Silver and Gold may Have Further To Run Before a Big Drop

by John Galt
February 6, 2017 05:00 ET

The U.S. Dollar has finally entered into a period of seasonal weakness and as a result, the usual first quarter rallies in gold and silver is well under way. The rumors about a super strong dollar policy are premature since it would appear the Democrat Party strategy is not only to only to obstruct, but to rally the legal system to oppose anything remotely resembling Constitutional rule of law.

Thus the disorientation felt by world markets is actually leading to an opportunity for precious metals fans to make a quick profit; but only if the individual trader is nimble, not of the buy and hold mindset. Let’s check out the charts to see why.

Gold is the weak sister of the two metals, not only due to uncertainty for global currencies, but a lack of conviction that the rally is real or has any legs to it:

Every rally in the past year has failed, rallied higher, failed, then rolled over. If this rally fails to break above the magic $1280 per ounce level again, look for a massive downdraft barring a military conflict or Trump Swan event. If the rally fails this week, then look for a rollover to the $1200 level with a retest and potential failure around $1150 per ounce. This could be exacerbated if the Federal Reserve does in fact raise rates in March.

Meanwhile in the shiny and shining silver market there is a tad bit more hope, especially due to an anticipated increase in industrial demand:

IF, and this is a big IF, silver can breakout above $18.10 to $18.20 per ounce, odds are it will run to the $21 range; however a failure in parallel to gold would be a disaster for the silver bulls and a retest of the $16.50 range or lower is possible.

At this point in time, trade it assuming higher prices but with super tight stops. All it takes is one Trumperism and this sucker could rally up by 5% or down by 15%.

BOHICA.

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