As the world continues to experience the “reflation trade,” we are witnessing historic breakouts. What this means for the gold and silver markets is fascinating.
From top Citi analyst Tom Fitzpatrick: “The London Metals Exchange saw a bullish breakout at the end of last week as we made higher highs and rallied through the trend line resistance (see chart below).”
London Metals Exchange Bullish Breakout!
King World News note: Fitzpatrick also illustrated the breakout in the price of copper (see chart below).
Copper Breaks Out As Well!
King World News note: If we take a look at what the commercials are doing in the gold and silver markets it is quite interesting…
First, although the gold market has rallied strongly, the commercials have not yet added much at all to their existing short positions (see chart below).
Despite Rally, Commercials Not Yet Shorting Gold
This may mean much more upside for the gold market before it has to consolidate and experience a corrective pullback.
The silver market is a different story (see chart below).
Commercials Aggressively Shorting Silver Rally
Although the price of silver may continue to surge, the commercials are shorting silver aggressively as the price has moved higher. This does not mean that the price of silver cannot continue to rally, but it does wave a caution flag that the longs may be susceptible to a “rinse.”
The Great Reflation Trade
The bottom line is that the world is experiencing a “reflation trade” right now, particularly in the commodity complex. And this will be extremely bullish in the medium- to long-term for the gold and silver markets if that reflation trade continues. It will also mean higher inflation is on the way, which may lead to global stagflation, the very environment in which the gold and silver markets skyrocketed in the 1970s. KWN will keep its global readers updated on the action in the commodity complex as it unfolds in the coming weeks and months.
沒有留言:
張貼留言