Bearish Senario: Everything Bubble Includes Gold and Silver
TLDR:
When the Everything Bubble pops people, including China, Russia, and everyone else might sell their precious metals (PMs), almost being squeezed out of their positions by necessity (maybe to fund actual wars, not mere trade wars). It would be the opposite of Browns Bottom, where UK Chancellor of the Exchequer, Gordon Brown auctioned off half of the UKs gold. The trade war could lead to silver's industrial use falling off the table. Indian households could convert all of their gold jewelry into fiat out of necessity.
Part of the dubious "inspiration" for this post is how out of step I am with the bitcoin longs, as they have pumped to a ridiculous height (see the linked post). The unwanted but necessary thought was I could be making the same mistake with gold and silver that others are with bitcoin, and I need to see a wider picture to have more solid scenarios for long term moves.
This post will almost be like a process paper, if you are familiar them and ever unfortunate enough to do one High School or University, and I don't have to stick to a word count. I'll try and cut all the fat.
THE PROCESS
I made the chart below so I could see how the precious metals fared around the last top and downturn and I saw we had a few months up upside, a low, then the precious metals took off as if the had rocket fuel.
I pivoted the charts and then saw something that bothered me, so I subbed out SPX and put in Bitcion (BLX) and that is how we get our top chart Hopefully the chart explains itself. Both Gold and Bitcoin look to have completed a 0.618 retracement and if the pattern hods true for silver we get a low around $9 and then a massive pump to around $34. Now that sounds really exciting.
Here is a focus on just gold. You can see the fractal nature of the ABC wave but also the bearish divergence on the MACD histogram. We might see a head and shoulders or some sort of other topping pattern here.
The potential placement of silver in both a descending triangle and a ABC correction also isn't a good look. The chart below shows how support could turn into resistance and end this uptrend. If we do resolve bullishly we would probably retrace back to these levels based on my first embedded chart so I am personally being real defensive right now with my stops and conservative with my take profits. I don't want to sell my physical so I'll basically be in a paper silver short.
CONCLUSION and DISCLAIMER
I am not a financial adviser. I am not a Certified Market Technician. This is not financial advice, I am just looking at protecting wealth and making money either way the market moves. People, most I believe are acting out of good faith based on history, believe that we are not in a "Everything" bubble, just a "Almost Everything" bubble. Either way, you need a plan to protect your wealth and make more either way.
When the Everything Bubble pops people, including China, Russia, and everyone else might sell their precious metals (PMs), almost being squeezed out of their positions by necessity (maybe to fund actual wars, not mere trade wars). It would be the opposite of Browns Bottom, where UK Chancellor of the Exchequer, Gordon Brown auctioned off half of the UKs gold. The trade war could lead to silver's industrial use falling off the table. Indian households could convert all of their gold jewelry into fiat out of necessity.
Part of the dubious "inspiration" for this post is how out of step I am with the bitcoin longs, as they have pumped to a ridiculous height (see the linked post). The unwanted but necessary thought was I could be making the same mistake with gold and silver that others are with bitcoin, and I need to see a wider picture to have more solid scenarios for long term moves.
This post will almost be like a process paper, if you are familiar them and ever unfortunate enough to do one High School or University, and I don't have to stick to a word count. I'll try and cut all the fat.
THE PROCESS
I made the chart below so I could see how the precious metals fared around the last top and downturn and I saw we had a few months up upside, a low, then the precious metals took off as if the had rocket fuel.
I pivoted the charts and then saw something that bothered me, so I subbed out SPX and put in Bitcion (BLX) and that is how we get our top chart Hopefully the chart explains itself. Both Gold and Bitcoin look to have completed a 0.618 retracement and if the pattern hods true for silver we get a low around $9 and then a massive pump to around $34. Now that sounds really exciting.
Here is a focus on just gold. You can see the fractal nature of the ABC wave but also the bearish divergence on the MACD histogram. We might see a head and shoulders or some sort of other topping pattern here.
The potential placement of silver in both a descending triangle and a ABC correction also isn't a good look. The chart below shows how support could turn into resistance and end this uptrend. If we do resolve bullishly we would probably retrace back to these levels based on my first embedded chart so I am personally being real defensive right now with my stops and conservative with my take profits. I don't want to sell my physical so I'll basically be in a paper silver short.
CONCLUSION and DISCLAIMER
I am not a financial adviser. I am not a Certified Market Technician. This is not financial advice, I am just looking at protecting wealth and making money either way the market moves. People, most I believe are acting out of good faith based on history, believe that we are not in a "Everything" bubble, just a "Almost Everything" bubble. Either way, you need a plan to protect your wealth and make more either way.
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