Transcription
Hey folks, welcome to verifiedinvesting.com. My name is Gareth Soloway, chief market strategist here.
Now, in today's video, we're going to deep dive into gold and silver and look at the silver cycle as compared to the past cycles. In other words, where are we when we look at the cycle from the 1980s peak or even the 2011 peak? Where does it tell us silver may be going in the near term?
I also think it's important to recognize that while gold and silver have underperformed last week with the big drop in the dollar, you would have assumed a much bigger push. I think this is more about a rate story, which actually long-term is extremely bullish for the metals, even though near-term it is hampering their upside. And again, I think that could give us our great buying opportunity, possibly pushing silver and gold a little bit lower before they bottom out in the cycles.
All right, so that's just something I want to pass along. Before we get into that, just a reminder, you can join my premium here, Gareth's Top Squad. It's my YouTube premium here. And again, you get a discount code, and I'm going to be releasing that discount code, uh, in the members-only video that I do later today. 20% off a specific service at Verified Investing. Plus, you get again, two to three premium videos every week on this channel just for members of Gareth's Top Squad.
All right, so let's get into the analysis here, folks. Let's start with gold. And gold is fascinating because last week we saw this mega drop in the dollar, right? Basically dropping from 101.63 on the DXY all the way down to close the week at 99.78. So that is a big drop when we're talking about the US dollar against a basket of currencies. You would have said, "Oh, well, gold and silver must have ripped higher, right?" But then you look at this and you're like, wait, so in those four days, when all was said and done, gold was basically flat. Look, down, up, up, down on gold. Now, most people will look at this and say, well, that's bearish. And I would tend to agree near-term, but I think the culprit here is that yields continue to go higher.
So, if you think about it, and a lot of people don't really understand the coordination of how yields affect gold, and the idea is is that gold generally doesn't give a return. The idea is you're buying gold with the assumption that it will grind higher over time as fiats are printed. When yields go up substantially, it's putting up competition for gold, right? So, you know, for instance, the 30-year is now at highs not seen since 2007, above 5%. So you can get a 5% return every single year for 30 years now. And the question is, people are saying, well, can I get that in gold? Will gold appreciate? Now, I think the key here is people's miscalculation because if we look here at the 10-year, right? So the 10-year is now trading at 4.72%. You have to look at this and say, well, what is the systemic issue here? Is it just that the economy is so amazing that rates are going up, or is this telling us that the long end, people don't believe that the fiscal responsibility is going to come through? In other words, does the US government, or has the US government lost total control of fiscal responsibility? Will debt just continue to go up? Is the debt level and interest payments so big now that we're just going to have to print fiat to to pay off our debts? In which case, if that's the reason why yields are going up versus a strong sustainable economy, then that is unbelievably bullish for gold and potentially silver. Do you guys see what I'm saying there? Kind of a unique angle that most people don't talk about, but I think that is what's going on.
Now, again, for me, I already have my long-term holdings in gold and silver. I do want to buy more, but I'm being a stickler for price. So, I need it to come lower. And again, if people don't, if the masses don't understand this disconnect of what I just explained, then I think gold and silver still can go lower. Even if I miss the trade, that's okay. I have my long-term holdings.
So, if we look at gold here, it did try to break out of this downsloping wedge channel trend line, or or trend line here. But obviously, what we saw is it creep up, pierce, and then got rejected on Friday. And again, what was interesting there is on Friday, we actually saw the dollar neutral to negative, and gold still pulled back. So, what we're watching here is, does it continue down into this level, or do we finally get a breakout here? Now, even if we get a breakout, history has shown us that a lot of charts will go like this, and then they'll kind of come back in and settle in and kind of come back to test the scene of the crime. In fact, that's one of the classic plays in technical analysis that I look for. I want to see a confirmed breakout, but I don't chase the breakout because once the breakout's done, sometimes you have already priced up substantially. And so I wait patiently, and I would say about eight out of 10 times, we get a retrace into that key level here, which can become the buy, right? And again, if you extend this out, you could even ask yourself, is that then down at that 3,900 pierce level, which is that next key support, or is it even lower? Now, that's just one scenario. The other scenario here, by the way, is that we could end up just coming down here and even piercing and getting as low as 3,500, 3,600, which is my low-end max downside target.
Now, if we flip over to silver, silver continues to kind of languish here. You had this kind of down move, sideways, sideways, sideways, sideways, and break, and now sideways again, and it continues to signal weakness unless we take out this level here. Okay.
Now, what I wanted to show you on this is if we take away these trend lines, right, and we split the screen and we look at the various cycles here. So, here's our current cycle on silver, right? Our blow-off top, massive blow-off top. And I kind of did this for gold last week for you guys, but it is fascinating to look at silver. If we go back on the cycles, right? And we go all the way back here. Let's go back and we look at our 2011 cycle. This is fascinating. It is very, very, very similar to what we are seeing in silver now. And because of that, it can give us some insights into potentially where we're going in the near term. Okay, so let's let's go through this here.
