Is a Gold and Silver Correction Underway?

Source: Clive Maund 04/24/2024

After a drop in gold and silver on Monday, Technical Analyst Clive Maund reviews the precious metals’ charts to explain why he believes it may be a good time to start adding to positions across the sector

The heavy drop in gold and silver on Monday did not come as any surprise to us. A period of correction was predicted in the last gold and silver market updates.

Fundamentally, this was triggered by an easing of tensions in the Middle East. Although portrayed in the mainstream media as a failure with the absurd claim that Israel had shot down 99% of Iran’s missiles, Iran’s missile battery was a carefully calculated success. Not only did they succeed in damaging some strategically important targets, but in the process, they demonstrated that Israel’s defense capabilities were not invincible.

They also succeeded in depleting Israel’s expensive missile inventories and did so “on the cheap” by lobbing all of their old, out-of-date stuff, some of which was little more than flying lawnmowers that took hours to arrive. It’s estimated that the night cost Israel $1.3 billion in expended missiles, whereas all the old stuff that Iran used up only cost a tiny fraction of that.

This is, therefore, thought to be a good time to start adding to positions across the sector and to do so more aggressively if we see any further reaction.

Of course, the U.S. taxpayer will no doubt be keen to make good Israel’s loss.

The end result of all this, apart from Iran’s “satisfying honor,” was that Israel is now starting to understand that it won’t get away with attacking Iran with impunity — if it tries it again in size, it is likely to disappear from the map as Iran has much more modern and powerful missiles in its arsenal with which to hit Israel should it decide to. This realization has restored a measure of relative stability and calm, and that fundamentally is why gold and silver are reacting back.

Nevertheless, the core drivers of the gold and silver bull market remain firmly in place, which are the ongoing exponential debasement of currencies worldwide and the associated impending complete collapse of the current financial system, which will be used as the excuse to impose the already prepared CBDC’s, and more recently China has turned its attention to hoarding silver.

So the “executive summary” is that this correction in gold and silver should be seen for what it is — the perfect opportunity to build positions further at better prices ahead of the next major upleg.

How far might gold and silver react?

In the last gold Market update, $2250 was given as a downside target for the correction, and this morning, it is not all that far above this, being at $2307 at the time of writing.

As for silver, it was pointed out in the last silver market update that it would probably react back across its uptrend channel with a target of approximately $26.50. Well, it actually got below $26.70 last night, so, for practical purposes, that is good enough.

Here are the latest gold and silver charts:

The conclusion is that the reaction in gold and silver is largely done. True, they could react back some more, but the downside from here is thought to be limited, whereas they could start higher again anytime, especially if Israel decides it wants to try provoking Iran again.

This is, therefore, thought to be a good time to start adding to positions across the sector and to do so more aggressively if we see any further reaction.

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Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.