Silver Is The Canary In The Gold Mine - Friday, July 24

Gold

Thursday, July 23, 2020, at 7 am PST.

Gold made a high of $1897.90 early this morning. It's trading last at $1885 last For the monthly Variable Changing Price Momentum Indicator (VC PMI) chart, the Sell 2 level is $1890. Therefore, the high has been close to accomplishing the monthly target.

For the daily VC PMI, the average price is $1862, while the Sell 1 level is $1881 and the Sell 2 level is $1891. These numbers are for day trading. The Buy 1 is $1851 while the Buy 2 is $1832. The market is trading at close to the Sell 1 level, and the Sell 2 level of $1891 fits the monthly target of $1890. So we have a harmonic alignment around $1890 between the daily and monthly targets. The VC PMI’s artificial intelligence identifies this area as a high probability area where distribution of supply may unfold. The market has gone above the extreme level of $1758, which is the average monthly price. The yearly target of $1803 has been accomplished and the annual signal is neutral. The monthly signals are completing targets at Sell 1 of $1844 and the Sell 2 of $1890.

Courtesy: TDAmeritrade

The VC PMI

We want to see if the market has enough strong buying to take the supply that's being offered. The market is trying to define whether the buying is stronger than the selling pressure. So far, the market has been in an uptrend, so any supply that's being offered is being taken by strong buying. The supply is being taken, but there is even more demand coming into the market. The VC PMI shows you this trend momentum, which can be used to analyze any market. We focus on gold because that's where we and our clients are making the most money over the past few months. Clients have made serious profits over the past few months using the VC PMI.

The VC PMI is not 100% right. Nothing is in this business. The VC PMI can, however, show you the highest probability trades, whether you are a day, swing or long-term investor. The VC PMI identifies the structure of the supply and demand, from which you can trade. It identifies probability factors based on the buy and sell levels, which have 90% and 95% probabilities attached to them: 90% for Sell or Buy 1 and 95% for Sell and Buy 2, of the market reverting from those levels back to the mean, whether for the daily, weekly, monthly or annual data.

In gold, the VC PMI is telling us that when the market trades in the red area, it's an alert to buyers that we could go up to $1844 or even $1890, if $1844 is reached. The annual target of $1803 was completed when the market traded above that level, and then that resistance became support. The VC PMI only ever uses five levels. With $1803 met, there are new targets of $1844 and $1890. The market may keep going up, but you are buying at a low probability level. The much higher probability is that the market will come back down to the mean.

You could be long the gold market since Sept. 28, when we published our annual report at $1506, which we recommended based on the annual outlook. The first level was $1655 and the second level was $1803. From $1500, at $1803, you could manage and trade the balances of your inventory at these designated levels without changing your long-term outlook on the market. You also can day trade using the VC PMI data, even as you trade long term. You can trade around your position.

If you get a buy signal above the Sell 1 and 2 levels, whether it’s the daily, weekly or monthly signal, you do not take it since the odds greatly favor a reversion from that high.

We execute the daily, weekly, and monthly signals on the 15-minute bar. We look for the harmonic relationships between the three trends based on the 15-minute bars. The VC PMI is written in C++ on the Tradestation platform and it is completely automated.

The gold sector is extremely flexible. There are thousands of instruments you can trade related to gold, such as NUGT or JNUG, which are triple or double X ETFs. For most traders, who are not in a position to financially take the risk of holding a futures contract overnight on margin, we use such instruments. Such volatile markets present incredible opportunities.

Fundamentals

It is unclear when, or if, our so-called leaders are ever going to put politics aside and do what needs to be done. The financial relief package is uncertain. The government’s policies are uncertain. Trump supporters appear to be unclear on how dangerous this pandemic is, both in terms of lives and in terms of money. It's unbelievable that a country that's so rich and so powerful can’t handle the pandemic as well as most other countries. The Fed appears to be ready to print as much money as the economy needs. The Europeans just put together a $2 trillion package. They were wearing masks when they did it. They know what needs to be done. If the president does not step up and lead, we are going to suffer for years. The damage we are suffering now will be profound and long term. Most people are not prepared for where we are heading. The gold market is anticipating that all of these policies are going to come back and hurt us in the long term in the form of inflation of the weak dollar. Who is going to pay for all of this stimulus? We all are as the dollar’s buying power plummets even more. Gold will be the beneficiary.

Instead of trying to make sense of the fundamentals, use the VC PMI to analyze the market for you. It will act as a GPS to guide your trading to make the highest probability trades.

All of the money the government is dumping into the economy will not be used properly. It was not used properly in 2008. It will not be used properly today. The government will not save you. You have to take control of your own destiny and, if you understand trading, this business can be the savior in your life.

Silver

Silver reached an overnight high of $23.67. It completed some major targets. It did not quite reach $23.94, which was the daily Sell 1 level. The market is trading around the daily average price. It's in a neutral signal right now for the daily. This is not a good time to day trade because there is a 50/50 deviation - it could go either way. The highest probability trades are at the Buy 1 or Sell 1 levels, or even the Buy 2 or Sell 2 levels. $22.20 is the Buy 1 level today. $21.07 is the Buy 2 level, which is the highest probability signal on the buying side. Selling at $23.94 is the Sell 2 level and would be the highest probability trade to sell.

E-Mini S&P

The E-mini S&P VC PMI daily average price is 3255 and the Sell 1 level is 3283 and the Sell 2 of 3300. On July 22, the market came right into the area that the VC PMI identifies as an area of accumulation of supply. Coming down, automatically the probabilities say that if the price activates a trigger from the Buy 1 level, there is a 90% chance that the market will revert from there right back up to the mean. If the market comes down to the Buy 1 or 2 level, do not sell down there. The odds favor the market moving back up from those levels. If you buy in at the buy levels, the level above, the mean and then the sell levels, become your targets.

Again, do not trade around the average price. Wait for the market to reach the extremes above or below the mean. Those levels represent the best times to enter the market.

For stops, we generally use dollar stops - a catastrophe stop. Don’t use straight stops or you will get stopped out.

Metals

The metals markets are beginning to move up again into this area of distribution of supply. Gold is challenging that monthly high. The action of the market will show us where we are going based on the VC PMI. The higher gold goes up into $1891, the more overbought it becomes. It's more likely that you want to go short here rather than buying into the market at these levels. If you go short, then the level below becomes your target automatically. The VC PMI daily, weekly and monthly targets are all getting completed in gold. A close below $1844 will activate another monthly signal. A close below $1881 will activate a daily signal. A close below $1803 will bring all of those signals into a harmonic alignment. All of the trends will have been completed in terms of their VC PMI targets confirming a possible reversion back to the monthly mean of 1758.

The VC PMI allows you to trade without emotion. We have been expecting that these targets would be met. You want to protect profits. This is a business. Remove the emotion and you will see your balances grow consistently. When these rare harmonic convergences occur, lock in your profits and wait to let the market tell us where it wants to go. Don’t chase the market. Let the VC PMI show you where the market is going. If you buy gold up here, it could be a bull trap.

The fundamentals in the metals are extremely bullish. If you are a new buyer coming into the market up here, extreme caution is warranted up here. Wait for corrections. Wait for the price to come down into that Buy 1 or 2 levels.