Huge Volume & Tiny Volume – Meaningful Paradox For Gold Investors

In terms of the intraday price moves, silver already invalidated the breakout above it, showing how the above works in practice. We might see another attempt, but it would very likely fail.

We have seen another attempt to move higher, and it has indeed failed in intraday terms. The silver forecast remains bearish.

Gold Miners: Fakeout in the Making

Gold Bugs Index

 

Gold miners closed the week a bit above their declining resistance line, but this move was small, so it would need to be confirmed in order to have bullish implications. Given the clearly bearish situation in gold - in particular given the long-term resistance and the recent daily and weekly sell signals from the RSI, it seems highly unlikely that gold miners would confirm this breakout.

They have very likely showed fake strength, just like in early 2016 they showed fake weakness. In 2016, when the underperformance and breakdown were invalidated, gold stocks were on a verge of a major upswing. Now, they appear to be on a verge of a huge drop.

Gold Bugs Index

 

On a short-term basis, please note that the HUI (gold mining stock index) has been moving back and forth after losing its momentum and we recently saw a sell signal from the daily Stochastic indicator. We saw something very similar in mid-October 2018. Back then, a short-term decline followed. This time, based on long-term factors, it seems that we will see something much bigger than just a short-term move.

And now the moment you’ve probably been waiting for – the palladium volume analysis.

Palladium’s Huge Weekly Volume

PALL ETFS Physical Palladium Shares

 

Just like last week’s volume in gold was lowest that we’ve seen this year, palladium’s volume was the biggest. Moreover, it was one of the biggest weekly volume levels that we saw in the last few years. Why would this be a big deal? Because of what happened in the vast majority of previous similar cases.

In 9 out of 11 (almost 82% cases) when palladium rallied for a week on very strong volume, we saw a decline in gold shortly. Why would this be the case? The investment public usually buys what is already high and it tends to buy right before or at the tops. The investment public is also usually wrong. The palladium price has definitely showed strength recently and the high reading in the weekly volume level may illustrate the increased interest of the investment public. The implications are bearish.

Let’s stay with the PGM group for a while.

Platinum Revisited

It is time to feature platinum in our analysis again. After all, it is an integral part of the PMs complex and provides valuable clues as to the relative strength of price movements in gold and silver. The same can be said about the relative strength of the gold price leading indicator, the gold-miners-to-gold ratio. Let’s take a look at whether platinum price action supports recent upswings, or not.

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