover. But today precious metals are advancing led by a weakening U.S. dollar. We will get the Advance GDP release along with the Unemployment Claims at 8:30 a.m.

Where would the price of gold go following Wednesday’s FOMC news? We’ve compiled the data since January of 2017, a 53-month-long period of time that contains of thirty six FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. The latest FOMC Statement release came out on June 16. Gold price was 4.8% lower 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 36 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.49% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Thursday, July 29

  • 8:30 a.m. U.S. – Advance GDP q/q, Advance GDP Price Index q/q, Unemployment Claims
  • 10:00 a.m. U.S. – Pending Home Sales m/m

Friday, July 30

  • 4:00 a.m. Eurozone – German Preliminary GDP q/q
  • 8:30 a.m. U.S. – Personal Income m/m, Personal Spending m/m, Core PCE Price Index m/m, Employment Cost Index q/q
  • 8:30 a.m. Canada – GDP m/m, IPPI m/m, RMPI m/m
  • 9:45 a.m. U.S. – Chicago PMI
  • 10:00 a.m. U.S. – Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations
  • 9:00 p.m. China – Manufacturing PMI, Non-Manufacturing PMI

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.
Sign up for our free gold, stock, and oil newsletter today!


Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Dollar Comes Back to The Bearish Trend. Gold and Silver Rise

  • Jerome Powell buried the USD, helped precious metals and as almost always…stocks
  • U.S. dollar index breaks the lower line of the channel up formation and goes down
  • Silver comes back inside of the symmetric triangle pattern, that’s bullish
  • Gold climbs higher
  • The NZDJPY is creating an inverse head and shoulders pattern on an important support
  • The CHFJPY goes higher after a very handsome technical setup, which we discussed in our previous video
  • The EURUSD with a false bearish breakout of a neckline, that’s super bullish
  • The USDCAD goes down as expected. Shooting star on a weekly chart is no joke
  • Indices push higher, same thing, different day

Silver Price Prediction – Prices Rebound but Remain in Bearish Continuation Pattern

Silver prices rebounded on Wednesday following the Fed meeting. The move-in silver came despite a decline in copper prices and a rally in the dollar. Gold prices were also under pressure, which should have weighed on silver prices. Prices rebounded following a large selloff on Tuesday. The Fed said that transitory means that after an acceleration in prices, inflation will decelerate.

Technical Analysis

Silver prices moved higher on Wednesday following a sharp decline in Tuesday and continue to form a bear flag pattern that was a pause that refreshes lower. The breakdown through trend line support is now seen as resistance at the 10-day moving average at 25.27. Target support on silver prices is seen near the March lows at 23.86. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium- divergence) histogram prints in negative territory with a declining trajectory which points to lower prices.

 The Fed Remains on Hold

The U.S. Central Bank kept interest rates unchanged following their two-day meeting on Wednesday. The Fed held its benchmark interest rate near zero and said the economy continues to progress despite spreading the delta variant of the COVID virus. Along with that, the committee reiterated its view that the economy continues to strengthen. The statement acknowledged that the economy had progressed toward the Fed’s goals, though it will continue its monthly bond purchases. The Fed appears to be using the delta variant as a way of keeping their policy very accommodative.

Silver Price Forecast – Silver Markets Dancing Around $25

Silver markets have rallied just a bit during the course of the trading session on Wednesday as the $25 level continues to be a bit of a magnet for price. The previous uptrend line is of course coming into the picture as well, and as a result it will be interesting to see how this plays out. Ultimately, this is a market that I think continues to be very noisy, but we could get a bit of a reprieve late in the trading session on Wednesday in the form of the Federal Reserve statement.

SILVER Video 29.07.21

If we continue to see a lot of industrial demand and the US dollar starts to fall, then it is likely that will provide a bit of “rocket fuel” for silver and other commodities in general. That being said, I do not have any real interest in trying to get too cute with this market, so I would not be a buyer until we clear the 200 day EMA above. With that, I continue to look at this as a scenario where we could get that potential break down as well, so if we break down below the bottom of the candlestick from the previous session, then it is likely that we go much lower. At that point in time, it is likely that the market accelerates to the downside.

