Transcription
Hey folks, welcome to verified investing.com. My name is Gareth Soloway, chief market strategist here.
In today's video, we're diving into the metals. What's silver doing? What's gold doing? Has there been any change in my downside targets of 35 to 3600 on gold or potentially as low as $50 or just below on silver?
So, we did see a bounce last week, and again, that coincided with a weaker jobs report, which again means there's less likely a chance of rate hikes, which is negative for the precious metals. And also, the dollar fell back, which had been at key resistance. So, all of these factors here, we'll watch and see, but really, the charts are my insight. So, as always, folks, I want to dive right in. All right.
So, here's your gold chart, right? And what we see very clearly is we remain inside what we call a wedge pattern. Wedge patterns are two trend lines that are converging, essentially forming a triangle. Price tends to want to stay within those lines. For instance, you can see starting the line up here, it connects right through the high here in March, then through the highs in May, again in late May. And the question is, will we see a push up into this line in early July here in the next few days? Now, if we do, we know right away that that level is going to be resistance, right? It just makes a whole lot of sense. You can see how price has been defined by this descending trend line that is the top of the wedge pattern. Likewise, we have this trend line, which I found fascinating. Generally, you do the wedge, you don't have to connect it through, but when it does, I think it's just amazing to view how the charts work, how this high pivot becomes a staple of the wedge, and it goes right through this little point where we broke out above it. We kind of retested right there. Then we popped up. Then we came back, retested. Then we had our monster surge in gold to 5600 before finding our way back down to the low end of the wedge again and again and again. And notice how many times we hammered on the low end of the wedge here, one, two, three, four, five, six days in a row. Every day tagging this line before we finally went to the path of least resistance, which was to the upside. And of course, coinciding with the price action and the jobs report.
Now, again, just to look at the US dollar here. If we do the DXY, notice how the dollar has played a key role driving gold down. We've seen the dollar grinding up. But then look at the pullback in the last few days or so. And that dollar pullback has helped gold catch a bid. Likewise, if we look at the 10-year yield, the 10-year yield pulling back as well, which again, you can see again that retrace pulling back. This general trend has helped support gold just a little bit.
All right, so a couple things here. So, number one, as we go back into the chart of gold, we want to say, all right, well, if we push up here, will we break out? And the general rule of thumb in technical analysis is that number one, you monitor the amount of hits of a trend line. The more a trend line hits, the weaker it becomes. All right? That doesn't mean it's going to break, but you want to be aware of that. Usually the second hit, the third hit, no. By the fourth hit, the odds of a break one way or the other are about 50/50, right? So again, you start to say, "All right, well, have we hit four times?" If it's four times, it's a to a coin toss, right? Um, and that goes on both the the descending upper trend line of the wedge as well as the lower trend line of the wedge. Now we can look here. We have this is our first point, our second point of contention, third point, and fourth point. So, this would be our fifth hit, which starts to increase the odds of a breakout. Having said that, we haven't broken out yet. So, it would maybe be about a 50% or slightly better chance that we could break out here or we will at some point in the future. Likewise, we have this would be considered our first point. This is just an intriguing aspect. But we have our low pivot, two, three, four, and also five. In fact, I want to put in an arrow down there. And we can just put one for that whole group because that just counts just like this just counts as one. This is just one. All of these hits because it's all in a clump. All right.
