Transcription
Silver and gold just reached a critical new stage. What am I talking about? Well, they have entered final capitulation. Yes, that's right. This is the beginning of the very end of this intermediate term correction in gold and silver. I've been talking about it for months and months. We've been in an intermediate term correction and the probabilities say it probably comes to an end before July. Now, let me share the evidence with you as we recap the week in gold and silver and precious metals. I'm Jordan Roy, a chartered market technician and master of financial technical analysis. Thank you so much for joining me.
First, let's start off here with the fundamentals for gold and silver and what is driving the weakness and the selling in the start of this final. It's related to interest rates. Higher nominal interest rates, but also higher real interest rates. Now, let me talk about the yield curve here, which explains it all. Now, in this chart here, we have the 30-year yield. We also have gold here. Here is the yield curve. It's the difference between the tens and twos, the 10-year yield and 2-year yield. And we see those yields down here. Now, with respect to the yield curve here, when it is steepening or rising, when the spread between the 10 and two is getting larger and it's increasing or steepening, that is bullish for gold and precious metals. Now when it is flattening or decreasing like this when the spread between the two is getting tighter and tighter and moving towards zero that's bearish for gold and precious metals and that's what we have seen in recent months as the yield curve is flattening as both short-term yields and the longer-term yields are rising.
Now moving forward when does this change for gold? When does it become bullish? Well, either you see longer-term yields start to pick up and increase much faster than shorter term yields like the 2-year yield here, or you get to a point where you see the reverse, which is yields across the spectrum start to top out, and then you see the 2-year yield start to roll over and go down much faster than the other yields. And that kind of action basically leads to rate cuts. Okay, so that's your fundamental explanation.
Now, moving on, let's get to the bread and butter here, which are charts and sentiment. Now, if you're new to the channel and new to my updates, first of all, hit that subscribe button. I don't want you to miss anything. But if you are new, this is my gold correction analog chart. So, in gold, there have been three major breakouts, okay? 1972, 2005, and 2024. And we are looking at the first big correction after those huge breakout moves. And so, we're looking at the current correction, which is in black. And we put the other two, which came in '73 and 2006, on the current scale. And what do you know people? Look at the last two or three months. I mean, this has tracked history quite nicely. And this is where we are here and now. Okay, we're down here. So, from this point forward in '73, we went sideways before a final plunge to a bottom. In '06, we had a sharp rally and then we had a move lower to the final bottom. So, what this chart is telling you is quite clear. We're not quite there yet, but we're getting very, very close to that significant bottom in the end of the correction.
Now moving on from that let's look at the gold major breakout analog chart which I have renamed to be the gold best fit analog. Now as we see here black that is the current breakout move in gold that began at the end of February 2024. Now the other line here is a composite and that is 75% of the 1972 breakout and 25% of the 2005 breakout and then we pushed it forward by 6 and a half months. You can see here, this is actually when we started the data. And people look at how close these two lines are. I mean, this is incredible. Even down to the last couple months where you have a where you have gold just grinding lower. It did the same thing with respect to the composite data. Then it had this final sell-off. So here we could be starting the final selloff already. And what's so great about this best fit analog, look what happens after we hit that bottom. This would project that gold hits $8,000 an ounce by what is that the end of summer 2027. So I don't think anybody would have a problem with this best fit analog continuing to be a best fit for the next 18 months. That would be incredible for gold and precious metals. And if you think about the fundamentals and what would be the driver for something like this, we're going to get into some serious stagflation if we aren't already there. Okay? So yes, interest rates can go up a little bit from here, but at that point, you're probably going to have to do yield curve control. You're going to have to start cutting rates because the economy is rolling over at some point. So there's plenty of fundamental catalysts. Maybe they're not imminent, but if you think about the next 3 months or 6 months, there's a host of bullish fundamental catalysts that are coming for gold and precious metals, and that's what can drive this move like that. But anyway, zooming back into the present, this is where we are. And this, like the other chart says, we still have to see a little bit more selling and a move down here to about 4,000 before we get this. Okay.
Now, moving on from that, let's discuss a little more about sentiment here. Here's open interest, and there's two charts here. This is open interest on the COMX, which is basically down to like a 17 or an 18-year low. There's nobody in the market in the ComX. But then you might say, well, Jordan, yes, nobody's trading on the COMX. They are trading on these other global exchanges like Shanghai, Tokyo, Istanbul, etc., etc. No problem. We see the data here. This is a look here at the global open interest in gold futures. So, this is on all the different exchanges where gold is traded. And look at how far down this baby has come. This from here to here is a 42% decline. And by the way, this does this hasn't updated this week's data. So, after this week or next week, this may come down even a little bit more. But here and now, this is at a one-year low, and this is again 42% lower. So, we've seen so much money come out of the gold market already. And this is another example of that. This chart right here, I know we showed this last week and we showed more sentiment charts two weeks ago. And so, this chart looks at GLD, which you can see here, the price action, the gold ETF, the biggest one. And down here, this shows the net fund flows into GLD, and it's based on the last three months. And so, this is a rolling three-month look here at the flows. And so, as of a couple weeks ago, this is where we were all the way down here. Okay. So, other sentiment indicators and this chart here argue that a lot of money has already come out of the gold market already. We've already seen that gold has corrected from 5,600 down to the low 4,000s. There's not a ton of people left in the market that need to be flushed out. Okay, so this tells me that the panic that we're going to see in the coming days, the next week or two, we're going to see panic selling, but that could lead to a potential V bottom, I think.
