What Next For Precious Metals?

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I hope my regular readers followed my precious metal suggestions a year or so ago and consistently since then. If they concluded it was worth taking a position, they will not only be happy but also wondering what happens next.

Full disclosure: I have a large exposure to precious metals and would also like to know what comes next, so here is my thinking.

Gold, where we are:

Right now, an equilibrium price range is forming.

I’ve put guard rails around this, and the classic way to treat this is: if it break up, buy more; if it breaks down, sell. I’m certainly not going to buy more if it breaks upward, but I’ll be comfortable with a move above $5,000+. Guard rails are a really good way to trade boom and bubbles.

So let’s look at silver:

The width of silver’s guard rails is a warning sign that the price is toppy. This is hardly surprising when silver is so “close” to the $100-an-ounce price magnet. The FOMO crowd will see $100 as their target, and this alone will make for difficult times for anyone trying to predict short-term moves.

Onwards to platinum:

The system breaks down here, so we are whistling past the graveyard. I think it’s going to break to the upside, but that’s just what my gut tells me. Sadly, I also know what my gut is connected to, so take that opinion as pure guesswork.

However, there is comfort in palladium:

It’s wild too, but a little more comfortable… a little.

This chart is what I cling to:

This make my Pavlovian bull salivate!

Fundamentally, however, it all comes down to gold and whether it makes a leg up above $5,000. $10,000 is the FOMO magnet, and if gold clears $5,000 and starts heading in that direction, everything will follow.

But remember: “up like a rocket, down like a rock.’”

That moment will come – but not while the guide rails stay in place.