Gold Market Wire
News, analysis and commentary for gold traders and investors
Silver Market Update
Silver Takes Another Leg Down
September 23, 2020 - (Gold Market Wire) - Silver has made another leg lower today, reaching almost minus 6% on the day, as the shake out in the precious metals complex continues. Gold, for its part, has shed about 1.5%. So far, this is happening in an equity market that is, temporarily, stabilizing. That could be a sign of metals capitulation...or a sign that the equity rout may re-commence. Take your pick.
Techincally, in Silver, we've paused at a minor horizontal support, but the major one is about a dollar lower.
The take away from the fall was, once again, that the much maligned technicals did, yet again, provide a good signal to get out. We had the poor upside head fake in Gold, which retreated quickly, the failure to clear the downtrend line, and the Silver box breech just above $26, which signaled trouble. Then, the failure of the 50-day moving average, the final warning, before the sell off. Gold's failure to clear horizontal resistance at $1956 was awake up call for us, and when we signaled that the failure of the rally was coming.
Technically, the simple trend line worked well.
More opaquely, the lack of follow through, as ever, revealed that we were, quite simply, running out of buying power. When that happens, the market turns.
Our plan in Silver, as we've said, is adding to core positions only now, at $22, $20 and $18. If you're more conservative, you can eliminate the first buying level and add $15 to the third buying point. As we have related on these pages, we added to core positions, in the first instance, as we passed through $24. Trading wise there is little point in trying anything until the market settles. The chart damage is significant and must be worked off. From the trading perspective its time to avoid catching those proverbial falling knives.