On that breakdown, it is very likely that we go looking towards the $24 level, followed by the $20 level longer-term. That being said, the market will be very volatile, which is typical for silver in general. If we do break above the 200 day EMA, then the market goes looking towards the 50 day EMA next.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Tries To Rebound After Sell-Off

Silver Gains Some Ground Ahead Of Fed Interest Rate Decision

Silver is currently trying to settle back above the resistance level at $24.70 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above 92.60 and continues to move towards the resistance at 92.80 ahead of Fed Interest Rate Decision. In case the U.S. Dollar Index manages to get back above the resistance at 92.80, it will move towards the next resistance level at 93.10 which will be bearish for silver and gold price today.

Meanwhile, gold continues to trade near the key support level at $1800. In case gold finally settles below $1800, it will gain downside momentum and get to the test of the next support level at $1775 which will be bearish for silver and other precious metals.

Gold/silver ratio faced resistance at the 73 level and pulled back. In case gold/silver ratio gets back above the 73 level, it will continue its upside move and head towards the recent highs near 73.35 which will be bearish for silver.

Technical Analysis

silver july 28 2021

Silver received support at $24.50 and is trying to settle back above $24.70. In case this attempt is successful, silver will move towards the resistance level at $25.00.

A move above this level will push silver towards the next resistance level at $25.30. In case silver manages to settle above $25.30, it will move towards the resistance which is located near the 20 EMA at $25.50.

On the support side, silver needs to settle below $24.70 to have another chance to test the support level at $24.50. If silver declines below this level, it will move towards the next support at $24.20. RSI remains in the moderate territory so there is enough room to develop additional downside momentum in case the right catalysts emerge.

If silver settles below $24.20, it will move towards the support at $24.00. A successful test of this level will open the way to the test of the support at March lows at $23.80.

For a look at all of today’s economic events, check out our economic calendar.

USDX: More Sideways Trading Ahead?

Yesterday’s (Jul. 27) supposedly big news was the breakdown below the neck level of the inverse head-and-shoulders pattern in the USD Index. Invalidations of breakouts are bearish, and what’s bearish for the USDX is usually bullish for gold, silver, and mining stocks. So, what happened? And what didn’t happen?

What happened was that the USD Index moved a bit below the declining neckline based on the previous intraday highs.

What didn’t happen was the move below the declining neckline based on the previous highs in terms of daily closing prices (dashed line).

So, was the breakout really invalidated? Not necessarily, especially that the USDX is moving back up in today’s pre-market trading (at least at the moment of writing these words).

Moreover, while the USD Index moved lower yesterday, gold refused to rally.

To be precise, it did move higher, but only by $0.60, so it generally ignored the USD’s movement.

Consequently, yesterday’s session might have seemed to be a game-changer at first sight, but it seems much more likely that it wasn’t one. In my view, yesterday’s price movement was the continuation of the back-and-forth trading that’s analogous to what we saw in the first half of June. Gold was moving back and forth in a boring manner then too. The boredom was over quite quickly and a big short-term slide followed – I think the same is likely to happen shortly.

Gold Miners’ Aid

Mining stocks’ performance also supports this scenario.

If it was the beginning of another sizable move higher in the PMs and miners, the latter would be likely to show strength before gold. And that’s not taking place.

Senior gold miners were practically flat yesterday, just as gold was – that is, only slightly higher. On the other hand, junior gold miners ended the session slightly lower – very close to their previous 2021 lows.

Junior miners (the GDXJ ETF) haven’t invalidated the breakdown below the neck level of the bearish head and shoulders formation. Consequently, the very bearish implications of the breakdown remain intact.

