Gold and Silver: Pay Attention to This Noteworthy Record High
Here’s what usually occurs in related financial markets when “big changes in social mood are afoot”
by Bob Stokes
Updated: May 08, 2020
Related financial markets tend to move together. For example, gold and silver.
Or, consider stocks. When the Dow Industrials are up on a given trading day, the NASDAQ is usually in the green too. The same applies when the Dow is down. Other major stock indexes tend to close in negative territory as well.
However, when a trend is near exhaustion -- whether bullish or bearish -- "non-confirmations" often happen. A non-confirmation occurs when one market makes a new high (or low), but a related market does not.
Let's stick with the example of stocks as we look at this chart and commentary from our November 2019 Global Market Perspective:
Notice that while the FTSE 100 is off 6% since its May 2018 high, the Small-Cap index and the AIM 100 are down 9% and 23%, respectively. These non-confirmations are important, because markets almost always splinter when big changes in social mood are afoot... It's only a matter of time before the broad indexes abandon the bull-market party.
As we all know, abandon it they did -- in a very dramatic way.
Now, let's look at what's going on with gold and silver.
Here's a chart and commentary from our April 27, 2020 U.S. Short Term Update:
Gold is massively overvalued relative to physical commodities and the ratio of gold-to-silver recently jumped to a record high. There remains a large non-confirmation between gold and silver.
Even so, here's an April 21 headline (CNBC):
Bank of America raises gold forecast by a whopping $1,000 to $3,000 because of zero rates
Well, this major bank's outlook for gold might turn out to be correct.
On the other hand, it's obvious -- as you've just seen -- that the gold and silver markets are significantly splintered.
Plus, the Elliott wave model is also providing clues about the next big moves in the gold and silver markets.
Get our analysts insights without any obligation for 30 days. Just follow the link below.
Steps to Help You Reach Financial Goals
The Elliott Wave Theorist stated:
Your first goal should be to hold onto your money. Your second goal, the goal of investing, is to take on risk when the odds are way in your favor, so you have a good chance of making money.
Is now the time to embrace a strategy of financial caution, or is the environment ripe for bold risk- taking?
Our latest forecasts -- for U.S. stocks, bonds, gold, silver, the U.S. dollar and more -- will help you answer that question.
Review at your leisure – indeed, you have a full 30 days to discover the charts, analyses and forecasts in our flagship investor service with zero obligation.
Simply follow the link below and you’re on your way to tapping into the insights of veteran Elliott wave experts.
Euro Stoxx 50: Sentiment Hits “Bellringing” Extreme
This European sentiment measure was at an extreme for the better part of five years. Now, it appears the tide is turning. Be prepared! Optimistic or pessimistic extremes are usually followed by an extreme in the opposite direction.
EUR/USD: From 2-Year Highs to 2-Month Lows. Press “Pause” on the “Fed Pause.”
On May 3, the world's most heavily traded currency pair, the euro/U.S. dollar soared to its highest level in 2 years. Mainstream experts focused on the Fed. Expectations of a "pause" in rate hikes would keep the wind at the euro's back. But that's not what happened. And here's why.
See What Happens When the Fed's Rate Hikes Stop
See our seven-decade chart that shows what happens when the Federal Reserve ends the cycle of interest rate hikes.