Commodity Trade Mantra: Trillions of Dollars will soon be seeking Safety & Security in Precious Metals

September 26, 2019

Article by Chris Vermeulen in Commodity Trade Mantra

Just as we predicted, precious metals are setting up another extended momentum base/bottom that appears to be aligning with our prediction of an early October 2019 new upside price leg.

Just as we predicted, precious metals are setting up another extended momentum base/bottom that appears to be aligning with our prediction of an early October 2019 new upside price leg.

Recent news of the US Fed decreasing the Fed Funds Rate by 25bp (0.25%) as well as strength in the US stock market and US Dollar has eased fears and concerns across the global markets. These concerns and fears are still very real as the overnight credit market continues to illustrate. Yet, the precious metals have retraced from recent highs and begun to form a momentum base which will likely become the floor for the next move higher.

The one aspect that many traders don’t grasp just yet is that the US market could continue to push higher, just as they’ve done over the past few months, while precious metals continue to push higher, just as they’ve done over the past few months.

The reality is, the fear and greed driving the upside price move in metals is related to foreign market concerns (China/Asia, Europe/EU/BREXIT, Arab/Iran/Israel, and others).

The true fear is that some type of war or economic event will start while the global markets are fragile. The recent news that the overnight Repo Market is seizing is another indication that the global credit market is very fragile.

This Gold Daily chart highlights the momentum base setup between $1480 and $1525. Any entry below $1500 is a relatively solid entry point for skilled technical traders. The next upside target based on our Fibonacci price modeling tool is $1795. Thus, the real upside move potential at this point is another 20% for Gold.

Silver is setting up a similar momentum base pattern after reaching levels just below $20 per ounce. We still believe the early October breakout date is relevant and we believe the next upside target will be between $21 to $24 in Silver. Any entry level below $17.60 is a solid area for skilled technical traders preparing for the next upside price leg.

To read this article in Commodity Trade Mantra in its entirety and view the relating charts, click here.

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