Transcription
Smart investors are not worried about the silver crash and its current malaise because they know that there's an absolute floor at $50 to $55 and that silver over the next two or three years has a high probability of working its way back above $100 an ounce and to a new all-time high.
I'm Jordan Roy. I'm a chartered market technician and a master of financial technical analysis. And I have been investing in and covering gold and silver and precious metal stocks and juniors for several decades now. And I'm going to share with you my current analysis of gold and silver and the mining stocks as well. And let's get right to it.
So let's start off with a historical background on silver. And one thing about technical analysis people is a lot of people who try to practice it, they make it way too difficult. They make it way too complicated. And remember, technical analysis is a tool. So there can be bad practitioners of it and great practitioners of it. But that aside, we have to stick to the big picture points and that provides clarity when it comes to technicals.
So big picture for silver, it had a bit of a blowoff in recent months, but it did complete, in my opinion, the second greatest breakout of all time in the history of capital markets. And so breaking through $50, we now know that this is a rock-solid floor for silver. $50 an ounce. So, shoots up too high too quickly, it's going to take a rest, and that's what it's doing. So it's taking a rest and it'll back and fill for a little while before it eventually begins to move higher again. So that's the big picture.
Now, underlying that big picture thesis is the fact that silver is still cheap in real terms. This is nowhere near 1980 or 2011. So there's a couple charts we can look at here. Here's the gold-silver ratio. And yes, this did come down intraday and intra-week. It did come down into the 40s, but we're looking at monthly closes here. And we can see, you know, it's back around the low 60s, the gold-silver ratio. Secular peaks in history, you tend to be around the teens in gold divided by silver. Okay? You go back to 1920. Here was 1968, which is artificially cheap because of the gold standard, which kept the gold price too low. So people bought gold stocks and silver. But then you had 1980, which was in the low teens again. 2011 at 31, that was the secular peak. But based on all my research, all my work, everything I've talked about in my book, I'm highly confident that the secular peak for this ratio will come down below 20. So the cyclical peak, it could be somewhere around here, 30, 35. And so we're way above it. So we're just at an intermediate-term peak. If silver had made a major peak, we would have seen this ratio way down here. Okay. So, there's that.
And then there's also silver against the stock market. And here you can see the chart here. Now, the chart is inverted. So, we're actually looking at the S&P against silver. And that's because it makes these ratios really easy to read and easy to understand. We're not looking at 0.00. So that makes it easier to understand. And we can see here historically, silver is still extremely cheap against the stock market. Okay? When we're up here, silver is really expensive again. 1920, 1980, 2011. So this is where we are here and now. And so here and now, this is roughly at 100. Okay? So still on the historically cheap side. And that is how we know that silver is not at anywhere close to a secular peak or even a cyclical peak. It's at an intermediate-term peak.
And so let's now delve into the short to medium term. I'm starting off here with my classic gold correction analog chart. What is this looking at? Well, we're looking at the current correction which is in black. Okay? This is where we are. But also on the scale, the same scale of time and price are the corrections in 1973 and 2006. Now, we're looking at the first significant corrections in gold after a major breakout. There's only been three major breakouts in gold: 1972, 2005, and recently 2024, February or March of 2024. Okay? So again, we're looking at the first major correction post-breakout, the three major breakouts on the same scale. And we also have an average here. And so we can see this is where they bottomed, both of those corrections in terms of time. They actually bottom right here and right here. So we are looking late June as far as a potential bottom. Now, this is just a guide. Maybe we see a bottom in early June, maybe we see a bottom in early July, but this is a guide that informs us how long these corrections typically last. And this is where we are here and now. And so yes, gold has had a bit of a bounce the last couple days, but the price action, classic technical analysis as well as history would tell you the path of least resistance is down like this.
But something to keep in mind, how did gold perform after those other two corrections finished down here? Here's my note right here. Okay? One of them 150% in the next 14 months. The other 85% in 17 months. So if you look at 4,100, 4,000, you even want to take 3,900 or 4,300, whatever, look at these numbers. That tells you where gold could be going in the next 12 to 18 months or so. Okay?