So, we're really at this pivotal point now per the charts, right? Where gold is getting to a point where the head of the wedge is coming to fruition. And if we look and understand wedges, the way they generally work, you have your down slope here, and I'm just drawing a rough wedge, right? And we have our price action, and it's getting squeezed inside of this wedge pattern, tighter and tighter and tighter. Now, what's important about that is the tighter it gets squeezed, eventually when it does break, it's usually a major breakout or major breakdown. In other words, what we can surmise by the price action here in gold is that if it breaks to the downside, it's going to be a big flush down to probably that 36, 3500, or if it breaks out, it's going to start a very big move to the upside. Now, it's not going to be like a one-day move, right? Just like down here, if it breaks down, it's not going to be a one-day flush to 35, 3600. But what we do know is that you're coming to the head of the wedge where price per this diagram up here, it's going to make its decision, right? It's got to make its decision to break out or break down. One or the other is going to occur by the time the head of the wedge occur uh forms. So, basically what we're seeing here based on the technical analysis, I'm just extending the line out a little bit so we come to a head, is that by latest by early August. So, basically gold could stay in this wedge pattern without a decision till for about one more month. That's the maximum. Now, the reason it's the maximum is because once it comes to the head, it's going to have to close above or below, right? I mean, there's no way it can stay in there because the two trend lines are going to intersect and then start to diverge again. So, you have until about August, mid-August until a breakout. Now, I don't think it waits that long. I think we probably know by the beginning of August which way it goes at latest because again, it once you get over here, it's it's very much like, okay, well, it's so tight. I mean, all it takes is a close above or below, but that's really what we're looking at now.
Now, I will say this, my bias still remains downside on gold to that 35 to 3600. I still think again, in general, there's still some pressure and some flush out that is needed. But we're now at a point where we got below 4,000 per ounce where gold is intriguing as an accumulation zone. I guess we can call that, right? Right down here. Before I even said that, I said, "Listen, you're it's a rounding error. If you're like me and believe that gold eventually within a few years is $10,000 plus dollars an ounce, doesn't matter if you buy at 3900 or 3600. I mean, $300 variance. I mean, it's a small percentage difference if it's really going to that $10,000 level. And likewise with silver. I mean, if silver is going to be 15, 20, $30, you know, $50, it got down to about 56 versus 54 versus 52 versus 50. If it's going up that high, it becomes that rounding error at that point. Okay.
So, again, just to summarize, we're we're going to be watching in the coming week this level here, which is now around the 4250 level. If it gets there, does it break out and does it confirm? That would tell me, okay, game on wedge breakout. Look for the beginning of a bigger bull move. All something like this, right? Eventually getting back to its all-time highs. On the other side, if it gets rejected and it comes down and confirms below this line outside of the wedge, let's say below 3,900 here, you look for that final flush out into the 35 range, right down in this range. And that then eventually, I think I think you know, sometimes markets like to give you that last big flush out to kind of scare everyone and get everyone max bearish. And I look at that as being the potential for the break. But the beautiful thing about it is that we're going to know. We have two trend lines right forming this wedge. The breakout or breakdown are very clear. A breakdown just gives me a great buying opportunity. A breakout says, okay, it's game on and we're headed back to the highs within, let's say, six months, 12 months, and likely to that 10k within two, three years out from now. And so, really, my overall mid to long-term bias is bullish. It's just this shorter term period now, which we're coming towards the end of, which is very exciting for me. You know, listen, when we were at 5,600, even above 5,000, I kept on telling people, gold's going to flush out here. Just the signals, the divergences, you had all the technicals pointing to downside. We're now at a level where it's getting close to a bottom if it hasn't already reached that, which is exciting. So, I'm still on the short-term, one more flush out to just wipe out those last kind of few people that are kind of, you know, the wishy-washy people that got into gold to get rich quick. But once that happens, it's to me it's an accumulation. Now, listen, nothing's going to be easy. So, as we all know, uh, chances are, you know, it'll throw us a few curve balls along the way, but that's okay. I don't mind that. Curve balls are how we get to be good seasoned investors and traders.
