Precious metals are a sensitive subject in some circles. Discussions about gold or silver tend to bring out more anger and craziness than other assets. As someone who couldn’t care less about what we’re trading, Gold, Apple, Bonds, Australian Dollars or Go Pro, to me it’s just letters and math. I find it kind of funny when people get extra sensitive about a specific asset. Precious metals bring out some of the most hilarious commentary.
Today, I want to break down Gold and Precious Metals from many different angles in order to put it into context from both a structural perspective and a shorter-term tactical outlook. I believe that a multi-timeframe, multi-asset class approach is the best way to generate absolute returns regardless of the U.S. and Global economic environment. For purposes of this post, we are treating gold and metals as any other asset. To us, it is no different than Singapore stocks, or Pound/Yen or Microsoft.
Let’s start with Gold prices going back to the correction low in late 2008. After peaking in 2011, Gold has been decimated falling from over $1900 to under $1050 per ounce in a little over 5 years. The $1155 level is an important one as it represents former resistance and support back in 2009-2010 and it is also the 61.8% Fibonacci retracement of the entire 2008-2011 rally. Prices were able to dig in around these levels, although temporarily falling below that in the second half of last year: