With the news on geopolitical escalation, soft versus hard landing, disinflation versus reinflation, growth versus value, and credit default versus available disposable income, gold and silver are even more interesting now.
Gold's behavior has been more of sell strength and buy weakness for some time. What has changed is that the swings from lows to highs have narrowed since mid-December. Look at October 2023, when gold's price action brought out the bears. (Not us, we bought on the gap up.) The price ran from $1876 an ounce in futures, or 172 in the ETF (GLD), to peak at $2152 in futures by December 4th. GLD went to around 193.
Since then, gold has ranged between $1987 and $2105. More importantly, if this past week was another low at $2020, then we can see that since last October, the lows are higher, and the ranges are narrower. Plus, momentum has improved, while it continues to remain an underperformer to the S&P 500.
Next direction should resolve very soon.
On January 5th, I wrote a Daily called "Super Cycles Do Not Just Fade Away". The most burning question we get lately is "How will we know when inflation returns?" Our answers:
The Dollar does something more dramatic.Silver starts to outperform gold.Sugar (perfect example of a super cycle type volatility) heads back over 22 cents.Interestingly, none of these scenarios have happened yet. However, silver in and of itself, looks very appealing.
Silver futures have been experiencing narrower ranges as well.
With higher lows since October, the recent support at $22.50 an ounce, if holds, could mean this week is the week we start to see this metal shine. A move above the 2 moving averages would be a start. In cash, a breakout over $24 should do it. In the ETF, that would happen over 21.75.
In the futures, the spot price had a mean reversion in momentum. Should silver get this follow through, the next big event will be if it begins to outperform gold. Then we'll know that this move in gold is not just a flight to safety, but, very possibly, that super cycle might be starting even a bit earlier than we thought.
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Mish gives you a thorough outlook on which areas to invest in for 2024 in just four and half minutes on CMC Markets.
Mish offers her thoughts on a number of commodities ahead of the US CPI data announcement in this appearance on CMC Markets.
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Mish talks how the January effect will reveal itself and her focus on the vanity trade in this appearance on Business First AM.
Mish covers oil, gold, natural gas, silver and sugar, plus teaches you how to use charts to determine short-term trading strategies in this video from CMC Markets.
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On the Tuesday, January 2 edition of StockCharts TV's The Final Bar, Mish (starting at 22:21) talks small caps, retail, junk, and why all three matter in 2024 a lot.
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Recorded on December 28, Mish talks about themes for 2024 to look for, and tells you where to focus, what to buy, and what to avoid depending on economic and market conditions on Singapore Breakfast Bites.
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Coming Up:
January 15: StockCharts TV, January Calendar Ranges
January 22: Your Daily Five, StockCharts TV
January 24: Yahoo! Finance
Weekly: Business First AM, CMC Markets
Mish Schneider
MarketGauge.com
Director of Trading Research and Education