All right, let's go to the silver chart here. Silver continues to be a little bit weaker than gold in my opinion. And the reason I say that is you have this very clear trend line, which remember I had this labeled as a support at 64. And then once we broke and confirmed, here's your breakdown candle. Here's your confirming candle. That now becomes resistance. Now, if silver can reconfirm above, that would be step one in showing relative strength. But for me to really buy that it's a new paradigm, a new breakout, a new bull run, we would need to confirm above this trend line, right? That's the obvious trend line there, which is all the way up at 72. And it's also, interestingly enough, if we look at the chart here, we can see that again, this level here is very, very important. That 72-ish level, low pivot. We kissed it here, and it's also this high. So, this area really, I mean, this is step number one. That's you got to get above that to even have a shot at it. But this is the one that if we could break above 72 and confirm, okay, now we can say we the chart has now flipped in my opinion from bearish to bullish. But right now, is silver bearish? Yes, absolutely. Still below this line at 64, $63 per ounce. And again, even though it's bounced up, it hasn't recaptured and reconfirmed above there.
By the way, guys, just a reminder that I will be dropping a member-only video today, and it will include a discount to a service on verified investing. A pretty good discount. In fact, one we've never offered. Uh, again, if you're part of Gareth's Top Squad, you will get that later today in the video. So, be ready for that, folks. As always, trying to take care of those of you that are supporting me here on YouTube. And again, it's Gareth's Top Squad here at YouTube. And it's just 10 bucks a month. If you go through the Apple App Store, they do charge you 30%. So, you can always do it through a browser to get that $10 price. Uh, but just be aware. Sometimes people are like, "Oh, mine's 13. Why is it 13?" Well, it's good old Apple getting their cut, as we always know, right? Um, okay. So, that's that, folks. And I'll be dropping a just member-only video with that later today. Um, and then always folks, as always, you guys know, um, yesterday I didn't have the QR code up, but Rumble, the Rumble wallet, how I buy and sell my gold, uh, as well as crypto swing trades. They are a sponsor.
Now, let's finish up with silver here real quick. I'll do a video platinum and palladium, oil, and and that gas in the coming days as well for those of you that are interested. But right here, folks, again, that's your level to watch. I still think silver is headed lower. Remember, it doesn't have anything to do with, well, inflation-adjusted silver should be higher. Remember, short-term price is ruled by emotion. So, this is your first level around 54, and really, this would be my wash out levels, 50, pierce maybe down to 46. That would bring us back to the highs from 1980, the highs from 2011. And again, like I said, the the rebuttal I always hear from you guys in the comments is, well, why would it go back there if you know inflation adjusted? So, well, yes, that's the that's the fundamental basis and that's a correct thesis, but that's the long term. Short-term price is always ruled by emotion. People get emotional and they make decisions based on emotion, which is how we as swing traders and investors get our deals, right? We look at things and say, "Okay, everyone's acting very emotionally here, right?" Recently I did videos on Bitcoin and I said, "Guys, Bitcoin and alts looking good." And the comments were like, "No, it's going to zero. No value." Blah, blah, blah. And I'm like, as a swing trader, I'm like, "Yes, that's the emotional panic of fear and like throwing it out the baby out with the bathwater." And that's when we see that on silver and gold, it's like ding, ding, ding, that's where we have to. So, remember the game that we're playing in terms of market timing has a lot to do with human psychology. Human psychology, both on greed at silver 120 or gold at 5,600, that was extreme greed. So, we faded it. It was very, you know, clear from emotion, and the technicals read into that emotion. And then vice versa on the downside. Very interesting. If you if you ever take the time to learn and start to study yourself and your emotion, number one, you become incredible at decision-making because you don't rely on emotion or you don't use emotion to make decisions, but also you learn so much about your fellow humans, uh, in terms of reading them. If you're like the person like me that kind of sits in a room and I don't really, believe it or not, I'm an introvert. I don't really talk a lot. I'm more of a listener. In fact, I I don't feel comfortable in front of people. I know it sounds weird because I'm here I am on YouTube, right? But just watching you pick up so much more. It's incredible.
All right, guys. So, on that note, I'm going to bid you farewell. Uh, I'm going to do a short later as well. I'm here. I'm here in in Mexico. So, I'll do a short from the beach or overlooking the beach a little bit later, and I'll send you guys that as well. Have a great rest of your day, guys. Take care.