Whenever In Doubt, Zoom Out – Metals & Energy

In the Precious Metals' space, the question is should we own Gold or Silver? Let's take a look at the weekly charts to find our answer.

Here's Gold consolidating nicely above our former price objective at 44,500. Since its breakout from a 7-year base in June 2019, prices in Gold have been trending steadily higher...digesting gains and working off bearish momentum divergences through time rather than price. It remains in a clear uptrend and remains so as long as prices are above 44,500.

Click on chart to enlarge view. 

Silver, on the other hand, is stuck in the middle 6-year base between 32,500 and 48,500. Unlike Gold, it has not broken out and remains in a sideways trend. Until it breaks out in either direction, there's no incentive to do anything other than short the top of the range and buy the bottom of it.

So what do we want to own? Well, based on basic price and momentum characteristics...we want to continue owning Gold over Silver.

The picture in the Energy space is very similar.

Here's Natural Gas, which found its footing again at 115 earlier this year and is now breaking through former support to new year-to-date highs. As long as prices are above this 11-year support level at 115, then it pays to be erring on the long side of this market. Notice how momentum also stayed in a bullish regime despite prices losing two-thirds of their value over the last 18 months, that's a big positive in our view.

Crude Oil on the other hand is also at an 11-year support level...but on the wrong side of it! After breaking this level in March and falling another 60% very quickly, prices are now back and testing this broken area of support. Based on the polarity principle, what was former support should now act as resistance...and so far it is.

As long as prices are below 1,900 then sellers remain in control of this market, though we don't want to be short it. We like being able to sleep at night and think there's too much risk in being short this product for our timeframe, so we'd much rather be taking profits on longs at current levels and moving on. If prices happen to reclaim 1,900 we can talk about potential upside towards 2,725, but with prices on the wrong side of this 11-year area of supply/demand, that's not the bet we're making right now.

What look like a messy picture on the daily charts becomes much clearer when we take a step back. For now, it appears the long-term trends continue to favor owning Gold over Silver and Natural Gas over Crude Oil.

Thanks for reading and please let us know if you have any questions.

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Allstarcharts Team