even our short term view on Gold and silver is turning bearish
Updated
At the moment of writing this article our full 200% net short position in gold,silver and mining stocks is well justified from the risk and reward perspective,last week we saw that the USD index goes lower while the mining stocks, gold, silver and Japanese all moved visibly higher,The slight reveals we saw in precious metals today where gold moved to approx $1231 appears to be a very bullish sign right?one may argue that was an opportunity to enter long but is it really? we highly doubt it and as we are writing this update gold is trading at around $1225 while it was trading at $1231 where we suggested you enter short in our yesterday alert,we believe that the rally is almost over and even if gold goes a little bit higher in short term it will not make any difference and one shouldn't be concerned with it,
Let's take a look at the Japanese yen(as it's currently highly interesting part of USD index) and try to understand why we think gold and silver is about to go much lower at least from both long and medium-term perspective.
The Japanese yen-In our previous post we wrote-The Japanese yen has recently broke it's long-term support line and right now it's trying to verify the breakdown, from a shorter point yen, could move higher but from medium and long-term perspective currency is about to plunge and there are good reasons which support our point of view, from the past few years we witnessed sharp declines in Japanese yen without any meaningful upswing.
In previous post we argue that we might see a short-term reversal where Japanese yen will make some correction based on apex triangle and that it's not going to make any difference,this is exactly what we witnessed,The Japanese yen moved higher but upswing and rally was stopped by the rising long-term support/resistance line. from our perspective, the rally in Japanese yen is almost over or very near to being over,
This means that the implications for the precious metals(gold, silver) is very bearish as before but the short term implications are even more bearish than they were before.
Gold-The yen moved higher and it's definitely a bullish factor for gold but gold wasn't even able to use this bullish factor and soared in a similar fashion, it barely moved $8 higher less than half of what it could it easily gained by the action in the Japanese yen, miners and gold should have soared if this was the beginning of major rally. Long story short, the implications of the gold’s chart are very bearish.
Weakness in mining stocks-we saw that miners moved higher on Friday but volume was very slow. That another bearish sign but not that important. The more significant bearish sign is that like gold miners were also not able to recover Thursday's decline, in last two trading day we saw that miners are down while gold is up, That's a classic bearish sign not bullish
Silver invalidated the breakdown-yes it's very true that silver invalidated the breakdown and was unable to go below 2017 also but at the same time the breakdown is confirmed below the December 2016 and 2017 bottoms,
silver bullish sign-The USD index declined with a force and thus it was obvious that silver was about to go higher and that's what happened but the rally was rather weak also accompanied with slow volume, overall our outlook for silver remains to be same
The conclusion-our outlook for the precious metals is extremely bearish for the long term and for short term
our 200% of the extra short position which we opened in gold, silver and mining stocks a few days ago is well justified from the risk and reward perspective,it'a very likely that the profit on the sell position that we opened some days ago will increase significantly before we will exit this trade,more importantly there are some signs which are pointing for the strong short-term decline in gold, silver and mining stocks,we will keep you informed anyway
many regards-Neeraj Pandey
Let's take a look at the Japanese yen(as it's currently highly interesting part of USD index) and try to understand why we think gold and silver is about to go much lower at least from both long and medium-term perspective.
The Japanese yen-In our previous post we wrote-The Japanese yen has recently broke it's long-term support line and right now it's trying to verify the breakdown, from a shorter point yen, could move higher but from medium and long-term perspective currency is about to plunge and there are good reasons which support our point of view, from the past few years we witnessed sharp declines in Japanese yen without any meaningful upswing.
In previous post we argue that we might see a short-term reversal where Japanese yen will make some correction based on apex triangle and that it's not going to make any difference,this is exactly what we witnessed,The Japanese yen moved higher but upswing and rally was stopped by the rising long-term support/resistance line. from our perspective, the rally in Japanese yen is almost over or very near to being over,
This means that the implications for the precious metals(gold, silver) is very bearish as before but the short term implications are even more bearish than they were before.
Gold-The yen moved higher and it's definitely a bullish factor for gold but gold wasn't even able to use this bullish factor and soared in a similar fashion, it barely moved $8 higher less than half of what it could it easily gained by the action in the Japanese yen, miners and gold should have soared if this was the beginning of major rally. Long story short, the implications of the gold’s chart are very bearish.
Weakness in mining stocks-we saw that miners moved higher on Friday but volume was very slow. That another bearish sign but not that important. The more significant bearish sign is that like gold miners were also not able to recover Thursday's decline, in last two trading day we saw that miners are down while gold is up, That's a classic bearish sign not bullish
Silver invalidated the breakdown-yes it's very true that silver invalidated the breakdown and was unable to go below 2017 also but at the same time the breakdown is confirmed below the December 2016 and 2017 bottoms,
silver bullish sign-The USD index declined with a force and thus it was obvious that silver was about to go higher and that's what happened but the rally was rather weak also accompanied with slow volume, overall our outlook for silver remains to be same
The conclusion-our outlook for the precious metals is extremely bearish for the long term and for short term
our 200% of the extra short position which we opened in gold, silver and mining stocks a few days ago is well justified from the risk and reward perspective,it'a very likely that the profit on the sell position that we opened some days ago will increase significantly before we will exit this trade,more importantly there are some signs which are pointing for the strong short-term decline in gold, silver and mining stocks,we will keep you informed anyway
many regards-Neeraj Pandey
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