Technical Analysis Reveals The Next Big Move: Deep Dive Into Gold, Silver, Platinum And Palladium

Key Concepts

• Technical Analysis: The study of past market data, primarily price and volume, to forecast future price movements.
• Pattern Repetition: The idea that historical chart patterns tend to repeat due to consistent human emotions (greed and fear) in market participants.
• Bull Flag Formation: A bullish continuation pattern characterized by a sharp upward move followed by a period of consolidation in a rectangular or triangular shape, suggesting a potential breakout to the upside.
• Bear Flag Formation: A bearish continuation pattern characterized by a sharp downward move followed by a period of consolidation, suggesting a potential breakdown to the downside.
• Reversal Candle: A candlestick pattern that signals a potential change in the direction of the price trend.
• Consolidation: A period where the price of an asset trades within a defined range, indicating indecision in the market.
• Support Level: A price level where a downtrend can be expected to pause due to a concentration of buying interest.
• Resistance Level: A price level where an uptrend can be expected to pause due to a concentration of selling interest.
• Pivot High/Low: A point on a chart where the price trend reverses direction.
• Gap Fill: When a price moves to fill a previous price gap on a chart.
• Inside Bar: A candlestick pattern where the high and low of the current candle are contained within the high and low of the previous candle, often indicating a pause or potential reversal.
• Safe Haven Asset: An investment that is expected to retain or increase its value during times of market turbulence or economic uncertainty.
• Industrial Metal: A metal primarily used in manufacturing and industrial processes.
• Fiat Currency: Government-issued currency that is not backed by a physical commodity like gold or silver.
• Debt to GDP Ratio: A measure of a country's debt relative to its economic output.

Gold Analysis

Gold's Bull Run and Pattern Formation

The video begins by analyzing the daily chart of gold, noting a significant bull run from approximately $3,300 to nearly $4,400, followed by a pullback. The presenter, Gareth Soloway, chief market strategist at Verified Investing, highlights the normalcy of pullbacks even within bull markets.

Comparison to 1979 Bull Market

A key argument is the striking similarity between gold's current chart pattern and the 1979 bull market. Soloway emphasizes that patterns repeat due to consistent human emotions of greed and fear driving buying and selling decisions.

• Identical Formation: Both periods show an initial strong upward move followed by a period of sideways consolidation, identified as a bull flag formation. This pattern suggests digestion of recent gains before a potential explosive breakout.
• Nine Consecutive Green Weeks: Both the 1979-1980 period and the recent gold chart exhibit nine consecutive green weeks leading into a potential top.
• Correction and Reversal Candles: In 1979, a significant correction and a major top were formed, marked by a large reversal candle. In the current chart, two candles in two weeks have effectively negated the previous green price action, indicating a similar reversal.
• Sideways Chop: Following the initial pullback in 1979, there were several weeks of sideways chop before a further move down. The current chart is also showing this "sideways chop" on the weekly chart, suggesting an expectation of another week or so of consolidation before a move to the downside.

Bear Flag Formation on Daily Chart

The daily chart analysis reveals a bear flag formation, characterized by a down move followed by choppy sideways consolidation. This pattern typically resolves to the downside.

Differences from 1979 and Future Outlook

Despite the pattern similarities, Soloway stresses that the current environment is not identical to 1979-1980.

• Interest Rates: In 1980, Paul Volcker aggressively raised interest rates to 15-17%. Currently, the Federal Reserve is lowering rates.
• US Debt: The Debt to GDP ratio in 1980 was 32%, whereas it is currently 130%. This significantly higher debt level, coupled with the Federal Reserve's easy money policy and continuous spending, makes Soloway bullish on gold as a hedge against fiat currency devaluation.

Conclusion for Gold: Soloway anticipates further downside in gold in the near term, followed by a turn back up to make new all-time highs by 2026, potentially breaking $5,000 per ounce. He does not expect new all-time highs within the current year.

Gold Support Levels and Accumulation Zone

• First Support Level: Around $3,845.
• Secondary Support Level: Within a specific range.
• Ideal Accumulation Zone: Soloway would ideally like to see a "flush out" to former pivot highs, around $3,500, before a significant springboard to $5,000.
• Historical Mimicry: The pullback in 1979 reached the former consolidation high before a substantial bounce. Soloway believes gold will likely pull back to a similar former consolidation high in the current chart.

Silver Analysis

Silver's Near-Term Top and Long-Term Bullishness

Soloway called the recent top on silver but considers it a "near-term top." While silver has an industrial component, it is still denominated in dollars, and he believes it will eventually go up. He is a buyer but a more patient one.

Chart Analysis and Accumulation Zone

• Historical Context: The chart references the 2008 financial crisis low and the 2020 COVID crash low, with the 2011 bull market high as a reference point.
• Pattern: A "down move inside bar" is identified, which is a bearish pattern.
• Expected Move: A move down below $43 is anticipated.
• Accumulation Zone: Soloway's accumulation zone for silver is between $43 and $39. He will start "nibbling" below the $43 level, especially with a gap fill just below $40.

Long-Term Outlook for Silver: Despite the near-term pullback, Soloway remains very bullish on silver long-term, viewing the current situation as a pause, pullback, and a way to "shake out the weak hands."

Platinum Analysis

Long-Term Bullishness and Buy Level

Soloway is long-term bullish on platinum but is not buying until it comes back down.

Chart Analysis and Buy Zone

• Top Formation: The weekly chart shows a clear topping out at a previous resistance zone.
• Pullback: A pullback is currently occurring.
• Buy Level: Soloway's buy level for platinum is between approximately $1,360 and $1,280, where there is significant support and a down-sloping trend line.
• Rationale: Platinum is a rare metal, and its price needs to rise to reflect its value, despite its industrial use.

Palladium Analysis

Chart Dictation and Buy Zone

• Resistance and Support: The chart clearly dictated resistance points, leading to a price drop. The analysis highlights broken pivot lows and subsequent retests of resistance.
• Trend Line and Pivot Points: An up-sloping trend line connecting two pivot points is identified as a key indicator.
• Buy Zone: Soloway's aggressive accumulation zone for palladium is from approximately $1,290 down to $1,200.

Copper Analysis

Near-Term Weakness and Bear Flag

Copper is not looking good in the near term, which aligns with the expected pullbacks in platinum, palladium, and silver.

• Industrial Nature: Copper is considered the most industrial metal, making it more susceptible to economic slowdowns.
• Pattern: A large drop followed by a bear flag is observed.
• Downside Target: A break below the low around $4.80 is likely to lead to a flush down to the longer-term trend line, which goes back to 2022, with a target around $4.25.

Long-Term Outlook and Caution

While copper might grind up long-term due to its dollar denomination, Soloway is the least enthusiastic about copper among the metals discussed. He has not bought copper as a store of value, unlike gold and silver, due to its high industrial correlation. If the US and global economy head into a recession, copper could remain weak, whereas other metals might benefit from currency printing.

Conclusion and Takeaways

Gareth Soloway's analysis suggests a near-term pullback across gold, silver, platinum, and palladium, with copper showing the weakest near-term outlook. However, his long-term conviction remains strong for gold, silver, platinum, and palladium, driven by factors such as increasing US debt, easy money policies, and the inherent value of these precious and rare metals. He anticipates gold making new all-time highs by 2026, potentially exceeding $5,000 per ounce. Soloway emphasizes the importance of technical analysis, particularly pattern recognition driven by human emotion, and provides specific price levels for potential accumulation. He advises patience for silver, platinum, and palladium, waiting for opportune entry points. Copper is viewed with caution due to its strong correlation with industrial economic activity.