The Canadian Technician

Silver, Gold And QE

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The stock market has been on quite a run. Gold and Silver have been falling in tandem with the precious metals sectors unloved throughout the QE cycles. All eyes are on the Fed for the concept of tapering. What will be the result in the metals market?

$GOLD $SILVER QE 20131217Apparently QE had a negative effect on the $GOLD and $SILVER charts. Ok. Maybe that is a little understated. Both $GOLD and $SILVER marked their highs in 2011 with the launch of QE 2 otherwise known as Operation Twist. Then the US Fed, the Eurozone, China and Japan all introduced special programs around September 2012. What was particularly odd was this stimulus was added while the market had been rallying for 4 months. You can see the equity markets rolled over and retraced into late November 2012 and have not looked back since. Every pullback in the market has been smaller than the one before. 

The real question is: If the Fed does 'taper' will this be enough to allow the precious metals markets to break out? Both are sitting at support levels near their June lows. Both like to rally near the end of the month as discussed in many of my blogs. For $SILVER, a break through $21 looks bullish. For $GOLD, a break through $1190 looks bullish. 

There are a lot of trend lines that are relevant with the Fed QE program seeming to be one of the factors in their existence. The precious metals are compressed like a spring in terms of sentiment. 

Should be an interesting couple of weeks.

Good trading,

Greg Schnell, CMT

 

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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