Precious Metal Run

Gold has FINALLY broken out of its converging triangle by a significant margin. The breakout isn’t confirmed yet, but if Gold can close above $1360 today, then I think it will be a very strong indication that the breakout is real.

The converging triangle has been a prison for Gold for the last 5 years.

The general trend for Gold is a permanently bullish price increase. This is due to constant demand and the natural scarcity of the metal. A logarithmic plot shows how Gold broke away from a 12-year price trend in 2012, and has been lying dormant ever since. I hope you’ve been accumulating during that time. (You may want to consider acting fast if you have not!)

When fiat-based markets are strong, Gold tends to suffer. Now that the fiat markets have been running hot for over a decade on increasingly shaky fundamentals, it is not surprising to see Gold get a sudden boost. Many analysts warn of an impending fiat asset crash, I am one of them. A trade war, an Iran war or any other little spark could ignite the flammable base which the fiat house of cards is resting on. In times of market uncertainty and doubt, Gold is turned to as a store of value. (Bitcoin should fulfil the same purpose as Gold from now on.)

Gold is not alone in its sudden rise. Silver is joining the party.

Silver has yet to break free of its own converging triangle, but it may well have the momentum to do so on this attempt. Previous weak attempts in Q1 were rejected. The recent upwards sloping support level (dotted line) of Silver is a bullish indicator and also serves to illustrate that Silver may be ready to break out.

The logarithmic plot shows how silver lost two thirds of its value within this decade, leaving it with exceptional room for growth.

I have mentioned before that I am stocking up on Silver. It is worth remembering that the Gold/Silver ratio is now at 90:1, its highest value in favour of Gold since 1993. Since that value far exceeds the real life rarity value of the two metals in relation to one another, a correction in favour of Silver (i.e. a significant Silver price rise) can be expected, even if Gold is the more traditional store of value. The green arrow above suggests a possible trajectory for Silver price. Below you can see the Gold/Silver Ratio over the last 20 years.

Not to be outdone, Platinum is also on the run. Like Silver it has yet to break free of its own triangle, a promising attempt in April ended in failure.

The Platinum converging triangle has governed Platinum price movement since 2008. Like Silver, Platinum also lost a massive amount of value, value which it has yet to regain.

The Gold/Platinum ratio looks even less sustainable than the Gold/Silver one. Gold and Platinum share similar rarity and similar utility, yet Platinum (which typically surpasses Gold in price) is currently valued at far less than what Gold is. Sadly I don’t have a copyright-free Gold/Platinum ratio chart to share, but the ratio is at the highest it has been in living memory. I expect this unsustainable situation to correct itself before too long.

One way that Platinum may rise in price is if Palladium drops. When Platinum was expensive, Palladium was widely used to replace Platinum in several applications. Palladium has not suffered like the other metals have, it is trading at its All Time High. Palladium is also climbing in price now, but in the long-term I would much rather invest in Platinum.

Yours in precious metals and crypto

Bit Brain

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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