The domestic and geopolitical situation is brewing to a boil while the dog days of summer approach an end that includes a treacherous escalation on numerous warfronts, political upheaval amid an assassination attempt on Trump during the U.S. presidential election cycle, wicked volatility in stock markets, a definitive shift in market reactions to recessionary signals, and the Fed circulating Fedspeak along with pundits that forecast interest rate cuts could begin in September. It appears that a termination of the latest TaperCaper cycle in U.S. monetary policy is imminent, so prepare accordingly.

An interesting observation during the chaos is that Olympic gold medals have mimicked the devaluation of the dollar since the Federal Reserve was born. They were 100% pure gold back then and are reported to be only 1% gold this year. The two other medals have already racked up complaints that they are visually deteriorating within one week. Meanwhile, gold has nearly doubled in dollar value vs. the S&P 500 stock index since January. There were several analysts and major banks that noted early in the year that gold would rise to $3,000 in the next 6-18 months. My spring analysis that gold was likely to continue mirroring its seasonality pattern throughout 2024 has held true so far.

Let’s begin today with a brief video clip from Jim Rickards, another with Danielle DiMartino Booth, a link garden of prescient commentary and data points since the “Gold and Silver Outlook for Early Summer 2024” was published on Jun. 24, and we will end with a technical analysis on the gold and silver charts.

“The level of risk on all financial and geopolitical fronts is growing exponentially, which requires a careful review of all investments and retirement funds. Events developing on warfronts around the world this year combined with political unrest surrounding an upcoming U.S. presidential election in November are unpredictable and will determine our future.” – TraderStef, Jun. 2024

Be Prepared BEFORE Fed Cuts Interest Rates – ITM Trading w/Danielle DiMartino Booth, Aug. 10

 

Jim Rickards: U.S. Economy’s “Heading Into A Very Serious Recession” – Bannons War Room, Aug. 6

 

• Nigeria repatriates Gold reserves amidst concerns over US economy – The Star
• Gold-buying frenzy grips Vietnam & Thailand – SCMP
• Unique View of Billions in Gold Bars at Netherlands Bank Safe – RTL (Video)
• Silver bonds for the first time in over 150 years – Monetary Metals
• United States Mint Announces Silver Product Price Hikes – Coin News
• Fed’s Powell says US on ‘disinflationary path – Reuters
• Dollar Drops Most in Three Weeks as Yields Fall on Rate-Cut Bets – Bloomberg
• A Deep Dive into the Gold Wholesale Market – Jan Nieuwenhuijs
• Gold- A Constructively Inhibiting Institution – James Grant
• Commodity markets fear a repeat of China’s 2015 economic slowdown – MarketWatch
• China Central Bank Did Not Stop Buying Gold in May – Jan Nieuwenhuijs
• A World First Precious Metals Recovery Factory – Royal Mint
• Two Chinese nationals arrested on Texas highway w/$250k in gold bars – NewsNation
• US recession scare fuels bond rally, yield curve flip in view – Reuters
• Jobs report disappoints, Gold poised for rally – FX Street
• Middle America rattled by jobs report – Washington Examiner
• Lousy Jobs Report Forces Fed to Reckon With Hard Landing – WSJ
• Flattening Yield Curve is the Calm Before the Storm – Peter Schiff

• Wharton’s Jeremy Siegel: Fed needs to make an emergency cut – CNBC
• Goldman Sachs revamps interest rate cut forecast as stocks slump – TheStreet
• Make Congress revisit decision to outsource monetary policy to Fed – Judy Shelton
• “I would have quit at 4.25, 4.5% and let market sort it out.” – Judy Shelton (Video)
• Biden DoE Misleading Claim Replenished Strategic Petroleum Reserve – Shale
• Google Search for ‘buy gold’ spikes 64% in recession panic – The Prospector
• George Gammon Explains the Yen Carry Trade Chaos – QTR
• Yen Plunges, Nikkei Soars After BOJ Says “Will Not Raise Rates” – ZH
• There’s Still Time To Prepare But Not For Long – Mike Maloney (Video)
• Modern Chickenshit Monetary Theory – QTR
• India gold demand still strong heading into fall festival season – Reuters
• Central Banks’ Gold Buying Sets Record in First Half of 2024 – Jonathon Turley
• Top Silver Producing Companies of 2023 – Visual Capitalist
• World Silver Survey 2024 – The Silver Institute (pdf)
• Silver Production by Country in 1893-2023 – Visual Capitalist / Voronoi

