Dec 2018 – Gold & Silver – Was That It? 3rd December 2018

As you can tell from the title of this report, we have a question over whether metals have bottomed. As I stated in last week’s report, whilst I would like to say confidently that metals have bottomed, the truth is there still a few downside patterns still incomplete so until complete or market suggests otherwise, we have to expect lower to come. We tend see markets push to the limits when developing long-term bottoms. Overall, the markets are showing similar consolidation to Dec 2015, which saw the entire metal complex bottom before rallying in 2016. And sometimes the rallies as the market reverses are stronger than expected, so now isn’t a time for complacency.

Beginning with the devil’s metal, I commented in the last report that there are enough waves down to a new 2018 low [$13.89] to suggest that Silver’s its 2-year correction may be complete. I also said that since finding support, silver looked like it was setting up for a rally to $15.50 – $16, which if so, should present itself as 5 waves up from the November low. The strong rally underway this morning could be the start of this, but we need a close above $14.55 to suggest higher. Unless we see resistance taken out in the coming days, we have not definitively ruled out silver providing us with one more low into the $13.60-$13.70 region. If, however, the market provides a rally to $15.50 – $16 for wave 1 and then pullback correctively to form wave 2, that would be a strong warning that the bull market is primed to resume, and a strong buy signal. I’ve highlighted this alternative count in [red] on the chart below.

Daily Silver Chart 03-Dec-2018

Whilst silver has enough waves in place to consider its downside structure is complete, Platinum doesn’t present a bottoming structure that gives me confidence. Whilst the August low [$755] could have been, in my opinion is looks best labelled as a 3rd wave, with the current relief rally being a corrective wave 4, with a 5th and potentially final low to $650-$700 to complete its downside structure. Having said that, the current action could be interpreted as an initial wave 1 and 2 off the August low. Should we see a rally over $900, that could provide us with a strong enough move off the lows to consider a bottom is in place. Unless that resistance is taken out, Platinum can still come down lower to complete its downside structure first before a meaningful rally can get underway.

Daily Platinum Chart 03-Dec-2018

So whilst the market has not yet provided a clear indication as to which way ultimately the markets will move, as noted earlier, we do seem to be bottoming in a similar fashion to what the metals complex saw in Dec 2015. So, whether there are lower lows waiting or not, it seems to be that probabilities are presenting us with the potential for a strong rally to be seen in early 2019

Jonathan Salmon

Jonathan Salmon

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