It is common for commodities to drop in unison, says technical analyst Clive Maund, and in tandem with his prediction that oil will drop, he also sees gold and silver going lower.
It is common for commodities to drop in unison, especially metals and oil. In my article on oil, I observed that oil looks set to drop hard soon. This was given added significance by the sharp drop in Precious Metals stocks Feb. 27, that calls time on the recent gold and silver rally that occurred this year to date.
That drop in the precious metals sector, which occurred without a concomitant drop in gold and silver, was the market “tipping its hand” because stocks tend to lead the metals, so we can expect gold and silver to follow suit shortly and drop—along with oil and copper.
On the 6-month chart for gold we can see that the uptrend is weakening, with it taking the form of a bearish Rising Wedge, and as it has now arrived at significant resistance near to its still falling 200-day moving average, and is rather overbought. It is at a good point to turn lower.
The picture is similar for silver, although its channel is not converging so much, and resistance is not so clearly defined. Silver is critically overbought on its RSI, which doesn’t help. Notice on the 6-month chart how silver has a habit of rising in a bumbling, hesitant manner much of the time, and suddenly plunging. We haven’t had a plunge for quite a while and one looks due.
The resistance set to turn silver lower is more clearly visible on its 1-year chart, on which we can see its origins, and we can also see that the laws of proportionality (almost as important as the laws of manipulation) favor …read more