home Latest News Gold and Silver are on a Major Buy Signal – Commodity Trade Mantra

Gold and Silver are on a Major Buy Signal – Commodity Trade Mantra

This post was originally published on this site

Our proprietary cycle indicator is down.

chanhui16-10
The gold sector is on a long-term buy signal. Long-term signals can last for months and years and are more suitable for investors holding for long term.

chanhui26-10
The gold sector is on a short-term buy signal. Short-term signals can last for days and weeks, and are more suitable for traders.

chanspec6-10
Both speculation and OI are not anywhere near a major top.

chanspdr6-10
The trend is up.

chansilver6-10
Silver is on a long-term buy signal.

chanslv6-10
SLV is on a short-term buy signal, and short-term signals can last for days to weeks, more suitable for traders.

chansilverspec6-10
COT data is supportive for overall higher prices.

Summary
The precious metals sector is on a major buy signal. The cycle is down, barely. The multimonth consolidation continues.

Gold is on the way up, says Tom Beck, editor of Portfolio Wealth Global, and sets out several elements investors should look for before buying.

You can already taste victory, but keep calm.

Gold is trading in its highest level in seven months.

Don’t get overly bullish yet. What we’re waiting for is the “all clear” signal, which is just 3% or so away from us.

What Portfolio Wealth Global is also keeping an eye on is the sentiment. If gold’s price is rising while demand is soaring, then the banking giants smack the price around and scare off the weak hands, but this isn’t happening now.

American Gold Buffalo Sale

The best time to enter a position is when the elements are aligned.

Remember these three elements that I’m about to show you and stick to them—don’t ever deviate from them.

For an investment opportunity in commodities to work out for you in the most profitable way, you must be ready when an asset is hated, cheap, and in an uptrend.

1. Hated: Middle-class America has abandoned gold and silver. Not only are the sales severely down, but on Google Trends, Bitcoin and Ethereum have surpassed the search quantity of the metals.

In fact, bond investors are betting on low interest rates at a record pace. This is a deflationary theme, and we all know that investor sentiment is a brilliant contrarian indicator.

COT 10-Year Treasury Notes Report

Bond investors are more confident that lower rates are here to stay than they have been for 35 years.

But as we’ve seen many times before, especially under the fiat monetary system, inflation picks up speed without warning and very quickly.

Historical U.S. Inflation Surprises

2. Cheap: What’s important to do is to compare gold’s price today with its 1980 high using the same CPI formula—the U.S. Government has altered the components of the Consumer Price Index over the years to make inflation appear much less harmful than it is.

In 2011, gold was as high as it was a third of the way through the 1970s cycle, which means that rising to a price of $5,700 per ounce could be expected. Gold is cheap.

CPI Formula Shows Gold Near All-Time Lows

3. Uptrend: This was certainly missing for a long period, but the metal just snapped out of its 2011 resistance line. Chief technical analyst for Goldman Sachs, Sheba Jafari, has come out today with a report that sees gold reaching $1,304-­$1,315.

This is a huge confirmation that the gold bears are losing again.

Don’t be committing the fatal error of jumping the gun, though. Let’s make sure this isn’t a false alarm—$1,300 is our key for seeing this through.

2016’s 180% move higher was extremely brief and is not considered a bull market in itself, but merely the first act.

HUI Bull and Bear Cycles Since 1995

The swift 8-month bullish roar is not the typical length of a bull market.

It was merely a correction within the long-term bear market that started in 2011.

Gold has had to shake off deflationary fears, a strong U.S. dollar, the weakness of the BRIC countries that are interconnected with gold, the price suppression by the big banks that is now out in the open, and low oil prices.

Gold is mimicking the 1970s move, and it has a lot more room to go.

With regards to the miners, gold ripping through the $1,300 mark would signal that they can begin spending more on acquisitions, drilling, merging, and expanding.

This will be the next logical step, as their financial health is firmly in place.

Free Cash Flows of HUI Components

Their books are looking solid.

The next step is that the same investors who have been shorting the stocks as a means of a hedge for years will now be reversing course.

For more than six years, traditional investments have outperformed the riskier miners.

Important dates to keep in mind are rate hike decision and the GDXJ rebalancing.

Those two major events will determine how precious metals will perform going forward.