The Significance Of The $32.75 Level In Silver | Arcadia Economics

So the most conservative number I can show you is $12 plus 32.75. So that’s 44.45. These are just numbers I’m making up, but they’re good numbers, right? So 44.75 would be your very conservative expectation should the things that Michael’s describing come to play. Then we get to 55, which is my volatility assessment, right? And then who knows what’s going to happen after that. Welcome to the Morning Markets and Metals with Vince Lancey, where each day he brings you the precious metals in financial news to get you ready for your day. And now here’s Vince.

Good morning everyone. I’m Vince Lancey and today’s market rundown will be will be giving you a homework assignment on Indian gold demand and we’ll go through some charts. Before we do that, let’s look at the markets themselves. I am leaving the Bitcoin weekly chart up there. That should look like something that you’ve seen recently. By recently, I mean the gold market, cup and handle, that type of stuff. Well, we might have another one of those in Bitcoin on the weekly. And if Bitcoin’s anything like gold, then we know it is breaking this high here.

It could be pretty substantial, but I’ll have to talk to a technical analyst on that. The dollar is up four. Ten-year yields are down five. Thank goodness, you know, I’m long loose. S&P 500 is 56.39, up almost three handles. The VIX is 13.28, up 15. The VIX keeps rallying in a rallying market. Gold 24.39, up 18. The title of today’s show is the fist-unclenching. Okay, or loses its grip. I forget, but we’ll find that a second. Silver is 30.82, up a week 15 cents compared to gold, signaling that there is more silver selling while there is gold buying.

Copper is 449 down a penny, also signaling that silver should not be as strong. WTI is down a buck 44. That’s pretty massive. At 8063, I don’t know why that is. I have to look at that. Natural gas is up a penny, nothing to do with WTI. At 214, Bitcoin is down 1.5%. Ethereum is down 1.8%. At 63, 800 and 3400. Palladium and platinum are both down small, less than one average 50 basis points at 942 and 990. And grains are scattered higher. Soybeans, 10.88, up 5 cents. Corn, 387, up 4 cents.

And wheat, 5.38, up almost 3 cents. Right? That looks like the gold saucer and whatever you call it, saucer of milk. All right, let me get my focus back here. Where are we? This is where we are. The gold is on my scatter brain at the moment. Okay, so today’s story is the grip loosens, tentatively titled. And it’s going to be about the gold and silver breakout implications. We’re going to try and come up with some price ideas. And you’ll have some homework on Indian gold demand. Basically, we have a little bit more of a breakdown of analysis for premium at the bottom for the Michael Oliver research, some Indian, a Toronto Indian gold demand.

And we have some ideas on how to project where the targets should be reasonably in gold and silver. Yesterday, market implications of the Trump assassination attempt. This was, well, it was a listen, talks about how gold is now leading bonds and the dollar as opposed to reacting to it. Very significant, although not something you will ever, ever, ever, ever, ever hear discussed in the mainstream media, let alone by most bank analysts. And the front running concept about gold, oil, Bitcoin sellers, and how they operate. A lot of stuff. The grip loosens. First, let’s start with your homework, right? I’m going to give you a reason to come back if you think this is interesting.

The chart you’re looking at there is India’s gold demand versus price in dollars, right? The dark blue histogram, that’s the amount of buying that India does with years labeled at the bottom in tons on the left. So 0, 50, 100, 150. And on the right, the right scale is the price of gold on a monthly closed basis. So for example, gold went up to 1900 and change in 2011, 2012, but it didn’t settle above there on a monthly basis. So that’s why it’s not as high. This chart is very accurate. So what you have is a light blue line chart, plotting price, and you have Indian gold demand.

Looks like they’re putting it up there by, looks like by quarter. Each bar is a quarter, I think, over the years and showing, revealing several patterns. So the question I have for you is, for all of you, is the question I asked myself. What does this chart tell you about Indian gold demand? That’s all. You won’t be wrong. The question is how far will you go in asking that question before coming up with conclusion. Now, everything you need to have a decent opinion on this is right there. This is not fundamental research.