Now, moving on from that, let's get to pure technicals here. Here's gold and silver. Now, here we see gold here, which has lost the 200-day moving average. And this is important to mention. I want to go back to let's see this chart here. Now these two post-breakout corrections which we had in '73 and 2006, both of them around here lost their 200-day moving averages. Okay. After the '06 loss of the 200-day moving average, it went down 4% then it bottomed. 1973 lost its 200-day moving average somewhere around here. Went down 8% and then it bottomed. So we get back to the reality and back to present. So gold has lost its 200-day moving average which is negative but based on history that's more of a short-term negative. So this is going to be negative over the coming days but 2, 3, 4 weeks from now that's no longer a negative. And so looking at the technical support for gold initially we have 4250 here and then I would also say 4050 down here. So, if you're looking at a weekly chart and you're looking at that analog that we showed you, right around 4,000, and that's actually just above this intraday low down here, which I think is 4090. This is an area where there should where gold should find pretty strong support. Okay.
Now let's go down here to the gold silver ratio. Now, this is now looking Now, this is now looking potentially bullish for gold. We can see this has come up here to nearly 64. So you could get a potential pop here to 70 or maybe a little bit higher before you get the final bottom in gold and silver. And so silver closed just below 68, 67.83. And so there is support here. This is the last significant support level. So bears and panic sellers next week are probably going to be able to push this down below 67. I believe this low here is 60. This level here just above just above this resistance here is 56. So those are the levels I'd be looking at, 56 and then around 60. So either way you you look at July right here, gold and silver are ripe to put in a bottom before July. And so people, whether it happens in 2 weeks or four weeks, we are setting up for a really significant low and bottom in precious metals. This is the end of an intermediate term correction. Okay, so this so we are setting up for the best buying opportunity in quite a while. And to those of you who have subscribed to the Daily Gold Premium, I thank you and appreciate your business. And those of you who own individual companies, individual miners or juniors, this is the service for you. We are entering buying time. In a bull market, you buy, hold, or you trim. The time to trim was several months ago. The last time to buy was quite a while ago. Now, over the coming weeks, we are coming to again one of the best buying opportunities we're going to see for a while. And the way you make big money in a gold and silver bull market is you buy good companies at good values and then you hold on for two or three years and let the market do the work for you. And in the Daily Gold Premium, I write about and cover the companies that I'm personally investing in. And so what I'm looking for is a combination of quality and upside potential. I'm looking for quality companies with quality people who have a track record. And quality also means quality assets that are big enough for the market and the industry to care because those are the assets that get the best leverage when metals prices rise. But at the same time, I'm looking at I'm looking at companies that don't need $100 silver or $7,000 gold to perform well. And as far as potential, I'm looking at companies that can do 3x to 5x potential because if you can buy good companies at good values, you're going to be able to ride out intermediate term corrections like we've just had, knowing that these stocks can move up dramatically when the bull market resumes. And so again, I'm looking for quality companies that have 3x to 5x upside potential over the next two to three years as this cyclical bull market resumes and matures over the years ahead. So, head on over to the daily.com/premium. We'd love to have you.
Now, let's wrap things up and talk about the miners. Here's the GDX advanced decline. If you don't know, this is a participation or breadth indicator for gold stocks. So, it measures the cumulative participation of all the GDX stocks. It's measuring how many stocks are rising versus falling and then it adds the difference and carries that forward into the future. And so, a market is strongest when most of its stocks are rising. And so that kind of internal strength tends to be a leading indicator as you can see here where these lines show the positive divergences in the advanced decline line compared to GDX down here. Okay, that was a lower low in GDX. That was a higher higher in the advanced decline line. You get it? The market continued moving up. Now recently what we've seen is you had this lower low in the advanced decline and then you had this higher low in GDX. So that was a bearish signal. Now, I do want to mention this is very preliminary, but it looks like we might have a bit of a positive divergence here because the GDX advanced decline line has actually not made a new low yet, even though GDX has made a huge new low. We can see here. So, I don't want to say this is bullish yet, but this is something to monitor as we move forward over the next week or so.
Now, let's wrap things up here with GDXJ. And so first let's talk about the price action before we get to the breadth indicators down below. So I'm looking at technical support here at around 96 and also 101. So GDXJ closed below 101. Now the next support comes into play at 96. This moving average here is the 350-day exponential moving average. It seems kind of random, but the reason I picked it because if you go back to the end of 2024 and the end of that mild intermediate term correction, this moving average marked the bottom of the market. Okay, so that comes into play right around 96 or 95, which is right in line with this line. And the other thing I want to mention is if you look at the 50% retracement from the 2023 bottom when this move really started, that comes into play at about 94. So we're starting to see all these strong support levels right around the mid-90s. Okay. So GDXJ is already not that far away from those levels. But at the same time, we want to keep our eyes on the breadth. And specifically, as I've said in past videos, when you're coming to the end of an intermediate term correction, this data here can help signal the bottom. And that data is the percentage of stocks that closed above the 200-day moving average. Now, based on history, looking at the 2000s and data for GDX, now during mild intermediate term corrections, the bottom, like the one at the end of 2024, came around 40%. But for more severe intermediate term corrections like the one we've been in, you tend to see readings that are below at the final bottom and the end of the correction. This data was just updated for me a few minutes ago. So I paused the video and reinserted this updated chart. We can see we're about 24%. Now for GDX, we're actually at 18%. I have to double check that. So we are actually getting really close here. We are 100. I talked about the support at 94 to 96. And then you look at these breadth indicators, 24%, 18%. We are getting really close. Like if we see another day like this or a day and a half, that's a strong buy. Okay, that's all for the video today. Hope you had a great week and hope you have an even better weekend ahead. Thank you. And I'll talk to you guys again next.