Gold and silver prices have both staged powerful breakouts above their long-term averages. The move higher has been led by a dramatic silver price performance.
Meanwhile, the headlines reveal a troubled U.S. economy, providing ample rationale for investors to move to protect themselves with gold.
The bullish precious metals picture is easily seen in the following charts, beginning with silver’s price action.
The technical picture for silver seen in this six-month chart could not be more dramatic. Throughout the summer, the silver price traded well below both its long-term 200-day moving average (the red trend line) and its short-term 50-day moving average (the blue line).
As we entered November, the price tested and bounced off the short-term trend line a couple of times around $19. That supporting price action was followed by silver racing higher, quickly moving past $20 an ounce. The price consolidated just above and below the longer-term 200-day moving average for about three weeks before decisively breaking out at the beginning of December.
The trading pattern in gold confirms the bullish signals seen in silver’s price surge.
The gold price traded below both moving averages throughout the summer. It tested, but was unable to penetrate, overhead resistance at the blue line in both September and October.
Then, gold broke through that resistance with a series of dramatic and consecutive moves higher in the first half of November. Gold, too, consolidated, trading just above and below its 200-day moving average as December got underway. Now it has moved decisively above that long-term trendline.
Investing in Gold and Silver
Charts and technical analysis are powerful tools. They often become self-fulfilling prophecies because so many traders and Wall Street professionals follow them. Although as we like to caution that past performance is no guarantee of future success, this action traces a classic breakout to higher territory in both gold and silver.
In any case, we always want to make sure that conditions on the ground—the economic environment—reflect what we find in the technical picture. We ask if the trajectory of gold and silver higher is justified by the fundamentals.
We answer yes. A report of consumer price inflation coming in slightly lower is taken as a sign by some that the Federal Reserve will soon return to its loose money ways. Perhaps. But the weight of wealth destruction and debt piling up has taken on a life of its own that is not good for the dollar, no matter how the Fed jiggles short-term interest rates. And they make gold ownership very attractive.
We will let a few headlines speak for themselves:
The bear market in stocks and rapid inflation eroded the real wealth of American households during the first three quarters of 2022
— MarketWatch, 12/12/2022
Financial stress is on the rise in North America, reaching the highest levels since the Great Recession and weighing on productivity, a new report has found.
— Yahoo Finance, 12/9/2022
The monthly federal deficit was a record-setting $249 billion in November, $57 billion wider than the same month last year, as Republican control of the House puts the government’s finances back in the political spotlight.
The federal government spent $501 billion last month, a $28 billion increase to a record high, while tax revenue dropped by $29 billion compared with last November.
— Wall Street Journal 12/12/2022
Be sure to take this important juncture as a sign to review your retirement and wealth preservation plans. Big changes are on the horizon.
If you’re interested in investing in precious metals, let us provide you with a free one-on-one consultation.
The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment advice and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.