Pretiorates' Thoughts 39 - Gold rises without its brother silver - what's going on?

Published on July 18th, 2024

In our analyses, we regularly examine current movements, identify possible influencing factors and assess the general market situation. However, these are not recommendations, but merely opinions and food for thought.

Hello dear readers!

Gold has continued to rise over the last two weeks, especially this week. Silver, however, seems to be struggling to find its way back to the uptrend. Let’s therefore analyze the precious metals a little more closely...

In the gold markets of London and Chicago, the last few days have seen a renewed accumulation (blue area up), but there has also been an 'exaggeration', which casts some doubt on a continuation. On the positive side, the trend (line in orange) is still rising...

Optimism in the market has also increased again recently. A prerequisite for further price rises...

Shanghai has actually become the key market for gold these days. And chinese investors are accumulating, the trend has even been rising again since mid-May...

However, optimism is already very advanced in Shanghai too...

And no premium is currently being paid over London & Chicago. This indicates that Chinese investors are not responsible for the uptrend of the last two weeks...

What about the silver market? Here, too, there is an accumulation of smart investors, but it is not really convincing because there are many 'strong action' points - which usually indicate a potential countermovement...

The market pendulum has already turned south again without the silver price really being able to rise. This rather indicates a continuation of the current consolidation...

Nevertheless, in Shanghai, a premium of 10 to 15 % is still being paid compared to London & Chicago. Physical silver still seems to be in short supply in China - or rather, demand remains high...

Striking: The discount between physical silver and the Sprott Physical Silver Trust has disappeared. This is an indication of greater interest on the part of Canadian investors. This is usually the case at the upper trading band...

Gold has recently risen considerably again, but not silver - which has led to a higher gold/silver ratio. This also reduced the mispricing that was the case against the US dollar just a few weeks ago. Remember: the US dollar and silver, which is more of an industrial metal, rise when the economic outlook is good - while gold tends to rise when the opposite is true. Hence the high correlation between the currency and the ratio...

Conclusion: Gold is rising, but not because of Chinese investors. Silver is not rising at all. It is obvious that the potential next US President Trump - and also his Vice President Vance - could be responsible for the rising gold price: they want to focus on China rather than Ukraine. This should further boost the de-dollarization...

A sideways glance at the gold miners, which have recently been able to realize nice advances: The Arca Gold Miners GDM Index has increasing strength (lagging indicator)...

The accumulation on the part of smart investors has been very strong since the beginning of June, almost too strong...

The 'after open action' has also reached a level where professional investors are starting to behave a little more cautiously...

And the pendulum seems to have reached its peak and is turning south again... a consolidation would therefore come as no surprise...

That’s it for today!

Remember, we are not making any recommendations for investments, we are just giving you ideas for your own analysis and decisions! Do your own due dilligence!

We wish you successful investments!

Pretiorates

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