83 replies to this topic

[Carlos77]

How to Use Fibonacci Retracement with Gold and Silver Trading

 

Posted 14th March 2024

Frank Watson

 

What are Fibonacci Retracement Levels?

Fibonacci retracement theory is a technical approach to trading that uses a set of specific proportions to determine the likely size of a price change relative to a previous change, providing expected support and resistance levels. 

It can therefore be used as a guide for traders to identify entry and exit points in the market, or for placing stop-loss positions that aim to manage risk by limiting losses. 

 

A quick history lesson

Fibonacci, also known as Leonardo Bonacci and Leonardo Bigollo Pisano, was a 12th and 13th century Italian mathematician from the Republic of Pisa. He introduced to Europe the idea of a sequence of numbers, thought to have derived from Indian mathematicians as early as the sixth century. 

In this sequence of numbers, later known as ‘Fibonacci numbers’ or the ‘Fibonacci sequence,’ each value is the sum of the previous two values. This gives the beginning of the sequence as: 1, 2, 3, 5, 8, 13, 21, 34 and so on. 

As the numbers rise, the proportion between each number gets closer to what is called the ‘golden ratio’ or ‘golden section.’ This proportion is approximately 1 to 1.618 and is a proportion widely found in nature, from the way petals are arranged on a flower, to the growth of plants, to the sections found in a snail’s shell. 

The golden ratio is thought to give a harmonious balance that is considered aesthetically pleasing and hence was incorporated into great works of art.

 

Why does this matter for trading markets?

After moving between two extremes, the price of any commodity tends to swing in either direction as the market tries to find a new balance. This is where Fibonacci retracement can help provide a framework for understanding where the price might be headed next.

Fibonacci retracement theory relates to the price of a commodity after having moved between two extremes. The theory holds that the size of a price retracement tends to correspond to the proportions embedded in the Fibonacci sequence. An important caveat: some traders do make use of Fibonacci retracement theory, while others ignore it.

 

Read more

[Carlos77]

Two Types of Price Rally​

 

March 12, 2024

By Craig Hemke

 

 

 

In summary, what just took place? A technical breakout following some very gold-positive news led to a massive rush of speculator cash into COMEX gold futures. Price rose 7% as total contract open interest rose by 30%

Now contrast that with the ongoing rally in the COMEX silver price. Over the same period of Thursday, February 28, to Friday, March 8, the COMEX silver price rose by $1.92 or about 8.5%

 

 

However, total open interest in COMEX silver declined over the same period from 146,515 contracts to 142,481. So, unlike gold, where price and OI surged together, COMEX silver had a price rally while total contract open interest fell by 2.8%.

What's going on in this case? You will almost always have a Spec short squeeze on your hands whenever you see price rising and open interest falling. 

Again, the rally in COMEX gold was driven by an easily recognizable, long-term technical breakout. How easily recognizable? See for yourself:

 

 

But COMEX silver is nowhere near that type of technical breakout. To achieve something similar, price will have to move decisively up through the $28 level...and it's not even to $26 yet! WHEN that breakout comes, hot speculator cash will flow into COMEX silver too. However, as you can see below, the breakout is still a long way away.

 

 

Read More

 

[Carlos77]

Silver starsMarket report for week ending March 15

 

MACLEODFINANCE

15.03.2024

 

 

 

 

 

 

The feature of these markets is the extraordinary extent to which bullion is leeching out of Comex. So far this year, 95 tonnes of gold have moved from establishment hands presumably into the Other Reported category. But the real surprise is silver, which by this morning had 1,201 tonnes stood for delivery. Normally, these deliveries are merely the shuffling of ownership in Comex-registered vaults. However, the evidence suggests that silver is actually being transferred with a view to being physically delivered outside the vaulting system.

