Infographics

While precious metals can't be produced out of thin air, US debt can be financed through central bank money creation. In fact, debt has skyrocketed in recent years.

How has the value of gold and silver coin production compared to the rise in public debt during past presidencies?

Take a look at our infographic to see how US debt and US Minted Gold and Silver correlate.

How Much is Produced Globally

Gold and silver have played an important role throughout money's history. Unlike modern currencies, precious metals can't be created out of thin air and derive value from their scarcity.

Globally, how does the value of minted gold and silver coins compare to currency creation?

Gold and silver have played an important role throughout money's history. Unlike modern currencies, precious metals can't be created out of thin air and derive value from their scarcity.

The precious metals market is very clearly in a secular uptrend and prices look poised for further significant upside into the end of the year. My technical view is that in the short term prices have gotten a bit extended and that a pull back/consolidation is due (and healthy) to build the base for the next leg higher.

GOLD

As I stated in my last post from July 8th: “I have always viewed the $1800 price level in gold as more significant than the $1910 blow-off top in 2011. The price level at $1800 was the multi-month, triple tested resistance level that precipitated the six-year base. If price holds, the breakout above this level is secular and very bullish.”

This past week December gold futures eclipsed $2000 and the front month August contract peaked just shy of the 127.2 Fibonacci extension. When this level breaks and holds, my text target is $2260 at the 161.8 Fibonacci extension. However, with the 14-period RSI in extreme overbought conditions, eclipsing 86 for the highest on record, and with bullish sentiment frothing, the timing seems ripe for a pullback (even if just a modest one).

For a more granular view, the August front month contract has been trading in this channel since February, and is also now approaching the upper bound. A logical place for a reentry to add to longs would be a small consolidation to rising support.

SILVER

The level to watch in silver is $26 (the July high was 26.27). The $26 level was triple tested support in 2011-2012 and is now acting as resistance. This is also the 38.2 Fibonacci retracement from the peak in 2011 to the the 2015 low. The risk/reward favors a long position above $26 or on a retest of the $19.80 breakout level. Price could get choppy in between as the market digests the recent moves. When price breaks out above $26, the next key targets are $33 and $35 (the 61.8% Fibonacci retracement).

US DOLLAR

The US Dollar supports the metals thesis, acting as the inverse of metals price action. Big picture, in July, the US Dollar broke down from its 12-year rising channel (and diamond top pattern) and all technical indications look bearish.

However, in the short term, price is likely to push back to at least 94.60 as the dollar works off extreme oversold conditions and historic bearishness to retest prior support.

We are looking for further metals strength and dollar weakness as we head into the fall. As always, we welcome any feedback and comments.

Precious metals prices broke out this morning above key resistance levels in the mining sector as well as the underlying futures market for the raw metal.

SILVER

In my post from June 10th, I mentioned 18.90 as a key initial target for silver. This level at sub-$19 has been an importance resistance level in silver for four years, getting rejected each time except for the false breakout in September. The breakout here is meaningful. The 14-day RSI (Relative Strength Index) is still not overbought and price looks like it has some room to run. The next target is $21, which represents the 161.8 Fibonacci extensions from the February/March high/lows.

Pan American Silver (PAAS), one of the leading silver mining stocks, also broke out this morning with a gap up above the 127.2 fibonacci Extension from the February/March high/lows. This move follows a multi-week basing period and targets just under $36 on this initial thrust, which is the 161.8 fibonacci extension.

GOLD

I have always viewed this $1800 price level in #gold as more significant than the $1910 blowoff top in 2011. The price level at $1800 was the multi-month, triple-tested resistance level that precipitated the 6-year base. If price holds, the breakout above this level is secular and very bullish, in my opinion, with the initial target at $2,000/ounce, or the 127.2 fib extension.

GDX

The Van Eck Gold Miners ETF had breakout and successful retest of the $32 level, broke out of the bull flag and is now taking out the May peak. My target is $42, which is the 161.8 extension from the Feb/March high/lows.

GDXJ

The Van Eck Junior Gold Miners ETF has been the laggard, but it is finally finally retesting the 2016 peak. Price has some room to run here and a bullish breakout/retest would be a great setup to add to long positions. The RSI hasn't been overbought on the daily chart since July 2019. Now would be a good time to show some strength.