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Gold/Silver/Commodities: Quick Note on What to Watch


Chief Market Strategist at Blue Line Futures

We will have to keep this article short and sweet this week because, after 22 years living in Chicago, I am finally moving to Florida this weekend. The harsh winters, increasing taxes, political letdowns, and rising crime justify a change of scenery. So let us dig right into it. 

Source: CQG

Gold futures started a recovery this week before running into stiff resistance at 1755-1760/oz. That level coincides with the high from March at 1756. What led to the recovery in prices was the pause in rising yields, a new U.S. Dollar downturn, and increasing geopolitical tensions globally. Unfortunately, the “pause” in rising yields is just that a “pause,” and the upward trend should resume next week, therefore, weighing in on gold prices. We exited gold longs with many clients and will wait for sub-1690 prices before rentering as a value play for the third and fourth quarter. We created a guide that will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the Gold market. You can request yours here:  5-Step Technical Analysis Guide to Gold.  

Silver futures have been more constructive on the charts, but it will most likely track lower next week until it can completely unhinge itself from Gold, giving us another chance to add near $24/oz. Another additional headwind is from increasing mining operations that are underway with vaccine rollouts. The expanded operations will lead to further supply and further paper selling because miners use paper to lock in prices. They execute their paper selling through large commercial banks; therefore, expect to see an uptick in short selling as the week presses on. We will be using a similar strategy to Gold “buying the dips and selling the rips” while adding call options for any sudden price surge in the back half of the year. Don’t get me wrong; silver has excellent long-term prospects. 

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Governments globally are working to fight carbon emissions, and the best way is to focus is on wind and solar energy. As solar technology continues to see boosts in wattage, the prospects for tighter Silver supplies in the coming years remain. We are setting up for another opportunistic Silver option play for early 2022. 

A few other ideas we have been implementing have been short 10-year on this rally. Doing so will help hedge your long physical metals, while crude Oil in the $58 range still looks like a value play this quarter. For Copper, we have been adding call spreads for the upcoming infrastructure bill, and active platinum buying has taken place below 1195 while selling has been occurring above 1225. 

I told you I would keep this short because I still have 14 hours of driving left before getting to the new beach house. If you would like to be up to date on the developments of our specific strategies in the futures and commodities markets, please register for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up. 

Originally Posted on April 9, 2021 – Gold/Silver/Commodities: Quick Note on What to Watch

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