 

They key to this activity is India. The Indian government introduced a solar production linked incentive scheme. Reliance Industries, among others, are investing heavily in photovoltaic production, and is commissioning the first 5 giga-watt phase of a 20 GW manufacturing facility scheduled for opening this month. I am informed by industry sources that being unable to source sufficient silver from refiners, Reliance has been buying what it can in silver markets, including Comex. It is almost certainly Reliance which is taking the bulk of that 1,201 tonnes and the acceleration of deliveries this month reflects the commissioning of Phase 1 in Jamnagar.

 

It seems extraordinary that with the massive increase in global ESG-related demand that the silver price has not yet risen significantly. But as I explained in a post to my Substack subscribers this week, China has deliberately suppressed the silver price while importing significant quantities to bolster its photovoltaic production. Now that India is rapidly developing its output under government schemes, China is likely to lose its grip on price.

 

 

The chart below reveals that silver has been in a three-year consolidation following the surge in price in 2020, incorporating a bullish reverse head and shoulders pattern. With China losing her grip on prices, it appears that the consolidation phase is ending.

 

 

 

Read more

 

 

[Carlos77]

Gold Miners’ Q4 2023 Fundamentals

 

March 17, 2024

Adam Hamilton

Zeal Research

 

 

 

All-in sustaining costs are far superior than cash costs, and were introduced by the World Gold Council in June 2013.  They add on to cash costs everything else that is necessary to maintain and replenish gold-mining operations at current output tempos.  AISCs give a much-better understanding of what it really costs to maintain gold mines as ongoing concerns, and reveal the major gold miners’ true operating profitability.

 

Again back in early February, I was looking for the GDX top 25’s Q4’23 AISCs to climb a slight 0.6% YoY to $1,275.  That was conservative based on their Q3 year-to-date AISCs and their full-year guidances.  But the actuals came in somewhat worse, with average AISCs climbing 3.9% YoY to $1,317. Hecla again skewed that high with its embarrassing $1,969 AISCs, which amazingly still improved a sizable 7.6% YoY!

Kicking out Hecla alone, the rest of the GDX top 25 averaged $1,276 AISCs last quarter right in line with my forecast.

 

Subtracting these quarterly-average GDX-top-25 AISCs from quarterly-average gold prices yields a great proxy for sector unit earnings.  Those ran $659 per ounce in Q4, soaring 42.3% YoY!  That followed Q3’s colossal 93.8%-YoY jump to $622, and ran 60% up into the 31-quarter range from $321 to $884.  Such impressive earnings yield rich profit margins of 33%, high levels most companies would sell their souls for.

Yet the major gold stocks remain unloved despite these strong fundamentals.  

 

Read more

 

[Carlos77]

Will Silver Steal the Spotlight?

 

March 15, 2024

Mike Maharrey

 

The narrative is the Fed has about got inflation whipped. Last week, Federal Reserve Chairman Jerome Powell said inflation is “not far” from where it needs to be to start rate cuts. Meanwhile, the economy is going to cruise to a soft landing.

There are two problems with this fairytale.

1. Inflation isn’t whipped. In fact, it seems intent on sticking around. Furthermore, the Fed hasn’t done enough to rein in price inflation.
    
2. The economy is broken, and another financial crisis is on the horizon. This economy wasn’t built to operate with interest rates at this level. It’s only a matter of time before it cracks, as it did back in 2008.

When the economy cracks, we all know what the Fed will do. It will run to the rescue. It will slash rates to zero. It will relaunch quantitative easing. It will unleash another tsunami of easy money.

 

The Case for Silver

 

Silver tends to get overlooked. It is often referred to as gold’s little brother, or its “poor cousin.” But while the price of silver is much more volatile, it generally correlates with gold over time. In fact, silver historically tends to outperform gold and a gold bull market.

This was the case during the pandemic. As gold pushed above $2,000 an ounce, charting a 39 percent gain, silver rallied to nearly $30 an ounce, a 147 percent increase.

