Signs Of A Bottom In Gold And Silver Prices

The U.S. dollar’s value is set to get diluted by another $1.9 trillion.

On Saturday, Senate Democrats narrowly passed their massive COVID relief bill on a party-line vote. It includes $1,400 in additional free-money handouts for most Americans, $350 billion in aid to state and local governments, and hundreds of billions more for various other pet programs.

Upon approval by the House of Representatives and President Joe Biden’s signature, expected later this week, another wave of government-induced inflation will cycle through the economy.

The impact on commodity and precious metals markets won’t necessarily be felt immediately. But investors who can see what’s coming will want to position themselves ahead of the trend.

Last week saw some smart money rotation into mining stocks ahead of a potential bottom in precious metals spot prices. The HUI gold miners index (NYSE: HUI) finished out the week with a 4.7% gain, despite continued weakness in metals markets.

Gold Bugs Index - March 5, 2021 (Chart)

This positive divergence is a bullish sign. It may indicate that a significant bottom is in, or in the process of forming, in gold and silver markets.

After becoming deeply oversold, the HUI could now rapidly push toward to its uptrending 50-week moving average line on a rally.

That would likely coincide with gold prices recovering off their similarly oversold condition.

Since peaking 7 months ago at over $2,000/oz, gold has trekked lower in a large corrective pattern. That correction is now getting long in the tooth, assuming as we do that it’s occurring within the context of a larger, structural bull market.

Silver, meanwhile, is seeing a huge positive divergence via the physical versus the paper markets. Robust physical bullion buying by investors continues to defy lackluster paper price moves.

Gold Price - March 5, 2021 (Chart)

Bullion dealers have been absolutely slammed with demand for coinsbars, and rounds this year – draining available inventories in the process. While Money Metals is still well-stocked, many other dealers are nearly wiped out or are quoting month-long delays on many items.

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Disclaimer: Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advise about or advocate the purchase or sale of any regulated security, listed on any ...

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George Lipton 1 month ago Member's comment

There is no bottom for #gold and #silver, until they hit zero. Worthless metals it would seem.