Gold and silver improved last week and we saw a tentative breakout by precious metals stocks from the downtrend they have been stuck in since last August. The purpose of this update is to point out that even though the sector may back off short-term from the resistance it has arrived at, the picture is brightening, and silver in particular is showing signs that it is beginning a major new uptrend, which, of course, implies that gold and precious metals will too, since silver is most unlikely to go up in isolation.
There are two key points to note on the 1-year silver chart. The first is the now tight bunching of price and moving averages, with the averages in bullish alignment—this is the sort of set up that often triggers a sizeable upleg. Thus it is most encouraging to see silver's Accumulation line forging ahead to new highs, making it all the more likely that it will continue to advance.
On the 3-month chart we can see that silver could tarry a little here, as after last week's advance it has arrived at a resistance level that could force a minor reaction, although the strength of the Accumulation line suggests that any minor dips should be bought.
Meanwhile, we can see that the stocks barometer GDX appears to have broken out of its downtrend in force from last August just last week, although so far the breakout is tentative. However, the strength of the silver chart means that there is a good chance that, perhaps after a minor dip with silver, it will soon gain traction and advance.
There is some resistance here and on its 3-month chart we can see why GDX may react back a little before taking off higher—it has arrived at a zone of some resistance where a rather bearish looking “hanging man” candle formed on Friday.
The conclusion is that the precious metals sector looks like it is beginning an important new uptrend, although we should not be surprised if we see a minor reaction first, and if there is, we can use is to build positions in the better stocks.
Finally, someone close to me was showing enthusiasm for buying Bitcoin in recent days, because "some of her friends we making a lot of money out of it." As diplomatically as I could, I pointed out that it was not particularly smart to buy something that gone up from about US$3,000 to $60,000 in the space of a year or two, and that it would be a lot safer and probably more rewarding to instead invest in the so far bypassed silver sector. Sure Bitcoin could go up a lot more, driven by massive dollar creation and the fear of banks plundering account holders' money via negative interest rates and bail-in scams after they introduce the cashless society to trap people, but after its recent huge gains it is very risky, which silver (or gold) investments are not.
Originally posted on CliveMaund.com at 7.15 pm EDT on 18th April 2021.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