Here’s how an analyst explained it to CNBC:

"Here's what usually happens with silver: it does move with gold, but it moves later. Gold will shoot up first and then you will see silver take off rapidly. And silver always outperforms. It's just late."

 

Read more

[Carlos77]

Checking In on Silver Prices​​

 

March 19, 2024

By Craig Hemke

 

For COMEX silver to run to $35 and beyond, it has to first break $28. And to break $28, it has to first break $26! Below is an updated version of the chart posted above. As you can see, progress has been made but a breakout to rival gold's is nowhere near. At least not yet.

 

 

 

 

That the breakout in silver is still pending is frustrating to many silver stackers, myself included. However, it's actually beneficial. Why? Because the breakout is coming. Of that, you can be certain.

How can I state this with such confidence? Because when gold moves to $2300, the gold/silver ratio is not going to be 100:1, implying a silver price of $23. And when gold moves next to $2500, the gold/silver ratio won't be 100:1 then either, and silver won't be $25. Instead, even if we use a median gold/silver ratio of 80:1, gold at $2300 implies silver at $28.75

 

 

 

 

But the thing is, when silver breaks out later this year or next, it will receive the same rush of attention and speculator cash that gold is currently enjoying. As such, the price target will not simply be $29 or $31. Instead, the initial goal will be $35 or higher. That's a greater than 50% move from here and one from which you could greatly profit if you get correctly positioned before it begins.

 

 

 

Read more

[Carlos77]

BRICS, Politics, and Gold — It’s all become a muddle

I can only conclude that Russia's trade settlement medium proposals for BRICS will not see the light of day

 

MACLEODFINANCE

MAR 21, 2024

 

Russia tried to get a gold-backed trade settlement currency onto the BRICS agenda last August but failed. There has obviously been a rethink, judging by the few public briefings from senior Russians. In those briefings, gold has been dropped, and it appears that the Russians are now struggling to come up with a workable alternative. And the proposed expansion of membership is probably making it even more difficult to get unanimous agreement on how to do away with the dollar.

 

Russia is this year’s president of BRICS, having taken up the baton from South Africa and membership has expanded to ten nations. And of the 30 nations which expressed an interest last year, a further 15 countries have formally applied to join BRICS. As pro tempore president, Russia will probably authorise further membership applications in a quest to expand BRICS and Russia’s own sphere of influence.

 

President Putin in his New Year speech outlined Russia’s objectives for BRICS in the coming year. The following is extracted from the English translation:

“In total, over 200 events of different levels and types will be held in many Russian cities as part of the chairmanship. We encourage representatives of all countries interested in cooperating with our organisation to take part in them. The BRICS Summit in Kazan in October will be the culmination of our chairmanship.”

 

With over five events planned on average every week, Russia has put considerable detail into her agenda for BRICS, which will run alongside her military and energy strategies. Clearly, the objective must be to cement hard support for Russia’s strategic objectives from all current and future BRICS members, which includes replacing the dollar as the foreign exchange and trade settlement medium as much as possible.

 

Readers will recall that Russia wanted to put a gold backed trade settlement currency on the Johannesburg agenda but failed to secure the required unanimous backing of the then members. With the benefit of hindsight, we can view the early leaking of her proposal as a device to put pressure on the dissenters. But Keynesian India was dead against it, and China was lukewarm. Consequently, Russia now appears to be adopting a different approach.

 

https://alasdairmacl...become/comments

 

 

[Carlos77]

What about mining stocks?

 

Posted 21st March 2024

Dave Kranzler

 

The breakout of gold, followed by a likely breakout of silver, fits a trading pattern that has been characteristic of the most powerful and durable cyclical bull moves over the last 24 years. Gold gets the party started with a strong move higher, followed by silver, and then followed by the mining stocks. 

 

At some point silver will outperform gold and the mining stocks will outperform both metals. This pattern repeated in three cycles in the bull move from 2001 to early 2008 and it occurred during the bull move from late 2008 to mid-2011.

