The first day of trading is full of uncertainty and excitement.
Aren’t they all!
Yet the new year brings one promise: events that have yet to come.
As corny as it sounds, it’s true.
Sure, precious metal bulls see new all-time highs for gold on the horizon.
I’m right there with them.
But let’s not get ahead of ourselves on day one.
Instead, let’s start the year with a long-term chart of gold…
Here’s a monthly candlestick chart zoomed out roughly 30 years:
The main takeaway to start the year: Gold has yet to break out.
Yes, gold recently hit a new all-time high. But it will remain a range-bound mess until buyers absorb supply at approximately 2,100.
We can talk about gold 2,500 or 3,250 once it clears that critical supply zone.
Meanwhile, silver mining stocks are showing strength.
The Silver Miners ETF $SIL is struggling to hold last week’s breakout as the US dollar bounces off a former support level.
We can expect near-term weakness for precious metals when the USD catches a bid, especially the high-beta areas such as SIL.
Nevertheless, these junky mining stocks will rip if gold completes an upside resolution.
Check out one of my favorite setups, Fortuna Silver Mines $FSM:
FSM is carving out a multi-year base below an area of significant supply.
Let’s call it 4.25. If and when buyers drive price above that level, I like buying strength with an initial target of 6.75 and a secondary objective of 9.50.
Could FSM post a double this year? It’s certainly possible.
I’d put it right up there with gold printing new all-time highs and other events we have yet to witness.