Below is today’s technical analysis for gold and silver. Rips and dips in the dollar and breaking news events combined with the dominance of automated trading decisions, HFT platforms, and artificial intelligence radically influence price action across all financial markets in either direction at all times within microseconds and cause bouts of extreme volatility. Be mindful that a window of opportunity for swing or scalp trading precious metal ETFs, spot, options, futures, or mining stocks does not necessarily equate to timing for layering core long-term positions or purchasing physical bullion and coins. To view a larger version of any chart below, mouse over it and select or right-click and choose a “view image” option.

 

Gold Spot weekly chart as of Aug. 9 close…

 

Excerpt from the May 10, 2024 (Twitter thread) weekly gold chart analysis:

“Gold’s 4-hour chart clearly shows a three-step pullback that bottomed out at $2,280 and the 38.2% Fibonacci Extension level. The price action printed a high of $2,378 at Friday’s close after challenging congestion at around $2,360 and a topside trendline drawn from the $2,431 all-time high on Apr. 12. On the weekly chart, gold’s entry into a secular bull phase may be forming a flagpole and Half Staff Flag that extends the rally to a third step at around $2,500 or higher this summer. Take note of those Fibonacci Extension levels. The DMI-ADX is still positive, the price is extended far beyond the 50 Exponential Moving Average (EMA), and the buy Volume bar was lowered last week. There might be some choppy consolidation before summer. Despite a pullback after leaving $2,100 in the dust two months ago, there is no technical damage, and the chart remains bullish.”

Excerpt from the June 24, 2024 (Twitter thread) daily gold chart analysis:

“On May 20, gold printed an all-time high (ATH) of $2,450 at the 123.6% Fibonacci Extension level. The subsequent pullback pivoted at $2,288 on June 10 confirming an upper and lower trendline to form a bullish Flag Tilt. As noted in the May 10 analysis, a healthy consolidation phase is playing out that will create a solid base of support. A rally is in the cards this summer if gold continues to mirror its seasonality pattern while buying picks up in India as they stock up months in advance for the fall wedding season. The price action has run into minor resistance from the recent highs on Jun. 6 and 7 and at the trendline drawn down from the May 20 ATH while riding along the 50 EMA. With the DMI-ADX trending indecisive and buy Volume sporadic, it’s likely we’ll see additional chops in price before challenging the Flag Tilt’s topside trendline if news doesn’t spike the price first. The chart is bullish.”

Gold printed an all-time high (ATH) of $2,484 on Jul. 17 and settled at $2,430 into Friday’s close. The dominant chart pattern continues to be a Flag Tilt with strong dip buying on higher lows that have followed higher highs since Apr. 12. When the price action was about to challenge the ATH on Aug. 2 and break out of the Flag Tilt, a selling panic in Japan’s stock market ensued overnight that followed the Magnificent Seven stocks and recessionary data beating down U.S. stocks since July. Markets in the U.S. were subsequently pummeled on Aug. 1-5. What occurred in Japan was a manifestation of the initial yen panic on Mar. 27 that has been annotated on my charts since that day. Gold buying quickly returned in earnest on Aug. 5-9. The reasoning behind the secondary Throwback that began on Aug. 2 is a topic I have explained numerous times, and the mainstream financial press duly noted that cause on this occasion. Note that gold and U.S. debt markets are two of the largest and most liquid on the planet, which makes them targets for cash when needed.