Now, moving on. Let's get to some classic technical analysis. Here we're looking at the daily candle charts for gold right here, silver right here. And so gold has come down to this support here. You can see clearly right here. And it's put in a bit of a bounce, which is not surprising because it is support. And we saw hard selling here. So gold has found some support here. So it might rally for another day or two. Maybe it'll last for another week or so. And then gold will retest the support and likely break it. And then you have strong support here at 4250. You can see 4250, 4350. That's where these lines are. You also have the 200-day moving average. Okay?
But one thing I want to note going back here, both of these lows here and here, these took out the 200-day moving average. So if we see gold, we see the 200-day moving average here going like this. And maybe gold comes down here and falls below the 200-day moving average. And then everybody on Twitter and in financial media, they're all like, "Oh, the bull market's over." But people, that's going to be a buy signal actually if gold breaks a 200-day moving average. Now, we'll worry about that in a month or so. I'm getting ahead of myself.
But looking at silver now, for silver, the support levels are really clear. There's two. Okay? The first one here is at about $67. And we can see right here, 67, other than this one day, was able to hold silver. It held silver's decline. Okay? So you have 67 right here and then the second is about, call it, 59 to 62 because if we're looking at this price action here when silver really started moving and it broke away from $50, it had this first little pause here which is about 59 to 62. So you have 59 up here and this low here is 60 and then you have the 200-day at 62. So 59, 60, that to me, I think is the floor for silver. But again, you also have this support here at 67 which it held for more than a couple days. So silver, nice bounce the last couple days, but I think the odds favor this will fizzle out and probably come back like that. So those are the, so those are the two support levels to keep an eye on for silver.
And I guess I'm patting myself on the back here. Same chart, but three weeks ago or so, I did sketch in these are potential outlooks for gold and I always favored this one. And we can see, I mean, it doesn't always happen, but gold has come down as I expected. So this is just a guess as to how the end of this correction could play out. Maybe you see something like this right here. Okay? And by the way, down here, it would probably lose the 200-day. The 200-day would come up like this and gold would be losing it here.
Okay, now gold, the gold-silver ratio. This is interesting because this setup is bullish for gold to shoot up here and break out and get to 77 against silver. The gold-silver ratio is at 61 right now. But we're in a period where we're not seeing economic weakness. This is a period of stock market strength, commodity strength, and that type of situation, silver usually outperforms gold. So maybe silver will hold up better than I thought a month or so ago.
Okay, now let's look at intermarket analysis and talk about gold against other markets. Now, this is gold against the stock market. Here is a 13-year former resistance. Super bullish breakout here, and I've been talking about this for weeks and weeks. Yes, this is really bullish for gold. However, we have seen a sharp decline here in this ratio. It's come back in. It's fallen below this resistance, which should be support now, but it's fallen below. And if you look at the daily line of this chart, you can actually see that there was a rally here and it failed. So for the time being, this major breakout is not in effect.
Now, there's two scenarios I think for how this could play out, which I've sketched in here. Now, up until the last couple weeks, I was thinking we'd see something like this. The ratio holds right here like this. Okay? But to me, it looks like it didn't do that. So now this is more likely where it comes back down here and it's going to take a little time like this before it eventually turns up again and gets back above the key line right here. Okay?
And what's really driving this is tech. And we can see here, this is gold against the NASDAQ 100 right here. This is a weekly bar chart. And I just love the polarity in this chart right here. You can see this was support. You had support here, resistance here, but major resistance again here, resistance here, wasn't able to break through. And now we've seen a sharp decline. And so what's happened is, yes, the market's made new highs. Money is moving back into the market. But the NASDAQ, this is the NASDAQ 100, is 40%. I mean, tech is 40% of the S&P 500. So money is coming out of precious metals and actually going into tech stocks. And that's, and that's clear when you look at this right here because this is gold against the NASDAQ 100. It's sharply come back like that. And by the way, this moving average, this is the equivalent to the 400-day moving average. So this has come back. It's lost the 200-day moving average and it's come back down here. And if you look at the 400-day, you can see it was support here, resistance here, resistance here, battled here before a big move started up, almost support here. And so there's probably a little bit more downside for this ratio. It could come back down here before it puts in a bottom. But the reality is, there's some technical damage here and we're unlikely to see a big move like that go right back up. It's going to take some time, more time than a couple months, but the setup here is super bullish. And so eventually, at some point over the months ahead, you will see this come back and make a big breakout like that. And that will signal capital moving out of the NASDAQ and tech stocks and the S&P as well and going back into gold. So, this is a really bullish setup and I think this is the key gold ratio chart to keep an eye on over the next 3, 6, 9 months or so.
