Glittering Opportunities In Gold And Silver

|
Includes: AGQ, DUST, GDX, GDXJ, GLD, JNUG, NUGT, SLV, SLVRF
by: Scot Macdonald

Summary

Gold and silver are both building strong bottom formations and offer excellent opportunities to go long in stocks, futures or ETFs.

The gold market will probably revert back to the mean on an intermediate- to long-term basis, which projects prices in gold all the way up to $1386 to $1400.

if the market does test support and you get the opportunity to buy gold at $1166 to $1044, you would be buying the bottom of the 18-year cycle.

In silver, $16.76 to $16.54 is the bottom range and silver should move up to the $17.05 to $17.56 levels in the coming week.

Bullish Gold

In my October 10, 2017 report published on Seeking Alpha, I examined the long-term gold forecast using our proprietary Variable Changing Price Momentum Indicator (VC PMI) yearly outlook. (For information about the VC PMI and its strengths and weaknesses, please refer to my article “Beware and Prepare, Gold and Silver Have Arrived.”) The VC PMI identifies the average price for the coming week, and from that mean, the sell 1 and sell 2 levels above and below the mean.

Gold closed on October 10 at $1288, above the 50-day moving average, which confirmed that the long-term trend momentum was bullish. The long-term VC PMI indicated that if the market closed below $1253, which is the yearly average price (pivot point, mean or equilibrium), it would negate this long-term bullish trend to neutral.

Since our October 10 report, the gold market had remained largely unchanged, closing around roughly the same price. From the September 28 or 30 low of about $1263 for the December gold contract, we have since rallied to make a high on November 17 of $1297.50 or $1298, which basically met the monthly targets that we have been publishing the past few weeks. In meeting the first target of $1298, the market is reverting back to the levels of demand once again ($1276 to $1264), which are the current demand levels we expect for the coming week.

In our October 10 report, we indicated that the yearly gold moving average price was about $1263, the long-term trend momentum was $1253, and, with the market closing above $1263, it indicated that the extreme above the mean target is activated at $1386 to $1484. It also indicated that if we were to close below $1263, it would negate this bullish pattern to neutral.

The market based on the price action that we have seen since October 10 is pretty much on the bullish side as the market continues to test the upper end of supply now anticipated for next week of $1297 to $1306 on a weekly basis. The confirmation that would validate the possibility that the market would continue higher to test the monthly levels of support would be a close above $1306. The monthly supply levels of sell 1 are $1298 to $1326, which have been tested this past week. A close below $1281 would negate the monthly bullish signal to neutral. It looks like the market is getting ready to challenge the monthly supply levels at $1298 to $1326 for the short-term.

For the coming week, the weekly mean is at $1285, and if we were to close below $1285, then the next level of support or pivot point will be $1281. For those with a long-term position, use this level as an indication to go neutral; use it as a protective spot. If the market closes above $1281, it would activate the monthly targets of $1276 to $1236. If you go neutral on a close below $1281, you can wait for the market to come down and activate those targets of demand, or if the market closes above $1281, it would activate the long side again of the weekly VC PMI, and would validate going long once again. The close Friday was $1288, which was above the weekly VC PMI of $1285, an indication of a bullish trend momentum.

Multi-Year Gold Cycles and the 50-day Moving Average

Since our report on the 18-year cycle published October 23, 2017, the price of gold hasn’t changed that much. Gold has been trading in a range between $1264 and $1308 that was established in October. In November the market tested the highs of $1297/$1298. The bottom of the range or the inversion below the average price was $1264/$1265. The October 23 report said that the market closed above the 50-day moving average of $1235 for three consecutive months for the first time in four years. November is going to be the fourth consecutive month it will close above the 50-day moving average. Now (November 25) the 50-day moving average is trading at about the same level of $1235. Looking at the monthly chart, the market has closed above this average now for about nine months and I believe that is a pretty bullish indication that the market is about to make a significant move.

What could potentially happen with gold?

