Precious Metals Rally: This Could Be The Start Of Something Big!

| February 11, 2016 | 0 Comments

precious metalsMassive Precious Metals Rally Imminent?

No doubt about it, gold and silver are on a roll in 2016…

In fact, the two metals are the top year-to-date commodity performers with gains of 12.6% for gold and 10.6% for silver.

While the recent upturn is impressive, there may be something even more exciting on the horizon.

Let me explain…

First of all, let’s be clear on why precious metals are rallying in the first place.

It’s fair to say recent economic data has been downright worrisome.  Manufacturing and industrial activity reports from China and the US suggest the global economy is cooling quickly.

If this trend of poor data persists, there’s a very good chance of a surprise US recession in 2016.

This worry is precisely why the major market indices are down sharply since the start of the year while safe haven assets like gold and silver are higher.  Fact is, the Federal Reserve may be forced to abandon its plan to keep raising interest rates in 2016.

Instead, the Fed will likely have to return to the easy money policies of years past to keep the US economy from folding in on itself.

Either way, the situation is bullish for precious metals.

Here’s where it really gets interesting…

A long-term chart of gold and silver reveals the metals have rallied to very important technical levels the past few weeks.

Let’s start with gold…

weekly gold chart

As you can see in this weekly gold chart, the yellow metal has rallied back to the downtrend line that has kept it under wraps for the past few years.

Same goes for silver…

Silver Spot Price

Without question, both metals are on the verge of breaking above highly important technical resistance levels.

What are the likely outcomes at these resistance zones?

Under normal circumstances, sellers would likely keep the downtrend intact, taking gold and silver back towards the lows created late last year.

But these aren’t normal times…

With equity indices trading near 17-month lows and the $VIX trading at 5-month highs, there’s plenty of worry amongst investors.  One more swift bout of selling pressure and the S&P 500 will break below the lows set in October 2014.

S&P 500

If the S&P 500 breaks below the red line in the chart above, it’s very likely gold and silver rally above the blue lines in the previous charts on safe haven buying.  Once those important levels are broken, the odds of a massive 2016 metals rally greatly increase.

How do you capitalize on this situation?

Be sure to check out all the great alternatives gold ETFs have to offer.  Of course, there are plenty of great options when it comes to silver ETFs as well.

Bottom line…

The fundamental risks to the US and global economy are increasing quickly.  As a result, this may be the year gold and silver bulls are finally rewarded with higher prices! 

Until Next Time,

Justin Bennett

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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Category: Precious Metals

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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