September 20, 2022
By Mish Schneider
Written by Mish Schneider
With the Fed about to announce its next interest rate change, it's a good time to check out the condition of gold (GLD).
After all, gold is a tried-and-true safe haven asset and has historically been used as a hedge during times of uncertainty to protect against inflation and stock market volatility.
Gold is also sensitive to interest rates and the trend in the U.S. dollar.
When analyzing the trend or a trade in gold (GLD), it's a good idea to also look at silver (SLV) because trends in these precious metals tend to be more reliable when they are in synch.
Currently, gold and silver have very different chart patterns, but they may be ready to move in the same direction. However, there are a few fundamental and technical reasons silver may be setting up as a better post-Fed meeting trade.
One of the important fundamental differences between gold and silver is what drives demand.
Almost all the gold that has been mined to this day is still here, and its use is primarily limited to currency, portable wealth, and jewelry. Only about 11% of gold is consumed for commercial use.
Silver on the other hand, is more widely used as a commercial metal. In fact, about 50% of silver on the market is used commercially.
As a result, GLD and SLV can react differently to economic forces like interest rates, inflation, and growth expectations.
More importantly for trading, there are compelling technical reasons why silver may outshine gold in the coming weeks and months. For example:
If SLV and GLD both break higher, such momentum could create a bullish trading opportunity in both, however, SLV looks better positioned for an easier ride higher.
We'll be watching these patterns closely for the MMM Portfolio.
To learn more about how to trade with us, please reach out to Rob Quinn, our Chief Strategy Consultant, by clicking here.
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Bloomberg BNN 09-16-22
S&P 500 (SPY) 380 a big area of support to hold. A break above 390 relief
Russell 2000 (IWM) Still holding the 177 support area so expect anything
Dow (DIA) 301-310 is the range now-until that changes-this still is a trading range market
Nasdaq (QQQ) Tuesday trading range inside Monday's range-speaking of trading ranges
KRE (Regional Banks) Another inside trading range only this one over the 50-DMA making it a good outperformer
SMH (Semiconductors) Also an inside trading range to Monday making 200-206 key range
IYT (Transportation) 213-220 the range and where we might see the worst or not-too-bad impact
XRT (Retail) The consumer is definitely in the line of fire-62.15 if clears is a relief. Under 60.00 not so much
Every day you'll be prepared to trade with: