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Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up!

For years, many Gold Bugs (investors who’ve been advocating buying Gold and Silver at low prices as a hedge against future global economic risks) were shunned as conspiracy theorists and nuts. How could these people believe Gold and Silver were solid investments when the Global equities markets were rallying 5% a year consistently – what could go wrong?

Over the past two weeks, I have personally received multiple phone calls and emails from friends and associates asking how these people can suddenly ”buy physical metals”. In one case, this individual was purchasing Airline and Food Services stocks in late February thinking this move would be short-lived and telling me how the airlines would recover quickly after this is all over.  Now, that person wants to know my secret contacts for buying physical metals.

If you know any Gold Bugs, you know we’ve built relationships with suppliers, friends and other Gold Bugs throughout the year. Believe it or not, I can still buy physical metals from a few of my closest associates in the industry. Eric Sprott is a fan of my precious metals forecasts and talked about my work a few times publicly. Eric owns SprottMoney.com. the other source is SDBullion.com. Both of these are my most trusted sources for buying physical gold and silver, I have never had any issues with them and customer support is top-notch!

Yes, the prices have begun to skyrocket a bit – Silver especially.  But I can still buy physical metals because I have a deep resource of friends and suppliers.

What’s going to happen over the next few weeks is that more and more average people are suddenly going to realize they should have been buying metals as security against risk.  Paper metals are going to explode as well, but physical metals will demand a premium that is much higher than paper/spot price. Right now, one ounce of Silver is going for about $21 to $25 per ounce in physical form (depending on my sources).  The current SPOT price of silver is $14.50. That means the premium for physical Silver is between +45% to +75% right now in the open market.

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DAILY GOLD CHART

This Daily Gold chart highlights the upside Fibonacci price targets using our Adaptive Fibonacci Price Modeling system.  We believe the next upside price target for Gold is $1825. A higher upside price target is visible on this chart near $1950 and we believe Gold prices will reach this level eventually.  But we believe the current $1825 level is the immediate target.  This would represent an immediate +10 upside price advance and would establish NEW HIGH prices for the past 9 years.

SILVER DAILY CHART

This Silver Daily chart also highlights our Adaptive Fibonacci Price Modeling system and shows an upside price target of $17.25.  Remember, the current physical demand for Gold and Silver has skyrocketed over the past 2+ weeks. The Spot price is really not indicative of the open market price of physical at the moment.  If Spot Silver moves to $17.25 as we predict, that would be a +19% upside price advance.  If Silver advances to $18.25, that would be a +26% upside price advance.

You should also take a look at our silver chart from 1999 and what happened then, and should happen again now as well.

Silver Bugs are loving the setup right now because they know the pattern that sets up in the Metals market when a crisis hits.  First, Gold begins to rally faster than Silver and the Gold to Silver ratio spikes higher.  Then, once the shock-wave of the market crisis subsides, the metals begin a fairly usual price advance where both Gold and Silver advance – in unequal forms.  This is when the real fun for Gold & Silver Bugs begins.

GOLD TO SILVER WEEKLY RATIO CHART
THE SILVER LINING

Take a look at this Gold to Silver Weekly Ratio chart.  This chart measures how much one ounce Silver it takes to purchase one ounce of gold at current prices.  Notice that spike in the ratio back in 2008?  That was the spike in gold prices relative to Silver prices as the top formed in 2008 and the “shock wave” struck global investors.  What happened?  Everyone tried to pile into the Gold trade and ignored Silver for about 6+ weeks.

Then what happened to the Gold to Silver Ratio?  It COLLAPSED from levels near 85 to a bottom hear 31.  That means the price of Silver advance almost 3x faster than the price of Gold over that span.  In order for the ratio to fall from near 90 to levels near 30, that indicates a very expansive price increase in the price of Silver.

Now, take a look at what has happened just recently in the Gold to Silver Ratio…  another massive price spike.  This time, the spike reached levels near 120 (Yikes).  Can you guess why Gold and Silver Bugs are so excited right now? If another price advance takes place in precious metals which is similar to the 2008~2011 rally, Gold may see a 300% to 500% rally and Silver may see a 450% to 900% rally over the next 2 to 3 years.

View chart by TradingView.com

This is no joke.  Physical metals are why Gold and Silver Bugs believe the value of having it in your hands is much better than owning an IOU from a broker or bank.