 

Assuming this pattern once again repeats, now is the time to start accumulating mining stocks. Recently two of the more well-respected investors announced that they were moving capital into mining stocks. Stanley Druckenmiller, who made his name running George Soros’ flagship Quantum fund, announced that he recently bought positions in Newmont and Barrick Gold. 

 

More significant in my view, Elliot Management’s Paul Singer announced the formation of a venture to invest at least $1 billion in mining companies. He hired the former CEO of Newcrest Metals (recently acquired by Newmont) to head the new venture. Paul Singer made his fortune and highly regarded reputation as a value/distressed investor. The objective of the new fund is to look for opportunities to buy mines and, possibly, buy out public companies as well as take investment stake in companies.

 

In my opinion, Singer’s move to commit a significant amount of capital to mining stocks, more so than Druckenmiller’s investments in Newmont and Barrick, is strong affirmation that something extremely bullish is likely getting ready to unfold in the precious metals sector.

 

Read more

[Carlos77]

Profit taking bites

A shakeout was due, but the background for gold and silver is very bullish both technically and fundamentally

 

MACLEODFINANCE

MAR 22, 2024

 

Meanwhile, speculative paper market positions on Comex, and presumably in London as well, have increased against a background of bullion shortages. This is reflected in the Managed Money category Comex gold contract, comprised mainly of hedge funds. The next chart shows how their net position and the gold price have evolved.

 

 

 

On 10 October 2023, hedge funds were net short of 26,767 contracts when gold sold off to $1823. With gold hitting a peak of $2160 on 12 March (the last COT release), hedge funds were net long 141,083 contracts. That’s a turnaround of 167,850 contracts representing 522 paper tonnes.  

 

This rapid swing from deep bearishness to overt optimism reflects unstable speculation. It is easily taken out by the Swaps, comprised of professional traders (mostly bullion banks) who take the short side. All they need to do is to mark down paper prices at the appropriate time to take out the stops.

 

Fortunately for the Swaps, hedge funds keep coming, and jobbing on the short side is extremely profitable. But there is a problem. In the past, the bullion banks close to the miners and refiners have easily persuaded them to hedge production forward, allowing the Swaps to put a cap on their net short positions. With the rise in the gold price, this category has reduced is forward hedging, illustrated in our next chart.

 

 

 

Consequently, the dollar value of the Swaps remains stubbornly high at $53bn gross and $36.7bn net. There are 29 Swap traders short, giving an average exposure of $1.83bn.

 

 

 

This is high, which stretches their financial resources. The possibility that one or more of the Swaps might get into difficulties could become an issue if the gold price continues to rise.

 

Read more

 

 

[Carlos77]

Gold Prices - World Gold Counsil Insights

1. Gold is typically unaffected by local financial crises or politically motivated conflicts; instead, it often benefits from them. This is because during a crisis, there's no risk of bankruptcy (as with publicly traded companies), significant increases in supply (as with fiat currencies), or changes in ownership (such as real estate). All of this means that investing in gold is currently considered one of the safest ways to preserve wealth.
2. Investing in gold is for everyone. A common stereotype about investing in this metal is that it requires significant capital, at least several thousand dollars. This isn't true anymore, as the dynamic development of the gold investment market has led producers to significantly expand their offerings, including products tailored to the needs of investors with limited funds or those seeking high liquidity. As a result, the gold investment market offers investors a plethora of opportunities - you can start investing in gold with as little as approximately $50. When investing small sums in gold, regularity is the key to success - regular expansion of assets in this metal can bring significant benefits in the future.
3. Investing in gold doesn't require specialized knowledge, chart analysis, or constant investment monitoring. The basic principle of investing in gold is "buy and hold." This is especially important during periods of increased volatility in financial markets, which typically accompany various crises - the price of gold not only remains resilient to negative economic events but consistently rises, significantly reducing risks in the long run.

Read More