As long as the market remains above $1235, we expect prices to trade above the mean and the first level of supply at $1386 and the second level at $1484. According to our analysis, we recommend using the extreme above the mean as your target, which is $1386 (sell 1 based on the 18-year cycle). The protected level for the 18-year cycle is $1264. This means that if the market closes below $1264, it would negate the 18-year cycle to neutral. This would open the possibility that the extreme below the mean of $1264 would trigger levels of demand starting at the buy one level of $1166 all the way down to the buy two level of $1044. At $1166, you should cover any short positions opened if the market closes below $1264. However, it does not have to be the case if the market closes below $1264, since the market might come down to $1260 and then move right back up again. If you can buy gold at $1166 to $1044, you would be buying the bottom of the 18-year cycle, which would be a phenomenal historical buy if it happens.

The 50-day moving average is at $1235 as well, so the market continues to be bullish. A long-term buying signal was activated when the market traded through $1235. In examining the yearly cycles we published on October 10, 2017, based on the beginning of the 12-month cycle or 360-day cycle that started on September 28, 2017, the market at $1288 continued to close above the long-term 50-day moving average for the yearly 360-day cycle of $1253. The market continues to maintain a bullish position that the market is trading above the average price for the year of $1253. We have identified the average prices of $1253 to $1264 as the long-term signals align themselves with the intermediate- to short-term signals. It appears that $1264 is a pivotal point to watch and to see if the market is able to break this level of support. If the market breaks this level of support, then it would validate and confirm what the 18- and 9-year cycles are indicating. A close below $1264, open possibility of a test of $1166 to $1044 using the long-term to intermediate VC PMI indicators. Our report published on October 10 indicated that the market closing at $1288 would mean that the extremes above the mean of $1298 to $1300 would be tested.

My opinion is that the market continues to build a very strong bullish foundation as we trade in the $1264 to $1300 range. A breakout from either of these levels would indicate an acceleration to the next price fractal. A break below these levels would indicate a move to the downside. The strategy, in my opinion, is to buy into the demand levels and trade the market from the long side as the probabilities are far greater for the market to revert back to the mean on the intermediate- to long-term basis, which projects prices in gold all the way up to $1386 to $1400.

GOLD WEEKLY S&D LEVELS

Courtesy of ema2tradelivesignals.com

GOLD WEEKLY S&D LEVELS CHART


Silver Ready to Rise

We forecast that the average silver price next week will be $17.05. The first level of the extreme above the VC PMI mean is $17.27 and the second level is $17.56. The first level of demand or support below the VC PMI mean of $17.05 is $16.76 and the second level is $16.54. Going back to our October 28 report, we can see the same pattern formation; that the lows were made on the 27th of October at $16.60 or $16.61, which is the area that is serving a strong demand area all the way through this time period.

We use the 9-day moving average as one filter for determining the average price for silver. The market closed at $16.99 Friday, which is above the 9-day moving average. This confirms that the trend momentum continues to be bullish.

The second filter we use to determine supply and demand levels is the weekly VC PMI, which is $17.05 for the coming week. The market closed at $16.99, which is below the weekly VC PMI and is a bearish sign. Therefore, we are coming into this week a bit bearish sentiment. But the VC PMI provides an alternative; if the market reverses or goes through $17.05, it would negate this bearish momentum to neutral. Conversely, a second close above $17.05 would activate the long-term bullish momentum once again.

Therefore, $17.05 is the key pivot point for the coming week. From that point, the VC PMI provides a structure above and below that mean with specific prices to execute your buys or sells. If the market reaches above the mean of $17.05, the VC PMI recommends to start taking profits at $17.27 supply levels or at a second level of $17.56. If the market closes below $17.05, it would be a bearish signal and would open the possibility that unless the market returns above $17.05, the demand levels of $16.76 to $16.54 could be tested. If that happens, the VC PMI recommends that you go long at those levels starting at $16.76 and put a stop at $16.54. If the market comes back up through $16.76, you can adjust your stop to $16.76. If the market goes through $17.05, I recommend taking profits on your long positions as the market reaches the sell 1 and sell 2 levels of $17.27 to $17.56.

SILVER WEEKLY S&D LEVELS

Courtesy of ema2tradelivesignals.com

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.



Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.