Gold Plunges as Global Equity Mayhem Sets Traders on Edge… “Virtually every time there is marked equities weakness, investors who hold gold as a risk hedge will liquidate part of their holdings to raise liquidity against any potential margin calls. When the dust settles, they almost invariably buy it back.” – Bloomberg, Aug. 4

It is also relevant to note that gold’s seasonal pattern is firmly intact for 2024 so far. The reason why some market observers mistakenly claim otherwise is because they misread what a seasonal chart represents. It reflects the up and down price action for a calendar year (I utilize a 20-year average) and does not indicate that the price action climbs upward every year forever. Coincidentally, I created a juxtaposition graphic literally hours before the Aug. 2 event. The last red arrow line on the right partially covered a downward blip on the seasonal that was due very soon.

Gold vs. Seasonality in 2024 as of Aug 2…

 

Despite any selling pressure since July, gold’s price action has continued to trend upward since the Jun. 26 low at $2,293 and the seasonal summer rally that gained an impressive $191 until the Jul. 17 ATH. The DMI-ADX is still positive, the price is somewhat extended beyond the 50 EMA, and buy Volume has outweighed any selling since early March. There may be some choppy consolidation before any new ATH attempt short of any major news event. There is no technical damage in the daily or weekly chart, and the price action remains bullish.

Silver Spot daily chart as of Aug 9 close…

 

Excerpt from the May 10, 2024 (Twitter thread) weekly silver chart analysis:

“Silver’s 4-hour chart shows a bullish Falling Wedge that formed and bottomed at exactly $26 on May 2 after printing a high of $29.78 on Apr. 12. There was strong buying at each step down that provided fuel for May’s rally that has printed a high of $28.75 and closed at $28.15 on Friday. After more than two years as resistance at a Fibonacci Confluence, the weekly chart highlights why $26 was a significant support level to be tested. The DMI-ADX is still positive, but the buy Volume bar was lowered last week. There might be some choppy consolidation before $29 and $30 can be left in the dust. The Throwback is a positive development, and silver is likely to leave $29 and $30 behind this summer. There is no technical damage, and the chart remains bullish.”

Excerpt from the June 24, 2024 (Twitter thread) daily silver chart analysis:

“Silver printed a high of $32.50 on May 20 and descended into a consolidation phase that has formed a bullish Half Staff Flag. There is a Bear Trap zone between $29 and $30 with resistance just shy of $31. Despite the pullback, the lower trendline drawn upward since late February has not been violated while the price action is pivoting off the 50 EMA. A summer rally is on the horizon if silver continues to mirror its seasonality pattern this year. With the DMI-ADX trending positive and buy Volume sporadic, it’s likely we’ll see additional chops in the price action before taking out the Half Staff Flag’s topside trendline and challenging $32.50 if news doesn’t spike the price first. The chart is bullish.”

Silver has not fared as well as gold since selling began around Jul. 11 due to recessionary signals in economic data released by the U.S. and China. Keep in mind that roughly 50% of silver demand is for industrial applications, and it usually mirrors any downside in industrial metals. An exception is when gold’s investment demand intermittently drags silver along for a rally or serious shortages occur that outweigh deficits in silver supply as premiums spike.

The Half Staff Flag noted in June was breached on Jul. 3 at $30 in lockstep with gold’s summer rally that began on Jun. 26, but the rally was halted at $31.74 on Jul. 11 due to the conditions noted in the analysis above. After printing a high at $32.50 on May 20 and the subsequent summer rally blunted, the price action hit a low of $26.34 on Aug. 8 after taking out all support gained in the $29-$30 Bear Trap zone. That low is sitting just above substantial lateral support at $26 going back to Apr. 2023. The downside in mid-July has formed a bullish Descending Broadening Wedge overall since May, and another is nestled inside that encapsulates the price correction since July.

The DMI-ADX has trended negatively since mid-July, buy Volume is sporadic, and the price action needs to consolidate with large buy Volumes to break back above the 50 EMA. The chart is neutral with substantial support at $26, and technical damage will be reversed if the 50 EMA is decisively retaken.

Plan Your Trade, Trade Your Plan

TraderStef on Twitter / Website: TraderStef.com