What Should Investors Do? Buy Gold And Silver Assets

Summary

• For gold and silver, the VC PMI recommends buying on corrections.
• Crude is in a neutral position and we are waiting for a clear up or down signal.
• Soybeans have activated a buy signal, wheat is neutral to bearish, and the E-Mini S&P is neutral to bullish. Bitcoin also activated a buy signal.

The Daily VC PMI Early Bird Update

The Daily VC PMI Early Bird Update for August 3, 2018 offered a look at seven markets based on the AI of the Automated Variable Changing Price Momentum Indicator (VC PMI). For gold and silver, the VC PMI recommends buying on corrections. Crude is in a neutral position and we are waiting for a clear up or down signal. Soybeans have activated a buy signal, wheat is neutral to bearish, and the E-Mini S&P is neutral to bullish. Bitcoin also activated a buy signal. With a mountain of global debt and a US policy of raising interest rates, payments on debt are going to increase, crippling already ailing economies. Gold and silver appear to be excellent assets to hold during such a perilous time.

Gold: Buy Signal

Gold traded last at $1225.30, up $5.30. The market has come down to the buy 1 (B1) level of $1213 overnight by making a low of $1212.50, which activated the buy signal. The market then closed above $1222, activating the sell 1 (S1) level of $1228 and the sell 2 (S2) level of $1237.

Silver: Buy Signal

The silver market is at $15.48, up 9.5 cents. The market overnight came down to a low of $15.25, right into the B1 area of $15.29 and B2 of $15.20.

“It reverted back up at about 1:15 am and kicked in a buy signal at $15.29,” Equity Management Academy CEO Patrick MontesDeOca said. “The market met the average price target of $15.39 and the S1 level of $15.48. The S2 level is $15.58.”

Crude Oil: Looking for a Clear Signal

The crude oil market is at $68.58.

“The market is in a neutral zone,” MontesDeOca said. “It is trading above the average price of $68.41 into the S1 level of $69.91. We are looking for the market to give us a clearer direction. Right now it’s neutral with an average price of $68.41.”

The B1 level is $67.47, B2 is at $65.97, S1 at $69.91 and S2 at $70.85.

Soybeans: Buy Signal

Soybeans last traded at $8.9050. The market has come down to the B1 level of $8.87. The average price is $8.96. The B2 level is $8.8 and the B2 level is $8.77.

“The soybean market has activated a buy signal at 6:30 am above $8.87,” MontesDeOca said. “If you’re long and want to use a short-term stop on a close below 887, we recommend using it. Your target is $8.96. The target above S1 is $9.12 and the S2 is at $9.21.”

Wheat

Wheat is trading at $5.6050.

“Wheat is neutral to bearish,” MontesDeOca said. “It is trading below the average of $5.70.”

The B1 level is at $5.49, B2 is at $5.36. The S1 level is $5.83 and the S2 is at $6.05.

E-Mini S&P: Neutral to Bullish

The E-mini S&P traded last at 2830.75, up 250.

“The market is in a neutral to bullish zone after making a low of 2791,” MontesDeOca said, “between the B1 level of 2803 and the B2 level of 2077.77. Closing above it yesterday at the B1 level of 2803, mean that it met the target of the average price of 2816, trading above that average.”

For the E-Mini S&P, the S1 is at 2843 and the S2 is at 2857.

Bitcoin

Bitcoin traded last at 7440. The average price is 7567 with the B1 level at 7428 and the B2 level at 7306.

“The market has activated a buy signal from the 7306 level at about 9:30 last night,” MontesDeOca said. “So we met the target of the B1 level at 7428 and it activated a buy signal above 7428 with a target of 7567.”

The S1 level is at 7689 and S2 is at 7828.

Strategy

Over the past few weeks the gold and silver markets have challenged traders who are on the long side as gold traded into the $1210 and $1215 levels and silver traded in the $15.25 to $15.30 levels.

“These levels have been tested now for about eight weeks,” MontesDeOca said. “The VC PMI is expecting a termination of this correction by the ninth week. When we look at the VC PMI signals that are being introduced from the B1 or B2 levels, the markets are reverting right back up to the average price almost every time they go down to the B1 and B2 levels. We are beginning to see a transformation from a bearish market to a neutral to bullish scenario for gold and silver.”

When the prices in an industry get taken down as the silver and gold markets have in the past 30 days, where we have seen almost a $100 move in gold and almost a $2 move in silver, it is an indication of the underlying artificiality of the price. MontesDeOca agrees.

“Most people forget that there is a real market underneath the paper prices that can be manipulated by the powers that be based on the buying power that they have, particularly in the paper silver market, which is thin,” MontesDeOca said. “Given all of its industrial, technological, medical and investing uses, including in almost all electronics and in solar panels, we are potentially going to run out of silver.”

The gold/silver ratio is trading at 80 to 1, but the actual ratio of mining silver to gold is 9 ounces of silver to 1 ounce of gold.

“You can see that the market is completely out of whack,” MontesDeOca said. “When the reversion to its natural equilibrium occurs, it’s going to be a fast and furious move, particularly in silver.”

Since 2011, the powers that be have created fear in trading gold and silver. I believe, based on the data we analyze, that the real motive underneath this policy is to support the US dollar no matter what and to keep precious metals cheap. The goal is to maintain the US dollar as the world’s reserve currency.

“The position of the US dollar as the reserve currency is being questioned and tested,” MontesDeOca said, “particularly after 2008 when the real world economy collapsed and we created this synthetic, simulated economy. We are into the ninth year of this cycle and we are just beginning to see what some people call economic recovery, which the Fed is using to justify raising interest rates. I can’t see how a policy of raising interest rates is going to support economic growth.”

Raising interest rates will increase interest payments on the mountain of debt held by governments and individuals around the world. If you do the math, raising interest rates even slightly will quickly increase interest payments for the US more than the value of the entire US defense budget.

“We are venturing into uncharted waters and the risk is far greater than what we experienced in 2008,” MontesDeOca warns. “The Federal government has run out of options to be able to continue to kick the can down the road.”

What should investors do? Buy gold and silver assets.

“I strongly suggest that you continue to add to the gold holdings in your portfolio,” MontesDeOca said. “Depending on your style of trading and goals, dollar average or speculate in futures or buy gold mining shares, but add to your positions. We are about to see something that is a reaction to the underlying pressure that has been going against the normal reversion to the real price discovery in the physical gold market compared to other assets such as crude oil. Be patient, buy on corrections, and add on corrections. This is an incredible opportunity at these levels.”

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. It is for educational purposes only.

Analyst’s 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.