With global equities taking the plunge, bond market turmoil, talk of negative interest rates and a bullish COT Silver Report, the future for Gold and precious metals just keeps getting brighter.
Add to that the threat of Mexican tariffs and the push for a Gold-backed currency in Malaysia and you have the makings of an exciting Weekly Wrap Up.
Eric cheers on the Raptors, chimes in on Gold and answers some of your questions this week on the Sprott Money Weekly Wrap Up.
The US Memorial Day weekend is set up to become a very interesting time for investors. The EU voting is complete and the change in EU leadership may move the markets a bit. China appears to be playing a waiting game – attempting to hold the US/Trump at bay until after the 2020 US elections. This week is certain to be very interesting for traders/investors.
The European stocks moved higher in trading on Monday as the relief from the EU election event and support for auto shares pushed the markets higher. The transition in the EU over the next few months will solidify into a political and social agenda. The EU leadership must acknowledge these future objectives of all parties in order to maintain some level of calm. It is evident that many EU nations are relatively satisfied with the current leadership while others are transitioning into more centrist leadership. The next 4+ years will be full of further transition in the EU.
China is another global issue that is relatively unsettled. We’ve been doing some research with regards to China and the potential future political and economic pathways that may become evident in the near-term future. Our biggest concern is that China has been inflating their economic levels for decades and the true scope of the Chinese economy may be much weaker than everyone expects. If our suspicions are correct and China has been inflating economic levels for many years, then the transition to a consumer/services-driven economy may be dramatically over-inflated and the US/China trade issues could be biting much harder than the Chinese want to admit.
The “Sell in May and go away” market saying may become absolute truth in 2019. Our expectations are still suggesting that an attempt at new market highs may take place before August 2019, but the current market rotation (lower) is setting up a very strong potential for further downside price action at the moment. Our proprietary Fibonacci price modeling system is suggesting the $7294 level in the NQ is key support. Below this level, the NQ could break much lower and potentially target $6850 or lower.
The YM is setting up a similar price pattern with resistance near 25,840. We believe this resistance will push prices lower as we move further into early June. The potential for some type of surprise economic data or Fed/Global market move after this weekend is somewhat higher than expected. There is a lot of shifting taking place throughout the globe and we believe this turbulence will reflect in the US market soon enough.
As of right now, our expectations are that a brief upside price rally will take place over the next 4~7+ days before a continued downside price trend may become evident. Pay attention to the news cycles for key elements that could drive the US stock market lower. We will continue to update you with regards to our proprietary research and expectations. The next 7+ days will likely be nothing but sideways price rotation within a Pennant/Flag formation.
Read our research to understand how this setup coincides with the GOLD price setup and why it is important to understand why July 2019 is so important. Please take a minute to review these recent research posts that focus more on the US Dollar and Gold, and also the July turning point for US Stocks.
4 DAYS LEFT TO GET YOUR FREE SILVER ROUNDS WITH SUBSCRIPTION!
We continue to see money flow into the safe-haven assets like the Utility sector, bonds, and most importantly precious metals. I anticipated this and our XLU utilities ETF taken with members for 4.4% already, and our VIX ETF trade we closed for a 25% last week.
For May I am going to give away and ship out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. You can upgrade to this longer-term subscription or if you are new, join one of these two plans listed below, and you will receive:
SUBSCRIBE TO MY TRADE ALERTS AND GET YOUR FREE SILVER ROUNDS!
Chris Vermeulen
Today, the US increased tariffs on $200B of Chinese goods as the US/China trade deal breaks down. China has vowed to retaliate for the move. The past week has seen the global markets shocked by two items: Iran sanctions and US/China trade breakdown. The markets had been expecting a US/China trade deal to be reached and optimism was quite high – hence the rally in the Chinese stock market and the rally in the US stock market. What next?
Well, we believe this news, as well as future news that will likely hit the markets over the next 3+ months, will continue to prompt the Shake-Out we have been warning about. Depending on how severe these news events are, the rotation in the markets could be quite severe as well.
Our recent analysis suggests that recent lows in the US stock market may be near-term support and that the US stock market may attempt to form a bottom near these lows. Our research shows the Transportation Index is leading this move. We believe the ORANGE Moving Average level, as well as the RED and GREY Fibonacci projection points, will act as a temporary price floor this week and next. The YM could move lower by 100 to 200 points today, retesting these low levels, before recovering near the end of the day.
Gold is showing signs of a potential upside price leg in the early stages, just as we had been suggesting. Our April 21~24 momentum base call from months ago appears to be incredibly accurate. At this point, we are just waiting for the upside price swing to begin. When it starts, the momentum behind this upside move will increase as it will catch the attention of many gold traders and solidify the “fear” aspect of this move.
Silver is still lagging behind Gold – as usual. We continue to believe the real opportunity for a great trade lies in Silver. The potential for a $22 o ~$28 upside price swing on a market breakdown or fear play is still very solid. Headed into the 2020 US election cycle and with all the uncertainty in the global markets, we believe this is the “sleeper trade” of the next 16+ months. When Gold begins to breakout to the upside, Silver should follow about 20 days later.
These new US trade tariffs puts pressure on China to come to the table and develop and honest deal. This is not the old way of slow negotiations with no real consequences. For China, the lack of access to the US market could be devastating in both the short and long run. Skilled traders should not be overly optimistic throughout this weekend. Protect your longs and prepare for more news over the next few weeks. This is the type of market that will make or break many traders.
UNIQUE OPPORTUNITY ONLY IN MAY
On May 1st we talked about the old saying goes, “Sell in May and Go Away!” and that is excactly what is happening now right on queue. In fact, we closed out our SDS position on Thursday for a quick 3.9% profit and our other new trade started Thursday is up 18% already.
Second, my birthday is only a few days away and I think its time I open the doors for a once a year opportunity for everyone to get a gift that could have some considerable value in the future.
Right now I am going to give away and shipping out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. I only have 11 left as they are going fast so be sure to upgrade your membership to a longer-term subscription or if you are new, join one of these two plans, and you will receive:
1-Year Subscription Gets One 1oz Silver Round FREE
(Could be worth hundreds of dollars)
2-Year Subscription Gets TWO 1oz Silver Rounds FREE
(Could be worth a lot in the future)
I only have 13 more silver rounds I’m giving away
so upgrade or join now before its too late!
SUBSCRIBE TO MY TRADE ALERTS AND GET YOUR FREE SILVER ROUNDS!
Happy May Everyone!
Chris Vermeulen