There are now over 10 million confirmed cases of COVID-19 world-wide and over 500,000 people have died, according by Johns Hopkins University with the US making up about 25% of that 10 million.
Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases spoke this week at the Senate Health, Education, Labor and Pensions Committee in Washington, D.C. He said many states reopened too quickly, people are disregarding social distancing, and authorities could do a better job at contact tracing to track. But how does contact tracing work when a good number of the population don’t have any symptoms.
Gold futures posted a gain of nearly 13% for the three-month period ended Tuesday, the largest quarterly percentage climb since 2016, with analysts renewing talk of record prices by year end.
Gold’s performance so far this year is “not attributed to the pandemic,” said Alex Ebkarian, chief operating officer at Allegiance Gold. “COVID-19 simply exasperated the underlying weaknesses as evident by the negative real interest rates and further weakening of the dollar.”
Gold accelerated its move towards record highs in the second quarter of this year, as it was “already set on this trajectory” before the seriousness of the coronavirus was even realized, said Peter Spina, president and chief executive officer at GoldSeek.com.
The reaction to COVID-19 over the last quarter was of “historic proportions,” with global debt now soaring and governments injecting trillions of dollars into their economies. Under those conditions, gold is a “lower risk shelter to seek refuge,” said Spina.
So where does that leave Silver?
On the weekly chart Silver is forming a triple top. This chart pattern signals a reversal is in the cards, and price may not want to go higher.
But this is where I go back to the gold/silver ratio.
The gold/silver ratio is simply the amount of silver it takes to purchase one ounce of gold. And when this ratio hits 80, it reverses. Since the mid-1990s, the ratio has hit 80 four times. And when it reversed, silver outperformed gold over the next several years. But that hasn't been the case on 2020, the gold/silver ratio is at its highest levels ever, hitting 125 in recent months and since then has pulled back to the 100 level.
I’m a Supply and Demand trader, where I wait for price to get to my price levels/zones, but why not take advantage of these price moves to these levels / zones. And when I trade supply and demand, it just doesn't apply to a traditional price chart. Lets take the gold/silver ratio chart as an example. On the way down from the recent highs, price formed a daily supply, eventually bouncing off of daily demand.
Now imagine if price breaks the daily demand as the price of gold continues to move higher. What do you think is going to happen to the price of silver? So I will ask again, triple top on silver...or pending break out???
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
