GOLD SILVER and GDX outlook after turnaround yesterday...

Technical Analyst & Author
December 6, 2023

After the rather dramatic reversal in gold and silver yesterday it is clearly in order that we review their charts as soon as possible to consider what this action portends.

There was a story going about that a group of speculators last week took out heavy short positions in silver after the cut off date for the COTs on Tuesday, as it takes 3 days for them to get around to reporting the COT data, which delay is in the writer’s opinion intentional to provide a window for just this kind of operation.

However that may be, we had already flagged the $2100 level on gold as being critical some time ago – gold has to break clear above this level to kick off the next major bullmarket phase. It broke clear above this critical level in the Asian trade Sunday night whereupon it looks like powerful forces stepped in, in light trading conditions, to knock it back down below this level and their success in doing this caused it to drop back further during the day yesterday. Rather surprisingly PM stocks were not heavily impacted by all this as we can see on the GDX chart below, which is viewed as positive.

Even though the forces that don’t want gold going up were successful yesterday, all they succeeded in doing was postponing the inevitable and a big reason that they got away with it is that gold and silver were already overbought going into the weekend. Next time gold tries to break above this critical level it is likely to do so from a position of more strength.

So, what now? After a reversal day like we saw yesterday it is normal for some sort of correction to ensue and what is thought likely to happen is that gold and silver react back further in a zigzag pattern towards their positively aligned moving averages to the oval target areas drawn on their respective charts before they stabilize and turn higher again. However, the key point to keep in mind is that once gold succeeds in breaking above the key $2100 level it’s on and we just had a clear demonstration of how important this level is on Monday when the “big guns” were brought in to stop it holding a breakout above this level – and they won’t be so successful in future.

As for stocks, the GDX chart still looks strong with a genuine breakout from a Head-and-Shoulders bottom having occurred about a week ago that was on strong volume, driving its Accumulation line steeply higher. So it doesn’t look like they will react back much – GDX showed resilience and didn’t drop back by much yesterday considering the drop in the metals – so it is expected to drop back to the support shown and if it does drop back further into the base pattern it shouldn’t be by much before it stabilizes and turns higher again and any such drop will be viewed as presenting a great buying opportunity.


Clive Maund

Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.

Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.

The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.

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China is the world’s biggest gold producer with more than 355 tons annually. Australia is second.
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