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Precious Metals-Has Anything Really Changed?

June 9, 2024

Mish's Daily

By Mish Schneider

While we never profess buying a falling knife, we do believe that the metals are probably setting up for a buyable dip this coming week.

Why?

Looking at the fundamentals, it seems nothing has significantly changed.

The news story that China paused buying gold after an 18-month buying spree could be nothing more than smart trading.

After all, the dollar rose Friday along with yields, and China has been a seller of both.

Hence, selling the dollar and yields higher whilst buying gold cheaper is timely.

Is China, though, done completely?

Maybe.

However, let’s look at some other factors which have not changed at all.

Geopolitics-in fact, one could say that Russia sending war ships towards Cuba is yet another concerning factor to add to the list of concerning factors.
Government debt-still rising
Government spending-still rising
Freight costs-still high along with sticky service inflation and now, higher wages
AI and EVs-not going away with only more stress inevitable on raw materials

Now add to the list

ECB and Canada cutting rates-de-globalization or just first before the US joins in?
Even higher for longer-that’s nothing new
Weather-with hurricane season upon us shortly, rising sea temps and heat and floods/drought-don’t underestimate Mother Nature

Which means to us that if the fundamentals remain intact, we must go to the charts for market timing.

The gold cash chart goes back to March.

We had said that gold was a hold your nose and buy once it cleared $2100. The high since then is just shy of $2450.

Then, after gold made that high on May 20^th, the next day was an inside day (price remains inside the trading range of the day prior).

That was proceeded by a down day, which put $2450 as a top.

Corrections on such types of chart patterns (brick wall) generally yield a 5-10% drop in prices.

5% is around $2330 and 10% $2200.

Only a move under $2100 would suggest failure and not just correction.

Silver looks better.

Silver futures did not have a reversal top.

Silver did not fail the 50-DMA.

Silver has returned to major support above $29.00

Silver looks compelling this week if holds above $29.50.

Educational purposes only, not official trading advice.

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
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