GLD should have struggled the first time it was brushed, but it hardly means the rally effort is dead. Indeed, the ETF’s 100-day moving average line (gray) ended up being a floor again on Tuesday. Add in the likely effort to fill in Tuesday’s bearish gap, and what we’ve got is a lot of reason to renew gold’s bigger uptrend, if not now, then soon. Note how the GLD stumbled similarly in late July and early August, and overcame that setback with ease.
The upside target for the ETF still lies somewhere around $151, where there’s another big gap as well as another major Fibonacci retracement level.
As for the iShares Silver Trust, it too peaked at its 38% Fibonacci retracement line back on the 27th, prompting this unsurprising pullback. Although SLV still is in a bigger-picture uptrend, too, its chart suggests there could be a little more relative weakness in store before it finds a bottom and rekindles the rally. That hard landing could happen somewhere around $21, where a couple of longer-term moving average lines are about to converge.
Of course, as fast as the ETF is losing ground compared to its gold-based counterpart, it might not take long for that hard landing to materialize. After that, the $27/$28 range will be waiting for the iShares Silver Trust to revisit it.
If you’re doing the math, even with silver’s relative weakness, its upside still dwarfs gold’s bullish potential.
Although the timing of the exact bottom is still a little fuzzy, it’s close, and both metals have a lot more upside to go before reaching their more meaningful — and more permanent — tops.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.