All in all, the precious metals sector seems poised for another move lower, quite likely to the previous yearly lows in the case of gold and well below the previous 2021 lows in the case of the mining stocks. Yesterday’s decline in the USD index doesn’t change that. To clarify, the above-mentioned targets will most likely be just interim stops within an even bigger decline that will get us to the ultimate buying opportunity for the PMs and miners later this year.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Stocks Lack Momentum Ahead Of Fed Interest Rate Decision

All Eyes On The Fed

S&P 500 futures are little changed in premarket trading as traders stay cautious ahead of the Fed Interest Rate announcement and the subsequent commentary.

It’s a big day on the earnings front, and major companies like Apple, Microsoft and Boeing have already announced their results before the market open or yesterday, after the market close.

However, earnings reports from leading companies had little impact on the direction of the general market today as the Fed meeting serves as the main catalyst during the current trading session.

Most likely, trading will remain choppy until Fed announces its decision (the rate will stay unchanged) and commentary, which may have a major impact on today’s trading.

Treasury Yields Rebound Ahead Of Fed Interest Rate Decision

The yield of 10-year Treasuries has managed to get back above 1.25% and is moving towards the 1.30% level. Meanwhile, U.S. dollar is also moving higher.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has managed to get back above 92.50 and is heading towards the resistance at 92.80.

Interestingly, higher yields and stronger dollar have failed to put any pressure on precious metals. Silver rebounds after yesterday’s sell-off while gold remains stuck near the key $1800 level.

WTI Oil Moves Higher Despite Virus Worries

Recent data suggests that another wave of coronavirus is gaining strength in the U.S. and globally, but oil traders stay calm as they bet that the new virus wave will not bring significant restrictions.

Stock traders are less optimistic, and the shares of energy-related companies are trading well below highs that were reached at the beginning of June.

Yesterday, API Crude Oil Stock Change report indicated that crude inventories declined by 4.73 million barrels compared to analyst consensus which called for a decline of 3.43 million barrels.

Today, traders will focus on EIA Weekly Petroleum Status Report. If EIA data confirms API numbers, oil may get more support, which will be bullish for oil-related stocks.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Wednesday, July 28 – Markets Awaiting FOMC Statement Release

The gold futures contract gained 0.03% on Tuesday, as it further extended its consolidation along $1,800 price level. On July 15, the market has reached a local high of $1,835. Since then it has been going sideways. This morning gold is trading along $1,800 again, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is virtually flat, as it is extending a consolidation. What about the other precious metals? Silver is 0.4% higher, platinum is 0.1% higher and palladium is 0.2% higher. So precious metals’ prices are mixed this morning.

Yesterday’s CB Consumer Confidence release has been better than expected at 129.1.

The markets will be waiting for today’s FOMC Statement announcement.

Where would the price of gold go following the FOMC news? We’ve compiled the data since January of 2017, a 53-month-long period of time that contains of thirty six FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. The latest FOMC Statement release came out on June 16. Gold price was 4.8% lower 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 36 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.49% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, July 28

  • 8:30 a.m. U.S. – Goods Trade Balance, Preliminary Wholesale Inventories m/m
  • 8:30 a.m. Canada – CPI m/m, Core CPI m/m, Common CPI y/y, Median CPI y/y, Trimmed CPI y/y
  • 2:00 p.m. U.S. – FOMC Statement, Federal Funds Rate
  • 2:30 p.m. U.S. – FOMC Press Conference

Thursday, July 29

  • 8:30 a.m. U.S. – Advance GDP q/q, Advance GDP Price Index q/q, Unemployment Claims
  • 10:00 a.m. U.S. – Pending Home Sales m/m

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Macro Economic Analysis 28.07

Some more clarity about the timing for the start of the tapering process will probably come only with the next meeting, in late September.

Despite this, investors are obviously waiting to read the minutes, trying to decode the wording used. Yes, it will probably be – once again – a matter of words.