All right, so number one, you have the bull move with the little check back and then the bull final move up. And if we look at this current cycle that we just went through in late 2025 into 26, it checked back and then it went up. All right. So, this was in 2010 into 2011's peak on silver. Okay. So, we have that. Now, we extend that out and we say, okay, well, initially we dropped, bounced, and then we came down. And here you did have a much more just steep. I mean, you had this little bit of an uptick right here, and then the down move came down here. So, similar. This had a little bit more of consolidation going on before that flush out. But either way, you ended kind of in alignment here, right? So, in other words, you can see how, and I'm just going to clean up the chart a little bit here so we can keep it simple, is that essentially what we started to form was this base plate right here in 19, you know, basically in 2011 to 20 late 2011 into 2012, etc. All right, so the point is right here, there's your base plate. And then what we could see here is you literally had the same thing. So you had the flush. So here's our flush, bounce, flush, and then bounce. And here you have your flush. Oops. Let me do that better. Flush, bounce, flush, bounce. And notice how it's all going along this zone here, right? And here we have at our current levels, we have the same thing going on. Look at this. Here's your flush, bounce, flush, bounce, flush, bounce, break. And then look at how just like here, hitting it over again, break, and then it goes to a retrace to the scene of the crime. You hit it here, hit it here, hit it here, broke, retrace to the scene of the crime. Now, that what that tells us is that this peak here is the equivalent exactly in in the cycle of this peak right here. So then we're getting close to where we currently are on the peak, right? So let's move this out. And what we see here is that almost identical, you get this move up, you get this move down, you get this little move up, then you get this little move down. And if we look at that, here's your move up, down, up, down. This is right where we are now in the cycle. And so what we see here is there might be a chance at another little bounce, right? There was a little bounce here, and then what happened to silver? It had its next leg lower. And that's the leg lower that in my humble opinion is going to take us to that $50 potential target.
Now, listen, I want to be crystal clear on this is that cycles don't have to be exact. And and as we see even on this, it generally rhymes, but it's not tick for tick, right? It's not tick for tick. And so we have to just be understanding that this is one projection that could happen, but there's no guarantees of it, right? And so we have to be open to things like if we were to break above some key levels, all of a sudden that changes the game and now we have a breakout. Right now we don't have that on silver, and so we have to be cognizant of that and be very aware. But essentially, what's cool about this, folks, is that if it has, I mean, essentially it has played out almost perfectly as the 2011 cycle has.
Now, you by the way, you might say, well, why is it playing? I mean, why do cycles repeat generally? Like, why do they rhyme? At least maybe not repeat perfectly, but rhyme? And the answer is because humans are the ones trading. And as much as I may be, you know, I'm still human. I still have a little emotion. Yes, I've gotten major control. But if you look at a million people that are trading silver or gold, um, or 100 million or whatever it may be, they are going, emotion is emotion. It doesn't matter if it's 2011 or 2026 or 1980 or 1500. Emotion is the same. People were still greedy, and they were still fearful. And that's why this works so well. And listen, again, it's not perfect, and I think we have to be honest about that, but it is fascinating.
And so essentially, what we're looking at is silver likely has a little bit more downside. But if we zoom out, generally this became, I think we went a little bit lower overall, and it took some time, but that was essentially it. Like, if we look at this, this is kind of that last dip to 50 or maybe just below 50, and then yeah, you had a flush here. This was COVID. I'm not sure, you know, we'd have to say, oh, well, you have to have another COVID to kind of do that. I don't think that's going to happen. In which case, this becomes the long-term low, and then we start our next bull move that started in 2021. And then listen, I mean, it's and and then there's the history of it, right? And if we get a repeat of this, then I mean, think about this, $250, $500 silver. I don't, I'm not going to pretend to know that yet. I'll have to get closer. But isn't that fascinating?
So essentially over here, folks, what we're doing here is we're saying, you know, maybe a little bit of a move like this, and then we get our last move down, then a lot of sideways kind of choppiness, and eventually we start our next leg up. At least to me, this stuff is what I literally, you know, you get those butterflies in your stomach when you fall in love, you know, like this is this gives me this gives me butterflies. It it does because even if it doesn't play out, enough cycles have kind of rhymed on various things that it's just it's just really cool. Like we are getting a a look into a high probability scenario that can guide us. And again, probability isn't 100%. But it's just freaking cool. I mean, I mean, isn't that cool? Anyways, I digress, guys.
All right, that's really what I wanted to go over today. It is cool as heck. Um, again, if we break to above key levels and it's very obvious, then okay, then we say, "All right, well, then that scenario is off the table." But this right now is probably our most likely scenario, probably 70% give or take, which means we get may have a little bounce here and there, and then that final flush, and then I'm going to work. I'm in other words, I'm buying. I am buying heavily. And remember, folks, I come from a different perspective in that I already have my long-term holdings. So, it's only if I want to add. You know, if if someone came to me and said, "Hey, I have no gold or silver holdings at all." I would say, "Well, I mean, the difference between $50 and 57 or wherever we are is negligible in the scheme of things." And it's just a the way I look at gold and silver is an insurance policy, right? I keep it in a vault at a bank, and like essentially that if, you know, what hits the fan, I know I have that, like if fiat collapses, if the dollar collapses, you know.
So, all right, guys, thank you so much. Don't forget, sign up for Gareth's Top Squad. A member-only video with discount will be coming out later today. I'll talk to you soon. Take care.