This is not going in and finding out the economics. This is just what we used to call ocular regression. You see it, you tell yourself a story about it, you see if the story makes sense from the other data on the chart, and then you handicap the chances that it’s true. And I will tell you this. I wouldn’t be wasting your time with this if I didn’t tell you that this is extremely, extremely bullish, and we’ll get into why tomorrow. So moving on, gold and silver break-in implications. Michael Oliver’s report over the weekend talked about two things in chart terms, and I’ve kind of replicated them.

One is basically a historical run-through of his gold levels and where we can go now. And the other is on silver, and that’s about how this move has an analog to the 2010-2011 move. So let’s start with the gold chart. The gold chart is, I’m going to go through his timeline. We discussed this more at the bottom. So you can’t see the words, and that says MSA bull initiation. This is in 2016. So my guess is he saw this coming off the bottom. Maybe we made a new low, and a momentum indicator of his did not make a new low, I’m guessing, and the market started to grind higher.

I remember this era. I bought silver when gold started to move. I got a breakout signal in gold and bought silver, and I ate, I ate crow for a year. I had a position for a year. And I didn’t figure it out until we got to say to here. And the year was someone was selling silver to buy gold, which is what we’re going to talk about again today, which is what bullion banks do when they have to buy gold for them or for someone else. And then he discusses the progression in loose terms.

So basically, you have your breakout. By the way, you see this here, there’s your cup and handle. So he may not talk about cup and handles, but my guess is, you know, you have your rally, you have your sell-off, you have your bottom. He recognizes the bottom. And so now he may not be saying cup and handle, but he’s saying we can momentum lower going higher. Here’s your progression. And now you have a little bit of congestion there, right? So cup and handle. By the way, a cup and handle essentially is the cup part is a sell-off that’s mirrored on the other side.

But the up ramp usually has more volume than the down ramp and it’s a little bit or as much or more volume. And the incline is more regimented. It’s like this is like people panicking, getting out. This is a liquidation sell-off. This is an accumulation rally by accumulation rally. So there’s different personalities. For example, see that there? That’s a liquidation sell-off. I mean, an orderly sell-off. So he notes that there are three tops in it, marking the congestion area and above that we have our acceleration. Now his acceleration says above 2500 and change on a monthly close and this market should start to really rip.

That’s it. He doesn’t give a target, but I’ll give you a target. Market settles above 25 and doesn’t close. Market settles above 25 on a weekly basis. Then I would say, you know, you’re clear to 27, 3000. I’m looking at measured moves here. I have no science. It’s not supply and demand. It’s gold. Moving on to silver in 2010, 2011, he identified what he called a, just call it a sideways movement. Now this here, this is an ellipse on his chart and this is probably a very key momentum thing for him.

But this behavior spike high and healthy pull, not even pull back, spike high and then a resumption. That informs him of something. I think it’s probably key. And then we have what he would call a correction. This is a healthy correction. And then above the healthy correction, he has a line here and above that we run. Okay. Keep that in your mind as we go to, so sideways channel, probably where his momentum indicator came in. Remember that little, not even a correction, right? Doesn’t even break. Look at it this way here. We’ll go back.

It doesn’t even break the trend line. It looks like a spike high and a sell off, but it doesn’t even break the trend line. So it’s not even a correction, right? Spike high doesn’t even break the trend line. It’s not even a correction, right? Then a resumption of the rally and now the pullback. So if we get above, let’s say that, which I think for him is like 3275. I’m not sure if he’s using a future or spot, and then we have an acceleration. So what’s his acceleration for silver? Well, the acceleration for silver is actually based on, from what he said in the report, it’s based on gold.

Meaning if gold’s above 25 and change on a monthly close and silver’s above 3275, then we’re definitely, definitely, definitely in acceleration phase and acceleration phase. I think he said could last quarters. Now, if you want to put a number on that, I would say looking at the gold and silver, looking at the silver analog, this is a $6 move. That’s a $12 move. I’m sorry. This is a $12 move. That’s a $25 move. All right. This is a $6 move. From here to here, that would be a $12 move, putting us at $44, $45, $46.

