Silver Has Big Day: What’s Next For Precious Metals?

Michele Schneider
silver price breakout comparison gold bullish precious metals investing february 18 year 2020

Before we analyze and discuss silver prices and the precious metals, I want to share a quote from my weekend update:

In Transportation IYT, Friday’s bearish candle and breakdown back into a caution phase gives us two very reliable patterns to watch.... IWM must hold 167 and IYT must get back over and close above 195.51. 

The Russell 2000 ETF (IWM) did hold 167. With Friday’s low 167.34, it even managed to hold that level. And The transportation Sector ETF (IYT) could not clear back over the 50-day moving average or 195.61. However, IYT closed green.

So, even with all the continuing news from China, the belief that the market won’t quit persists.

However, since stagflation is a word I kick around a lot, the move in precious metals and bonds got me thinking…

Today’s featured chart is the Silver ETF (SLV).

The bottom chart is the ratio between silver and gold prices.

Today, Gold (GLD) saw levels it has not seen since 2013.

Gold miners finally took out the trading range of the last 10 trading days.

Silver crossed the shorter-term moving average (red) that suggests the possiblity it will start to play some serious catch up to gold.

The silver chart on top, also represents the breakout after a similar period as the miners had of consolidation.

What does the action in equities and the precious metals imply?

Interestingly, precious metals have help from the low bond yields.

Yet they are ignoring the strong dollar.

In a stagflationary environment, the dollar would weaken, as would stocks, while gold, silver, miners and some soft commodities would strengthen.

Remember sugar as the secret weapon to determine if inflation is coming?

Well, that has moved up a lot, so today the metals move is yet another cautionary tale to equities bulls.

Furthermore, as stagflation is barely mentioned in the financial media, should that sentiment change, bonds, typically safe when stocks turn down, will not look good.

On July 12-13, 2020, I will be speaking/teaching at the Modern Traders Summit in Philadelphia. Only 5 speakers, which means attendees will get a lot of attention, I hope to meet many of you there:

S&P 500 (SPY) the 10 day moving average at 334.67 needs to hold. $SPY is in La La Land. 

Russell 2000 (IWM) the 10 day moving average at 166.87 needs to hold.

Dow Jones Industrials (DIA) Closed right on pivotal price support. 

Nasdaq (QQQ) Talk of La La Land-new all-time high today. 231.67 support to hold 

KRE (Regional Banks) 56.12 is price resistance and 54.05 is major price support.

SMH (Semiconductors) Gapped lower but held price support at 148.00

IYT (Transportation) Confirmed caution phase. 195.61 to clear or the bulls should be careful.

IBB (Biotechnology) 123.48 is the price to clear.

XRT (Retail) Looks better on the weekly chart but has to clear 45.24 on the daily chart.

Volatility Index (VXX) 14.20 is the first area of interest.

Twitter: @marketminute

The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.