From the Desk of Ian Culley @IanCulley

I find the general distaste for precious metals amusing.

It cracked me up when a close friend referred to gold as “hot garbage” at the start of the year. The Nasdaq 100 was trading almost 36% off its 2021 zenith. And gold was within striking distance of its former all-time highs.

Yet gold was trash in this investor’s eyes.

That’s information.

Information that got me thinking about a rally in precious metals…

Gold might churn within a range-bound mess over longer to intermediate time frames. But that doesn’t mean we shouldn’t trade it – or other precious metals. 

In fact, I continue to find fresh levels that define outsized risk-to-reward opportunities.

Here’s the Silver Trust ETF $SLV digging in at a critical shelf of former lows:

From the Desk of Ian Culley @IanCulley

Here comes the Fed.

Another FOMC decision is upon us.

But the market has the central bank’s number this time, or so it seems.

The fed fund futures are pricing in an almost certain chance we’ll see a 25-basis-point rate hike come Wednesday.

With general consensus running at all-time highs, the focus will shift toward Jerome Powell’s words, basically the Fed’s forward guidance.

I won’t tune in to that press conference.

What I will do is monitor price.

When it comes to precious metals I’m following absolute trends, as usual, but I’m also tracking these two critical relative trends…

From the Desk of Ian Culley @IanCulley

Here comes the Fed.

Another FOMC decision is upon us.

But the market has the central bank’s number this time, or so it seems.

The fed fund futures are pricing in an almost certain chance we’ll see a 25-basis-point rate hike come Wednesday.

With general consensus running at all-time highs, the focus will shift toward Jerome Powell’s words, basically the Fed’s forward guidance.

I won’t tune in to that press conference.

What I will do is monitor price.

When it comes to precious metals I’m following absolute trends, as usual, but I’m also tracking these two critical relative trends…

First, let’s take a look at the Gold Miners ETF $GDX versus the S&P 500 ETF $SPY:

From the Desk of Ian Culley @IanCulley

The US dollar is approaching a slippery slope. 

And few markets embrace a falling dollar quite like precious metals.

Yet gold’s response to a weakening dollar so far has been subdued, perhaps due to elevated real yields.

But gold’s crazy cousin, silver, has enjoyed quite the boost…

From the Desk of Ian Culley @IanCulley

The US dollar is approaching a slippery slope. 

And few markets embrace a falling dollar quite like precious metals.

Yet gold’s response to a weakening dollar so far has been subdued, perhaps due to elevated real yields.

But gold’s crazy cousin, silver, has enjoyed quite the boost…

Here’s silver reclaiming a critical seven-month polarity zone:

The two major catalysts that will propel gold to new all-time highs are veering in different directions. 

US real yields are challenging fresh decade highs (not ideal for a gold rally) while the dollar is pressing against its year-to-date lows.

A breakdown in the US dollar index $DXY would no doubt send gold bugs dancing in the streets everywhere around the world.

I believe a weaker dollar remains critical to the next secular uptrend in Gold. But do real yields need to roll over as well? 

I’m leaning toward no. Here’s why…

The two major catalysts that will propel gold to new all-time highs are veering in different directions. 

US real yields are challenging fresh decade highs (not ideal for a gold rally) while the dollar is pressing against its year-to-date lows.

A breakdown in the US dollar index $DXY would no doubt send gold bugs dancing in the streets everywhere around the world.

I believe a weaker dollar remains critical to the next secular uptrend in Gold. But do real yields need to roll over as well? 

I’m leaning toward no. Here’s why…

First, a quick reminder as to why real yields represent a potential headwind for Gold: 

From the Desk of Ian Culley

Healthy retest or failed breakout?

These are the scenarios rolling through my mind as I watch the Gold Miners ETF $GDX.

It’s easy to lean toward further weakness based on recent selling pressure and the five-year real yield breaking out to fresh decade highs. 

But who likes easy? I certainly don’t. I doubt gold bugs do, either.  

Luckily, I always defer to price action across multiple time frames for insight. As Brian Shannon always says, “It’s price that pays.”

And in the case of GDX, the charts aren’t as bearish as you might think…

From the Desk of Ian Culley

Healthy retest or failed breakout?

These are the scenarios rolling through my mind as I watch the Gold Miners ETF $GDX.

It’s easy to lean toward further weakness based on recent selling pressure and the five-year real yield breaking out to fresh decade highs. 

But who likes easy? I certainly don’t. I doubt gold bugs do, either.  

Luckily, I always defer to price action across multiple time frames for insight. As Brian Shannon always says, “It’s price that pays.”

And in the case of GDX, the charts aren’t as bearish as you might think…

Check out the monthly chart of GDX:

From the Desk of Ian Culley @IanCulley

Buyers are holding the line. 

The former 2011 highs remain front and center for gold futures – and all precious metals.

These shiny rocks will experience increased selling if gold slips back below those former highs marking the prior commodity supercycle peak. 

Silver, palladium, and the Gold Mining ETF $GDX are already printing fresh lows. And new multi-month lows for the silver/gold ratio indicate dwindling risk appetite.

These aren’t the type of developments that support a sustained uptrend.

Yet this action hasn’t deterred gold bugs.

Despite every reason to sleep in and shirk any and all responsibilities, they continue to show up right on time…

From the Desk of Ian Culley @IanCulley

Buyers are holding the line. 

The former 2011 highs remain front and center for gold futures – and all precious metals.

These shiny rocks will experience increased selling if gold slips back below those former highs marking the prior commodity supercycle peak. 

Silver, palladium, and the Gold Mining ETF $GDX are already printing fresh lows. And new multi-month lows for the silver/gold ratio indicate dwindling risk appetite.

These aren’t the type of developments that support a sustained uptrend.

Yet this action hasn’t deterred gold bugs.

Despite every reason to sleep in and shirk any and all responsibilities, they continue to show up right on time…

Even on Monday!

Check out the monthly gold chart:

From the Desk of Ian Culley @IanCulley

I left gold bugs an urgent message last week.

“This mess could turn downright ugly for the entire precious metals space if buyers don’t step in and support higher prices in palladium – and fast.”

I am many things, but “alarmist” isn't one of them. I simply find it hard to believe gold will post new all-time highs while palladium falls to fresh five-year lows.

Call me crazy, but those two puzzle pieces don’t seem to fit.

Perhaps we’ll never know for sure, as buyers showed up right on cue, driving palladium higher ahead of the three-day weekend. 

Last week’s strength bodes well for all metals, industrial and precious. So I’ll reiterate critical levels to trade against in palladium.

But I also want to share a strong correlation between this multifaceted metal and a market I would never have guessed…