Get ready for some incredible price moves in the metals markets and congrats to all the Gold and Silver bugs out there.  Our analysis says our patience and accumulation of physical metals will soon pay off in a big way.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor with any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal this week!

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Transportation Sector Crashed Hard and What it Means

The Transportation Index, a common measure of economic optimism or pessimism, collapsed very early in trading after the Martin Luther King holiday (January 20, 22020).  We found this very informative because a rotation like this suggests optimism may be waning by global investors and future expectations of growing economic activity may be reverting to more realistic expectations headed into a US election year on top of the US political circus.

When we take a look at these TRAN charts, below, pay very special attention to the historical upper range of price activity over the past 20+ months and you’ll see why we believe a top formation/setup near these current levels in the TRAN could be a very strong topping pattern for the US and Global markets.

DAILY TRANSPORTATION CHART

This Daily Transportation chart highlights the immediate rotation that is setting up a sideways price channel.  The range between 11,250 and 10,450 has established a moderately strong sideways price channel going back well over 3+ months in the Transportation Index.  The broader price channel, between 11,250 and 9,700, extends well over 8+ months.  Beyond that, we have a rotation going all the way back into 2018, between 11,600 and 8,650, that establishes a very broad sideways price channel.

The Transportation Index has been trading within this sideways price channel over the past 20+ months as global investors attempt to determine the future expectations for the US and global economies.  If global investors believe the economy will accelerate as consumers become more active, then the Transportation Index will rise above the 11,800 level on an upside breakout move.  If global investors believe the US and global economies will contract before experiencing any further advance, then the Transportation Index will likely fall to levels below 10,400 – possibly lower.

The recent downside rotation in the TRAN suggests global investors and skilled traders are not expecting the economy to continue as it has over the past 6 to 12+ months – as the US stock market.  The melt-up in the US stock market was a result of global capital attempting to take advantage of a stronger US Dollar and continued price appreciation in the NASDAQ and various US stock sectors.  Even though the underlying economic data and fundamentals may not have changed, it was still advantageous for global investors/traders to play the “melt-up” because it provided the opportunity to gain on two fronts – US Dollar gains and US share price gains.

If this massive “capital shift” trade is unwinding, in part or in full, then we will start to see weakness in the Transportation Index and likely the Mid-Caps as global investors try to pull away from risks in the US stock market.  If the Transportation Index falls below 10,450, then we need to get ready for a potentially bigger downside price move across the global markets.

WEEKLY TRANSPORTATION CHART

This Weekly TRAN chart highlights our Adaptive Fibonacci price modeling system which has drawn the GREEN and RED “trigger levels” above and below the current price action.  It is doing this because the TRAN price action has not defined any real price trends recently – staying within the sideways price channel.  The price must either rally above 11,450 to begin a new bullish price trend or fall below 8,990 to initiate a new bearish price trend.  That means a downside price rotation may support a -2000 point decline from current levels before initiating a continued downside Bearish global market trend.

It is time to really start paying attention to what happens with the Transportation Index.  First, we have to watch the 10,400 level.  Then we have to watch the 9,700 level.  If both of those fail, then we have to watch the 8,990 level as the final “trigger level” for a new global market bearish trend. We are a long way away from that moment right now, but it appears the Transportation Index has started to revert back to the downside and we are alerting our friends and followers to be aware this rotation may be a very timely warning of a new global market top in the making.

UTILITY SECTOR WARNS OF BIG MONEY
IS EXITING THE MARKET

Utility stocks have been on fire ripping to the upside and they tend to lead precious metals and then bonds so I am starting to get excited for our portfolio.

We locked in 10% the 3rd quarter of our SSO position today, we still have 25% of that initial position left but our exposure to equities is now very small. All the other asset classes like high yield bonds, gold, and utilities are pointing to a correction in the stock market.

You can see which markets do well at various stages of risk in the market using our custom market gauge we have been developing. This is one of the new trading tools have been working on.

This gauge will automatically update live with the markets using all of our analyses. Its a really exciting new tool we plan to make available in the next 30 days for our subscribers.

BIG MONEY FLOW GAUGE
20-40 DAY MARKET PRICE CYCLE

TheTechnicalTraders.com Market Gauge

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Chris Vermeulen
www.TheTechnicalTraders.com