Silver has a BIG rally but the real test lies ahead

silver
From Taylor Dart: Gold (GLD) was the shining star by a mile in Q2 of the two most sought after precious metals, but silver (SLV) looks like it might finally be ready to join the party.
NYSE:GDX July 18, 2019 1:56pm

What the Silver-Gold Ratio Nearing the Modern-Day High Means For Investors

Can Gold Replace The USD As Reserve Currency?

gold bars coins photo
One of the stories gold bulls like to tell is the decline of the US Dollar as the world reserve currency. This story usually runs along the following lines: The US is overspending massively, thus the US is a debtor nation. Debtor nations don't last forever, thus the US is heading for collapse. When countries collapse, their currency becomes worthless. Since gold has never been worthless in the history of modern civilization, trade Dollars for gold now so you'll preserve value heading into that uncertain future. That's it in a nutshell, isn't it? When the cow excrement hits the rotating blades you want to hold on to the value you've created in the past.  And you want whatever the best form of money is.  And because gold has always preserved its value well during such crises, you should choose gold.  Simple.  Gold will protect you against the collapse of your country. The modern reality is more complex than that.  In today's world, there is more than one country, and countries don't all collapse at once. When one country collapses there are other countries still standing, and that provides a framework of support that can be used to set your country up again. New deals can be signed, loans can be made with international money, banks can be restarted and linked into the world banking network - it's pretty amazing.  We'll see with Venezuela how quickly this can happen, once the question of who's in charge there is settled. Plus there's the inconvenient fact that gold is difficult to fractionalize.  That means a hunk of gold is often worth more than you need for a purchase.  Imagine wanting to buy a single shopping bag of food in a time when the local currency is worthless, and you are holding your bar of gold. How do you shave off "the right amount" for your purchase?  Even a dime-sized gold coin is worth hundreds of dollars today, much more than your typical food purchase. So the reality is that gold is indeed a great store of value, but there are still issues with using it directly as currency.  What we really need is currency we can both fractionalize and trust - thus the idea of gold-backed currency.  Or, as it's better known, a gold standard.
Your Gold Enthusiast is not saying this is the best answer, however. It is possible to be a gold bug AND realize there is a better solution than going to 100% gold-backed currency. What we are looking for is currency whose value we can trust, and it doesn't have to be 100% gold backed.  All that's needed is a good percentage of gold backing. Whether that's 25% or 50% or even 10% we don't know, we'll leave that to others to debate while we spin some numbers and do some pondering. What we do know is that the US is heading deeper down the rabbit hole of debt.  That's not good. And especially it's not good that two of the other superpowers in the world - China and Russia - are digging themselves slowly out of their own debt rabbit holes, AND accumulating gold.  They are putting their currencies in positions of superior economic strength compared to the US Dollar. And the rest of the world is watching. Both countries are also forming trading alliances with other countries that are not based in US Dollars. China has both their own gold- and petro-dollar based trading contracts.  Russia has been trading natural gas with other countries for years as well.  And let's not forget the EU, which has the purpose of making trade between member countries possible without relying on external currencies or markets. This is all leading to a new multi-polar world, where there are several large superpowers (if you will). Just 10 years ago the US could say it was the world's biggest superpower.  Now China is a viable contender for the crown, and while Russia is much smaller than the US or China it has positioned itself as a rising economic superpower. While the EU is currently caught up in the Brexit battle with England it is also not out of the discussion - just distracted at the moment. Your Gold Enthusiast is watching all this happen and is fascinated by the idea of a multi-polar world. It is a step closer in evolution to everyone getting along, so that is good.  There are still borders and differences, but wars are increasing being fought with sanctions and tariffs rather than shooting, and that's a step in the right direction. Right now the US Dollar is still the #1 currency in world transactions.  It's dominance is shrinking however, and we may yet see the day when gold prices shoot up in US Dollar terms as it already has in many other world currencies. Another writer wrote this very good article about this possible multi-polar world, looking at whether it could be backed by gold. You'll have to read it to discover his answers, and his discussion is well worth understanding. Because of all the variables I don't think anyone can make exact predictions; what we're after is the direction things are likely to go, and where the decision points are that tell us if we're right or not. Why does all this matter?  Because as time passes the future has a way of becoming the present - and then we're living in it. Signed,
The Gold Enthusiast DISCLAIMER: No specific securities were mentioned in this article.  The author is long the gold sector via small positions in NUGT, JNUG, a few junior miners, and covered calls on part of the NUGT position. He has no plans to trade the shares in the next 24 hours.
About the Author 
For 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.
NYSE:GDX July 17, 2019 11:05am