It is extremely likely that the FOMC will not yet see the “substantial further progress” recently requested by Jerome Powell for starting the tapering. But any expressions which would lead investors to think that the Federal Reserve could anticipate the tapering can further strengthen the greenback, adding pressure on equities. Vice versa, if Powell and its team of economists confirm the relatively dovish view of the last few weeks, the party on stocks could continue further.

In this scenario we have seen in the last few hours a moderate decline of the US dollar, with the dollar index in area 92.45, while the EUR/USD is traded just above 1.18

Gold Analysis

The Gold price remains steady and it is continuing once again the movement in the trading range of the last few days between $1,790 and $1,820.

The slowdown of the greenback lifted up by a few dollars gold price, while the price is struggling to find a clear direction, in a scenario with little volatility.

Fomc meeting would probably be a market driver for bullion only if any surprise will arrive – with any dovish or hawkish announcement.

Vice versa bullion could continue the consolidation phase, which can be seen as relatively positive for further recoveries in the medium term.

Silver Price

The technical scenario for silver still appears fragile. The precious metal lost ground again on Tuesday, with a new fall below $25. The decline was even sharper than the previous one, with a bottom at $24,52 in the future. We will have a first positive signal with the recovery of the 25,5 zone, while only a clear surpass of $26 would show strength. Despite the weakness shown in the last few days, silver should find a significant support zone between $24 and $24,5, where buyers are expected to stop or at least curb the current bearish momentum.

Carlo Alberto De Casa

Carlo Alberto De Casa is Market Analyst for Kinesis.

He also writes as a technical analyst for the Italian newspaper La Stampa.

Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent, Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a 250-pages book on gold and the gold market, followed in 2018 by a new updated edition.


About Kinesis

Kinesis is a global monetary system, based 1:1 on allocated physical gold and silver. Through digitalising physical gold and silver, Kinesis is introducing a new era of precious metals

Kinesis set out to bring back a stable, debt-free store of value to the global monetary system. A global fintech company specialising in payments technology, Kinesis has combined the timeless value of physical gold and silver with the latest technological advancements. Creating a digital currency with the everyday utility of a fiat currency; the borderless value and efficiency of a cryptocurrency, and none of the inherent volatility. Kinesis currencies enable allocated gold and silver bullion to be instantly purchased, traded, spent and sent anywhere in the world, bringing real-world access, value, and utility to physical precious metals. Kinesis operates our global platform from our offices in Australia, London and Liechtenstein, with vaulting facilities across all major trading hubs: Brisbane, Dubai, Hong Kong, Liechtenstein, London, New York, Singapore, Sydney and Zurich.

Disclaimer – This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Waiting On Silver

However, an examination of those fundamentals reveals a different picture. That picture is inconsistent with the call for higher silver prices.

SILVER SUPPLY & DEMAND, RATIOS

The supply deficits (gaps in consumption over production) have been talked about for decades. In the 1960s and 1970s they were the principal fundamental justification in the case for higher silver prices.

Throughout the twentieth century, industrial use of silver increased to the point where the consumption of silver eventually exceeded new production. This is the start of the consumption/production gap to which people refer. The government then became a willing seller in order to keep the price down. The specific purpose was to keep the price from rising above $1.29 per ounce. This is the level at which the amount of silver in a silver dollar (not Silver Eagles) is worth exactly $1.00.

The huge price gains for silver that occurred in the 1970s were largely attributable to years of price suppression prior to that. Those years of price suppression, though, were preceded by decades of price support.

Neither price suppression, nor support, are significant issues at this time. The primary imbalance in supply and demand was corrected in the 1970s. If it hadn’t been, the silver price might be much higher than it is.

Expectations for a return to a 16-1 gold/silver ratio will go unfulfilled. The gold-to-silver ratio that existed one hundred fifty years ago was mostly the result of political influence and appeasement. There is no fundamental reason which justifies any particular ratio between gold and silver. (see Gold-Silver Ratio: Debunking The Myth)

Gold to Silver Ratio – 100 Year Historical Chart

gold-to-silver-ratio-2021-07-25-macrotrends

As can be seen in the chart above, the gold-to-silver ratio continues to widen in favor of gold.