You’re like, oh, that’s not very exciting. We went to $50 before. Right. I’m just giving you the baseline, right? That’s the baseline. The reality of it is, if you look at these two charts, there’s one thing that doesn’t match up and that is the volatility, right? This is now we’re in my world. Low volatility compared to this. So now you start thinking in terms of percentages, okay? And I came up with this using volatility as a measure begets $55, okay? So this ends up being that. So for example, from here to here, it’s a move to $32.75.

Break spot, $32.75 ends up going to think in terms of Fibonacci’s, if you’re not a volatility person puts me at $55. Now, again, that’s conservative. So the most conservative number I can show you is $12 plus $32.75. So that’s $44, $45. These are just numbers I’m making up, but they’re good numbers, right? So $44.75 would be your very conservative expectation should the things that Michael is describing come to play. Then we get to $55, which is my volatility assessment, right? And then who knows what’s going to happen after that, okay? And then we get to come back to his assessment.

His assessment, coming back to it, is if gold gets above 25 and change and silver ignites, you should expect the gold-silver ratio to get in his terms about 2.5 to 3% easily, which puts silver at 62. Now, the thing is gold-silver ratio went much higher in the past on rallies like this. So gold-silver ratio go to 3%, 4%. Not going to say it’s going to go up to 8%, but it can move if you’re looking at the 1980 analogues. So look, I mean, if gold gets above 25 and change and silver is above 32.75 concurrently, silver is going to run.

That’s my prediction. How am I going to trade this? Aside from the position I have, completely speculative, I want to share this with you, all right? If gold gets above, I’m going to use Michael’s numbers to create my own trading play. If gold gets above, nice voice, right? If gold gets above 2,500 on a monthly close basis and settles strongly, settles well, and other indicators indicate that it’s not too overbought or not overbought or what have you, right? And silver’s below 32.75. I’m not going to buy silver, okay? Because that indicates to me, in my experience, his technicals are saying silver needs to be above 32.75.

It’s his own market. And a combination of gold rallying and silver not getting above his level says to me, someone’s buying gold again and selling silver. I’m not going to have my ass handed to me like I did back in 2016. Conversely, if gold gets above 2,500 and silver is below and near 32.75, you’re supposed to be bullish gold. But I’m not going to buy gold. I’m going to sit on my hands and I’m going to wait for silver to break above 32.75. And if it does, then I will see silver joining the party as it frequently does, late, and then completely outperforming everything, just tearing the market up.

And that’s what happens now. They buy gold, they sell silver to finance the gold. And then six months later, they go, oh, shit, silver hasn’t come off yet. Let’s buy our silver back. And boom, it’s all started years ago, this behavior. Anyway, so that’s it. That’s where I am. Data on deck today. It’s Tuesday, retail sales. That’s pretty important. You probably will have seen it by then, by the time you see this. And the RNC convention, quick comment, quick observation on that. Donald Trump picked his VP candidate, J.D. Vance. And I guess you could say that the markets like that.

I don’t know how to take that. I really don’t. But J.D. Vance is young, demographically, he’s a millennial, I think. So, I mean, that’s pretty much it. That’s the news. At the bottom, the premium, you have the MSA analysis broken down a little bit more, a little bit more digestible for people. And let’s go to the gold chart. I’ll show you where we are today. You know, I keep drawing these trading range lines, and we keep breaking out of them. There is no resistance in a bull market. So here we are. I don’t think this is going to be a trading range.

But man, if this the fist analogy, and we put this back up, this is really like, we got to give Michael credit for this. The grip loosens. Michael made a comment in his report. He said, gold is captured between 24, call it 2460 and 2290. And he said that he says it feels like it’s in the grip of a tight fist. And although he didn’t say it, the analogy is very similar to what I’m seeing in terms of the flows. It’s captured. It’s kept in a range. It’s kept under control. It feels like when someone gets what they want, I’m putting people’s names on it.

When the banks or the customer gets buys enough they want, they’ll loosen their grip, and it will run. Hence his analogy, it’s in a tight fist. So when that grip loosens, it should run. And it feels like the grip is loosening. It hasn’t opened up yet. The fist is still there. But this would be an inflection point for new all-time highs. I’m Vince. Have a great day. Well, thanks for tuning into today’s Markets and Metals with Vince Lancy. The show is brought to you each day by Miles Franklin Precious Metals, who we encourage you to consider for your next gold or silver purchase or sale.

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