And look, we keep an eye on everything and companies and stocks as well in our premium service. Head on over to thedailygold.com/premium. You can learn more about our premium service. And people in this service, I cover the stocks I'm personally investing in, okay? And I'm looking for high-quality junior companies that have 3x to 5x upside potential over the next couple years. And yes, I'm looking to make big profits, but at the same time, I'm looking for quality companies because when you own quality companies with quality assets, that protects your downside. You don't get worried during corrections like we're having right now. And at the same time, I'm covering the companies that I missed and other companies I'd like to buy when this correction ends sometime in June. So, if you own juniors and miners and you'd like to gain some expertise and assistance with respect to stock picking and company selection, we can help you with that at The Daily Gold Premium. So, head on over to thedailygold.com/premium. We'd love to have you come aboard. To those of you who have subscribed already and remain subscribers, thank you so much for your business. I appreciate you.
Okay, let's get into the stocks a bit. And we have one macro slide. So, we'll have this and one macro slide before we wrap things up. And I've talked about breadth indicators a bit in past videos. There's the advanced decline line, which is a cumulative measure of participation in a sector and a great leading indicator. And I also have custom indicators down here. I have my custom indicators for GDXJ. I'm looking at new 52-week highs here. And this shows how many GDXJ stocks were making new 52-week highs. It's smoothed here with the 20-day exponential moving average in blue. Down here, I'm looking at the percentage of stocks that closed above the 200-day. This is the percentage that closed above the 50-day and the percentage that closed above the 20-day.
Now, this rebound right here, we got the signal because back here, you can see 0%, 0%. So at this low here, you had 0% of GDXJ stocks above the 20-day and 50-day. And historically, when that happens, doesn't matter what kind of market you're in, that leads to a good rebound. Okay? Now, we are in an intermediate-term correction right now. Now, what happens at the end of an intermediate-term correction? As you get towards the end, well, the percentage above the 200-day moving average, as you can see right here, this was the end of 2024. This starts to come down at the end. You know, more and more stocks start losing their 200-day moving averages. So, this has just started again. This is where we are. This data is a couple days old. So, this was 62% as of a couple days ago. And so we need to see this come down a lot more, maybe towards 30, 20% when the sector is at a point where the intermediate-term correction is ending or about to end. We can see here this was a mild, very mild intermediate-term correction here where this came down to about 37%. So this is a more nasty correction, a more significant. So this is going to come down significantly, probably to 20%, even lower. So we're looking for the signal here and this data while also looking at this data and at the same time we look at the price action. So close at 115. We have seen a rally the last couple days and that's because these hit zero right here. Okay? So we're super oversold in the short term. But moving out, we need to see this come down a lot more and that's going to be really close to the end of this correction in the bottom and when we want to be buying. And of course, at the same time, we'll also look at the price action here. We'll look at where support is. Uh, did we form a bullish hammer, a reversal candle, uh, all those things, etc., etc. And so I did do a flash update where I gave out a potential bottom target for GDXJ, but that's premium info for now. So I'll leave that with premium subscribers.
Now, finally, here's a macro comment. You guys know I'm not a big fan of macro analysis, but this is important. So this is a chart from someone else on Twitter. I think his name is Sam. I apologize for not mentioning his name. Now, in the late 60s, the secular bull in the S&P, the stock market, the Dow, you know why they ended? There wasn't some big crash. It was because, and remember, we were in an inflationary era. It was because you had a breakout in the 30-year yield that led to the end of the secular bull market in the S&P. Oh, and look right here. This is the 30-year yield. And look at this. This is threatening a move up like that. Okay? So, if we see this, this is going to trigger the end of the secular bull in the stock market. It's probably going to trigger a recession at the same time. So, this is the chart. This is the signal that we should be watching for over the coming months. Now, I'm not saying if it breaks out, we're going to see the top in day one. It might take three months or four or five months, but I'm telling you, it's very likely that this is the signal that is going to precipitate the end of the secular bull market in stocks. And at the same time, this is going to lead to the next big move higher in precious metals.
So, that's all for the video. Thank you so much for tuning in. Hope you guys had a great week. Hope you guys have an even better weekend ahead and I'll talk to you guys next week.