Money technically joins gold in a new bull market

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(Kitco News) – As Gold continues to consolidate its recent gains above $ 1,500, investors have begun to opt for the less expensive money option, which climbed 12% this month and peaking at $ 18.76 on Thursday. . Unless there is today a severe sale under $ 17.50 in "poor gold", the metal that everyone loves to hate since its fall in 2013 will technically join gold in a new market bullish. If we are to believe the story, the leadership and its outperformance of the gold price should remain in silver so that the precious metals rally continues to run.

Historically, the two – way gold trend has resulted in the money market. Investors are generally unaware of this tiny sector until gold has recovered sufficiently long enough to convince them that its momentum is sustainable. In fact, when the current secular bull market for gold began in early 2001, silver did not begin to skyrocket until late 2003.

We observed about the same time differential between the yellow metal and the yellow metal, which had reached a major minimum in early 2016. When the first segment of this secular bull market in gold peaked at the end of 2011, the metal refuge recorded a significant bottom bottom. at the beginning of 2016, as the bearish silver market continued to frustrate investors by returning to a last low, the last low at the end of 2018.

At the same time, silver stocks also hit a significant low with gold stocks in 2001 and again in 2016. Although silver stocks lagged until recently, Silver ETF (SIL) and Gold (GDX) mines have a large fund simultaneously at the beginning of 2016.

Since the price of silver reached nearly $ 50 an ounce in early 2011, this precious metal with a strong industrial component continued to follow the price of gold. until the gold / silver ratio, which has been very well monitored, reaches a weekly high of over 96 at the beginning of last month. At the end of June, when the gold price began to stabilize for six years, the money began to wake up from his eight-year-old sleep. The price ratio of gold on silver has dropped 13% since early July and, although gold has risen sharply over this period, the gray metal has grown faster.

The gold / silver ratio of 96 meant that it took a brief 96 ounces of silver to buy an ounce of gold. This high region of more than 90 years according to the most followed statistics had not been observed since the financial crisis of more than a decade, which also revealed a significant hollow in the cheaper alternative of gold at $ 8.40 an ounce. Once silver began a slingshot move in the opposite direction to this depressing trough of October 2008, the volatile metal reached nearly $ 50 per ounce in just 30 months, a gain of nearly 500% in March 2011.

The rising gold bullion is a sign of a bull market in precious metals and it looks like the gold / silver ratio hit a new record high last month. In fact, I wrote about this ratio, which could peak above 90 last month in this column, as silver miners started to drive up the entire gold complex before the money decided to join the group.

After stopping to consolidate for a few weeks, the gold / silver ratio began to decline even faster this week. With the endless trade war between the United States and China, the civil unrest in Hong Kong, Brexit fears and the pursuit of the world's central banks on the path to destroying their respective currencies, l & # 39; gold and silver should stay in plain view. There is now more than $ 17 trillion in negative global debt, up from $ 15 trillion just a few weeks ago.

Moreover, the ECB already holds 40% of all public debt in the euro zone and has no end and has destroyed its bond market, while the US yield curve has reversed again this week . The increasing global destruction of currencies has been the main catalyst for the recent rise in precious metals. If the Federal Reserve continues to try to contain the rest of the world by further lowering rates in the United States, it will eventually destroy the United States. bond market.

However, I was probably expecting GDX to reach the US $ 315 area with $ 1,550 in December before a sustained correction, and that the market is telling us that we may have reached a peak in the near term after reaching that level. two levels in the gold complex this week. . On Wednesday, the precious metals sector showed signs of surpassing before gold and silver turned lower yesterday in the day. The sale was anticipated at the opening, when the GDX began to see profits take hold of strong resistance in the region by $ 31 Wednesday and continued yesterday with reduced volume.

Even though a prolonged correction begins to take shape after the Labor Day weekend, a withdrawal should be a great buying opportunity. There is a good support for the region of $ 1,500 in December in gold and I expect the level of the $ 17.50 silver futures to be maintained on a weekly basis if sales continue next month.

Nevertheless, the buying opportunity may not last very long, as I also hope to see the return of silver in the money continue to gain momentum once the technical correction made in the complex of precious metals . The metal could quickly reach its 2016 high, above $ 21, before the next FOMC meeting on September 17 and 18, once a healthy correction has been made.

Despite the recent weakness of the complex, the fundamentals should still be favorable enough to limit losses in any technical sale. Technical and macro-economic situations support the entire gold and silver complex over the long term and are expected to continue producing a series of lower and higher highs by 2020.

In the near future, we will see juniors start to far surpass the GDX when speculative fever hits the entire precious metal complex. In recent years, I have positioned Junky Junior Miner subscribers among the best junior precious metals of the breed, long before this new rise in gold and silver. If you would like to receive my research, newsletter, portfolio and exchange alerts, please click here for instant access.