SILVER FUNDAMENTALS

Silver is an industrial commodity. Its primary demand is driven by – and its price is determined by – industrial consumption. Any role for silver as a monetary hedge is secondary. This is true even in light of the significant increase in the amount of silver used in minting bullion bars and coins; particularly Silver Eagles.

The fundamentals simply do not support the bullish expectations for silver. Also, there are fundamentals that make silver vulnerable to a big price drop.

Deflation is a more likely near-term possibility than hyperinflation. True deflation results in a decrease in the general price level of goods and services.

As an industrial commodity, the silver price would reflect the full brunt of deflation’s effects. The depression-era low for silver occurred in late 1932 at $.28 oz. This low coincided with the stock market’s low.

Something similar happened in March-April 2020, when both silver and stocks declined by thirty-five percent.

Another possibility is that we might continue for several more years with relative prosperity and disinflation. This would not stop further price declines for silver.

SOME HISTORICAL PERSPECTIVE

After it peaked at $48.00 per ounce in 1980, silver’s price declined ninety-two percent over the next thirteen years. It reached a low of $3.57 oz. (February 1993) during the boom years of the 1990s.

It has been ten years since silver last peaked at close to $50.00 oz. At the current price of approximately $25.00 oz., silver is cheaper by one-half. This is shown on the chart (source) below…

Silver Prices – 10 Year Historical Chart

historical-silver-prices-100-year-chart-2021-07-25-macrotrends-2

Given that, does it matter much that silver has doubled in the past year. All of that increase is just a matter of recovering some lost ground.

Historically speaking, most of the reasons people give in support of dramatically higher silver prices, lose credibility when one looks at the facts.

CONCLUSION

Silver is ineffective as a monetary hedge because it is not a store of value. Silver would need to be over $100.00 per ounce right now to roughly approximate what gold’s current price of $1800 oz. reflects regarding the loss in purchasing power of the US dollar over the past century.

It is not remotely close to that number and there is no historical precedent to expect the gap between gold and silver to narrow in silver’s favor. As long as the US dollar continues to lose purchasing power, the gap between gold and silver prices will continue to widen in favor of gold.

In addition, on the few occasions when silver has increased in price dramatically, it has given up most or all of the gains in short order.

In other words, there is likely more downside ahead for silver’s price. And it could be quite significant.

(also see $100 Silver Has Come And Gone)

Kelsey Williams is the author of two books: $100 Silver Has Come And Gone and $100 Silver Has Come And Gone

Silver Price Prediction – Prices Drop Following Durable Goods Report

Silver prices re-broke down on Tuesday after testing trend line support on Monday. The silver drop came as copper prices retraced, despite a decline in the U.S. dollar. Since silver prices are quoted in U.S. dollars, generally, when the dollar declines, silver receives a bid. Softer than expected, U.S. Durable Goods orders weighed on the U.S. 10-year yield, which generated headwinds for the greenback.

Technical Analysis

Silver prices moved lower on Tuesday, following a bear flag pattern that was a pause that refreshes lower. The breakdown through trend line support is now seen as resistance at the 10-day moving average at 24.41. Target resistance on silver prices is seen near the March lows at 23.86. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium- divergence) histogram prints in negative territory with a declining trajectory which points to lower prices.

 

Business Investment Rose Less than Expected

Business spending rose less than expected. According to the U.S. Commerce Department, Orders for non-defense capital goods, excluding aircraft, rose 0.5% last month. Expectations were for core capital goods orders to increased by 0.7% month over month. The release came along with the headline Durable Goods Orders report, which reflects sales of items used for at least 3-years. Durable Goods orders advanced 0.8% in June after rebounding 3.2% in May. Orders were driven by a 2.1% increase in orders for transportation equipment. Orders for civilian aircraft climbed 17.0%.