Excerpted from the October 2 edition of Notes From the Rabbit Hole, NFTRH 725:
Gold & Silver
Gold and silver (monthly chart) continue in the cyclical bear that started in mid-2020. I had originally (and incorrectly) projected a Cup & Handle for gold that had to be revised to a double top when the 2022 high failed to gain blue sky. I’ve left the Cup drawn on the chart but that is no longer a handle of any sort. It’s a mess, actually.
The next technical target for gold is support in the 1500s per this Sept. 15th update [password protected]. Also note that the update included an extreme downside below 1300. While not overly likely (IMO), that would put a hard test on the bull market, which was indicated when gold took out the 1378 “bull gateway” (the bull/bear line shown below) in 2019.
As for silver, it continues to hold important long-term support at/around 18 after making a quick breakdown and reversal.
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The precious metals complex is in a positive risk/reward situation, but that is different from a situation imminently ready to resume a bull market. It’s a process. A long and grinding one. Gold, silver and the miners have led the broad bear market by a country mile (the bear cycle is now in year 3) and the question remains whether or to what degree a final decline will manifest prior to bottoming.
That question could be answered by the answer to another question: Have enough inflation-centric bugs been exterminated (or at least cleaned out of the investor base) yet?
This excerpt was preceded in #725 by a couple of still-bearish macro indicators for gold to go along with Friday’s public article highlighting some developing positive ones. The excerpt was followed by a big picture technical view of HUI and review of the correction targets we are operating to.
Frankly, this report served to tamp my greed back down a bit and affirm my patience as well. I am often a different investor immediately after writing a weekend report than I was before it.
The rest of NFTRH 725 was very helpful to me personally, and that goes well beyond the precious metals. We are developing a thesis that would surprise a lot of 2022’s angst ridden broad market herds if it plays out.
