by Steve St. Angelo, SRSRocco Report:
While the gold and silver prices have broken out higher, precious metals investors are wondering if the rally will continue throughout the rest of the summer. Since the beginning of June, gold has gone up $250 while silver has increased $3. Gold is now trading above $1,500 for the first time since 2013 and silver has finally penetrated a key resistance level held for the past six years.
So, we do the precious metals prices go from here?? Good question. Even though fundamentals are the key underlying driver of price, the market pays attention to key technical levels as I explained in my previous video, Silver Price 2019: Key Levels For Continued Breakout. In this new video update, I cover both the gold and silver price action and my analysis of the key levels moving forward.
Precious metals investors need to understand that while the fundamentals do indeed impact the price, certain key technical levels act as a HUGE SPOTLIGHT for traders, investors, hedge funds, and institutions. Thus, when gold and silver break through these key levels, it seems as if everyone wants to JOIN THE PARTY. For years, I disregarded technical analysis, but I have found that it provides clues to where the price will head in the future.
Yes, this doesn’t change the fact that the Falling EROI of oil will still destroy the value of most stocks, bonds, and real estate going forward. But, in the meanwhile, technical analysis will take away some of the mystery and frustration as the precious metals prices head up much higher in the future.
In my newest video update, GOLD & SILVER: Continued Summer Rally Or Correction, I provide charts showing the key levels for the precious metals over the next few months. For example, the gold chart below shows how gold enjoyed a BREAKOUT above $1,440 in the daily chart. Thus, we see breakouts occur in the longer-term monthly charts, as well as the shorter-term daily charts (and even intraday as I showed for the silver trading action on Tuesday & Wednesday last week):
Not only do I explain what is going on in this chart, but there are also an additional 20 charts that I discuss in the video. However, one chart that I would have liked to include is this one below on the Amount of Negative Yielding Bonds versus the gold price. I have not only received this chart sent by followers in my INBOX, but I have also seen it on several websites. This chart shows an interesting parallel trend between the gold price and the amount of negative yielded debt:
While the interest rate has indeed impacted the gold price, it is not the only fundamental factor. This chart only goes back to 2014, and doesn’t show that there wasn’t any negative-yielding debt before 2013 (just a very small amount). And as you can see in this chart, the gold price fell from $1,300 in 2015 to a low of $1,050 at the end of the year, while the amount of negative-yielding debt remained quite flat.
The fundamental factor that was impacting the gold price in 2015, was the crashing oil price that fell from $100+ a barrel in 2014 to $25 at the beginning of 2016. This chart does not show that dynamic. So, we just can’t use one metric to determine the future price of gold, even though interest rates are a significant factor… it’s just not the only one.