E Getting Technical: The Next Generation - It’s Not Gold That’s Getting Me Nervous

The recent breakout in gold got a lot of people excited. How many mummified gold bugs were reanimated, saying, “See, I told you all of that money printing was going to push prices higher!”

Thanks, 49er, that’s not why gold is rising.

Rather than obsess over the why’s and whatnot, let’s take a slightly deeper dive into what is happening. From there, we can draw some conclusions and from what I see, the rest of the year may not be so kind for the economy and for stocks.

I’ve posted charts of gold already so let’s just stipulate that the yellow metal broke out from six-year base in June. It immediately fell into a new trading range before breaking out again this past week.

Was it China’s move to devalue? Probably. But again, the why is not my thing. All I know is that gold moved into a bullish trend until it tells us otherwise.

If gold is rallying, it makes sense that the other precious metals are rallying. And they are. Silver moved nicely since a June breakout of its own, albeit that breakout was not from any major base.

Curious. Now let’s look at a chart comparing gold and silver.

(Click on image to enlarge)

As you can see, the two tracked fairly well until 2016. I don’t know what happened then and I really don’t care. All I see is that the two-headed in different directions.

And yes, both have short-term breakouts. However, only gold as a long-term breakout.

I’m not much of a gold/silver ratio guy although it seems on the surface that silver is the better bet right now. But then again, silver is less precious that gold and by that I mean it is far more sensitive to the economy. It has far more uses in industry.

Does that mean we have an economic red flag? Maybe.

Now let’s look at platinum. Remember the good old days when platinum was hundreds of dollars more per out than gold? With gold now in the $1500 area, it is 70% or so higher than platinum.

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Disclosure: No positions in anything covered.

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