Gold and Silver moved lower early on June 2nd and
3rd. Our research team
believes this is a “Washout Low” price rotation following a technical pattern
that will prompt a much higher rally in precious metals. This type of washout price rotation is fairly
common before very big moves after Pennant/Flag formations or just after
reaching major price trigger levels.
With Gold, a sideways Pennant/Flag formation has been setting up near our GREEN Fibonacci Price Amplitude Resistance Arc. We believe the downward price rotation recently is a perfect setup for skilled technical traders to take advantage of lower entry price levels. The GREEN Fibonacci Price Amplitude Arc will very likely be breached over the next 5 to 10 trading days and the price of Gold should rally well above $1850 in the process. We believe this Washout Rotation is a process of running through the Long Stops just below recent price activity that will end with a defined upside price rally over the next 2 to 5+ weeks.
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Silver has set up a completely different type of price pattern – a true Double-Top pattern. The downward price rotation recently in Silver is indicative of a weaker reaction to this massive resistance pattern and Double-Top. The likelihood that Silver will find support above $17 and mount a further upside price rally over the next 2 to 5+ weeks is still very strong. After the deep downward price collapse in Silver took place, just like what happened in 2009 and 2010, the upside potential for Silver is still massive – likely targeting $65 per ounce of higher.
This current Gold to Silver Ratio Monthly chart highlights
the recent collapse in the ratio level as Silver rallied from near $12 towards
current levels near $18. A similar spike
in the Gold to Silver Ratio took place in 2008-09 – just before the broader
market collapse in the US and Global markets took place. This happens as the initial reaction to risk
in the global markets pushes Gold prices a bit higher while Silver, the often
overlooked store of value, typically declines in value.
Once the price of Silver starts to rally, pushing the Gold to
Silver ratio below 60 typically, both Gold and Silver start to align in price
and begin to rally together. The current
level of the Gold to Silver ratio is 94.9.
This suggests that both Gold and Silver have quite a way to go in terms
of reaching the “alignment phase”. Our
researchers believe Gold will rally above $2100 to $2400 and Silver will rally
above $40 to $50 before the two metals align and begin to rally together in
almost equal strength.
Concluding Thoughts:
Pay attention to what happens to precious metals over the next 10 to 15+ days. If our research is correct, both Gold and Silver will rally higher by about 7.5% to 14% – setting up new price highs for both metals. When the washout pattern completes, usually a fairly aggressive price trend begins where new price highs are established fairly quickly. Get ready, this should be a really nice upside price swing in precious metals over the next 6+ months or longer.
The next few years are going to be full of incredible opportunities for skilled traders and investors. Huge price swings, incredible revaluation events, and, eventually, an incredible upside rally will start again.
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