Gold: What Is Sentiment Telling Us

gold bars coins photo
Gold (GLD) has enjoyed a huge run off of its June lows, thanks to a complete U-turn in Fed Policy. Initially, 2019 was expected to be the year of three rate cuts and a continued effort to cool off inflation, but Powell has walked back all of his comments, and 50 basis points of cuts before year-end are now on the table. While this is a boon for the stock market (SPY) that was dealing with recession worries up until just recently, it's an even bigger help to the yellow metal. The good news for the bulls is that this spike higher in gold has two significant differences between past $100/oz moves higher since 2016. The first is that this move is showing follow-through as gold is not melting off of its highs like it has been accustomed to doing in the past. The second and more meaningful change of character is that sentiment has heated up to extreme levels, and while this may seem like a bad thing, it's actually the complete opposite. I have worked with Daily Sentiment Index [DSI] data for several years and found some interesting nuances that are counter to what common sense might be. I constantly see some analysts harping on the fact that high readings of sentiment are bearish, and low readings for sentiment are bullish. While this is generally true, it is essential to know where these readings are coming within a general trend. The 2011 top in gold occurred with several readings above the 95% level for bullish sentiment, telling us that more than 19 out of 20 market participants were bullish on gold for a full week near the $1,900/oz top. However, this type of bullish sentiment was occurring after an accelerating three-year uptrend, and therefore, this final spike sentiment was buyers capitulation. However, when we get these same type of readings after a multi-year consolidation, this sentiment is telling us something completely different. In this case, it is telling us that market participants are finally warming up to the metal again after a frustrating and lengthy period of disinterest the past few years. The point being is that the 5-year high in bullish sentiment for gold we registered on June 24th was the best thing that gold bulls could have asked for. As can be seen in the below chart, both the December 2017 spike to 91% bulls and the Q1 2019 spike to 90% bulls were unable to eclipse the prior sentiment high of 95% bulls. So what else can this chart of Daily Sentiment Index tell us? As we can see from the red line on the chart, which is a sentiment moving average, gold is trending higher and above its vital sentiment moving average. This is a positive sign as it shows that more bulls are entering the market on an intermediate-term basis.  When more bulls enter a market after a period of disinterest, this typically leads to any sharp dips being bought up quickly. This moving average is also nowhere near overbought at current levels near 60% bulls. As long as this moving average can stay away from the 80% bulls level, the gold bulls don't have anything to worry about here from an exuberance standpoint. Based on this new multi-year high in bullish sentiment that accompanied the recent $1,365/oz breakout, I would expect the most likely scenario is for gold to build a new base between $1,350/oz and $1,450/oz. Breakouts from multi-year bases typically either correct through time or price, and thus far it's looking like gold might end up correcting through time.  This would be the best-case scenario as it would allow the metal to build a new launchpad above its prior multi-year resistance.I would consider any pullbacks down to the $1,370/oz area to be buying opportunities, especially if these dips are coupled with bullish sentiment falling below the 50% bulls level. As long as gold defends the $1,325/oz on a weekly close, I would consider any pullbacks to be buying opportunities. The next real resistance for gold doesn't come in until $1,560/oz. ______________________________________________________________________________________
About the Author  Taylor Dart has over 10 years of experience in active & passive investing specializing in mid-cap growth stocks, as well as the precious metals sector. He has been writing on Seeking Alpha for four years, and managing his own portfolios since 2008. His main focus is on growth stocks outperforming the market and their peers. In addition to looking at the fundamentals, he uses different timing models for industry groups, and scans upwards of 2000 stocks daily to identify the best fundamental opportunities with the timeliest technical setups.  Taylor is a huge proponent of Trend Following and the "Turtles" who enjoyed compound annual growth rates of over 50 percent per year.
NYSE:GDX July 16, 2019 6:04pm

Is Silver Really a Better Buy Than Gold?

NYSE:GDX July 11, 2019 5:42pm

Gold flashes a warning signal for currency markets

gold %dollars
NYSE:GDX July 10, 2019 10:37am

Technically, gold charts look very bullish

gold bars 2019
NYSE:GDX July 9, 2019 10:55am

Healthcare sector in focus during the first Democratic primary debate

Healthcare
From Kevin Breuninger :
KEY POINTS
NYSE:GDXJ June 27, 2019 11:23am

Gold Miner ETFs soar amid political uncertainty

From Timothy Smith:
NYSE:GDX June 3, 2019 12:33pm

Analyst predicts gold prices rising to $3,000-$4,000

gold bar closeup
From Sarah Abu-Shaaban:  (Kitco News) - Amidst market pessimism, one expert sees gold prices climbing to record heights of $3,000-$4,000 an ounce in the future."When gold launches higher, they're all going to be winners," said Daniel Oliver, founder and managing director of Myrmikan Capital, referring to gold investors.
NYSE:GDX May 7, 2019 1:49pm

World Gold Council says central banks bought 68% in Q1 2019 than last year

gold bars
From Allison Brickell: Central banks are stocking up on gold. According to the World Gold Council, net buying by central banks reached 145.5 tons in the first quarter of 2019. That's a 68% increase over last year. And it's the most gold central banks have bought in the first quarter since 2013.
NYSE:GDXJ May 6, 2019 5:53pm

Gold rallies, reaches a 1-week high

gold bars
From Reuters: Gold rose to its highest in more than a week on Tuesday as the dollar and equities weakened after the International Monetary Fund cut its global economic growth forecasts for the year, with increased buying by central banks lending further support.
NYSE:GDX April 9, 2019 1:56pm

Why caused gold prices to rise over $1,300 today?

gold bars
From Simon Dawson: Gold rose 1 percent to a more than one-week high on Monday through $1,300 an ounce as the dollar slipped and equities paused a recent rally.
NYSE:GDX April 8, 2019 12:25pm

Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular


From Our Partners


Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories