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Silver and Gold Into Year End

Craig Hemke
|
Wednesday, September 25th

Back in January, we predicted that in 2019 the precious metals would see their best annual gains since 2010...and so far, they have! So now the question becomes: will the metals hold these gains and extend or will they fall back in the fourth quarter?

And why were we so confident back in January, when every major analyst and sell-side economist was expecting higher interest rates and lower gold prices at the time? Because it was clear that the U.S. and global economy would be slowing this year, and to combat that slowdown, the only central bank option would be lower interest rates and additional quantitative easing. This turn of events would prompt a revelation that the central bankers were, indeed, "flying by the seats of their pants" and simply making things up as they go along. Global confidence in these charlatans would begin to fail—just as it did in 2010—and this would lead to higher precious metal prices.

We laid all of this out in this post from the middle of January. If you missed it then, please take a few moments to review it now: https://www.sprottmoney.com/Blog/gold-and-silver-2...

So, what would "the best annual gains since 2010" constitute? Calendar year 2010 saw this:

 COMEX gold began the year at $1096 and finished at $1421 for a gain of 29.7%

 COMEX silver began the year at $16.85 and finished at $30.94 for a gain of 83.6%

Thus far in 2019, we've seen the following:

 COMEX gold began the year at $1281 and is currently $1530 for a gain of 19.4%

 COMEX silver began the year at $15.54 and is currently $18.60 for a gain of 19.7%

However, it's only late September and if history is any guide, no one should get complacent. The fourth quarter of the year is typically a volatile period, so the year is far from over. But let's get on the record with some predictions into year end that continue with the theme laid out back in January.

For COMEX gold, the gains since May have stretched the open interest and Commitment of Traders structure to near all-time highs. This alone will make it difficult for price to surge higher from here. However, it will not make it impossible for price to creep higher. Our stated primary goal for 2019 was a move toward what was expected to be stiff resistance near $1525, with the expectation that this level would then be bested in early 2020. But here we are now! So, the level to watch in the weeks ahead is not only $1525 but, perhaps more importantly, $1550 on a weekly closing basis.

Why is $1550 so important? On the chart below, you can see that price has not posted a weekly close above that level since Friday, April 5, 2013. With the investment world sensing a renewed bull market in gold, besting this key level on the weekly chart will draw all sorts of additional attention and cash to our sector. Expect this to happen at some point in Q4. Following that,expect an additional rally and then pullback to $1550 support as a staging area for a move toward $1800 in early 2020.

 

COMEX silver continues to battle the same Bank price suppression forces detailed in the U.S. Department of Justice indictments revealed last week: https://www.sprottmoney.com/Blog/case-closed-craig...

However, as noted above, price is still up nearly 20% year-to-date. With an open interest and Commitment of Traders structure that is "better" than COMEX gold, it's logical to think that the next rally in COMEX silver will take price above $20 per ounce. From there, the goal for late 2019 or early 2020 would be to take out the 2016 highs near $21. Once this happens, more attention will be focused on silver, as the breakout will be clearly noticeable.

And by now you've likely noted that while COMEX gold was holding support in 2013 near $1525, COMEX silver was holding support at $26. Well, in 2019 here's gold back to $1525+ yet silver is still below $19. You may have noticed this. I've certainly noticed this. But I'm not sure many others have. Therefore, the stages in silver going forward are:

 A move to new 2019 highs.

 A weekly close above $21.

• A move toward $26 in 2020.

 

The conclusion you should draw? This rally in 2019 was predictable, and the continued rally into year end and 2020 is predictable, too, as the central banks continue to ease, restart QE, and move toward the imposition of negative interest rates. The best strategy for wealth protection continues to be the consistent acquisition of physical precious metal. And acquiring real, physical gold and silver is easy! It can be held at a trusted gold bullion storage company or in your own, personal safe. You can hold it in gold bullion coins or silver bullion bars. Take your pick. Just be sure you acquire some at a reasonable price...while you still can.

Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

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