Technical Scoop: AI Party, Warsh Monitor, Bullish Triangles

 Excerpt from this week's: Technical Scoop: AI Party, Warsh Monitor, Bullish Triangles

Gold and silver

Source: www.stockcharts.com

The correction (overdue) that got underway for the precious metals sector after the January 2026 top is not yet over. For the second week in a row, the precious metals sector fell as concern over rising oil prices (even if they fell this past week) weighs on concerns that the Fed will have to hike rates rather than cut them. That the former hawk Kevin Warsh (who is now more a dove) takes over as the new Fed chairman has not calmed the market. Some Fed governors are expressing a need for higher, not lower, rates to quell inflation. Not helping was a mildly stronger US$ Index as well. Concerns about inflation are outweighing concerns about the economy. And that was despite both oil prices and longer-dated bond yields falling this past week.

Gold fell 0.7% this past week, silver was down 0.6%, and platinum was off 2.4%. Of the near precious metals, palladium fell 4.8% but copper, with its growing needs and shortages, rose 1.9%. No surprise then that the Gold Bugs Index (HUI) dropped 2.6% while the TSX Gold Index (TGD) was off 1.8%. The gold/silver ratio fell slightly by 0.2%, reflecting silver’s continued outperformance to gold. We continue to view that as positive going forward.

In a surprise move, we note that the commercial short position on the Commitment of Traders (COT) report is falling. That is a potentially bullish development. If one wants a detailed analysis of what is going on with the COT and other gold/silver reports, the best source is Ed Steer, writing for SilverSeek (www.silverseek.com). Here’s a link to that article (https://silverseek.com/article/huge-drop-commercial-net-short-position-gold). It’s quite technical but thorough.

Source: www.stockcharts.com

One thing that keeps us bullish in the precious metals sector (gold, silver) is the appearance of large symmetrical triangles for gold, silver, and the gold stocks (as represented by the TSX Gold Index (TGD)). These patterns can signal a consolidation or even a top. The last major low was seen in 2022 and since then we count three completed up waves while the current wave appears to us as a fourth-wave correction. If that’s correct, then we should break to the upside. Gold breaks out over $4,700 with confirmation over $5,000, silver goes

over $89 with confirmation over $95, and the TGD goes over 993 with confirmation over 997. Above $5,250, gold suggests new highs ahead, silver over $107.50, and the TGD over 1,040. Seasonals suggest a low in June but we could hang on until July. Beware a false breakdown, characterized by breaking the bottom of the triangle but with little follow-through. Those drops are meant to shake out weak longs. We note that the 200-day MA is just below for gold at $4,350 and silver at $65.00.

Source: www.stockcharts.com

Holders of gold stocks are not having a good time lately. We note especially those in the junior mining exploration stocks where the TSX Venture Exchange (CDNX) is down on the year. Many of these junior exploration plays remain deeply undervalued and as a result represent significant investment opportunities. The trouble is there are hundreds, even thousands of companies and landing on the right one can be more luck than skill. Still, they represent strong opportunities as many can double, triple, and even more in a hurry if things heat up. 

We remain bullish on the precious metals sector but recognize that corrective phases can be frustrating. While we put low odds on a breakdown, gold falling under $4,000 and silver under $50 would be quite bearish.

Read the FULL report here: Technical Scoop: AI Party, Warsh Monitor, Bullish Triangles

Disclaimer

David Chapman is not a registered advisory service and is not an exempt market dealer (EMD) nor a licensed financial advisor. He does not and cannot give individualised market advice. David Chapman has worked in the financial industry for over 40 years including large financial corporations, banks, and investment dealers. The information in this newsletter is intended only for informational and educational purposes. It should not be construed as an offer, a solicitation of an offer or sale of any security. Every effort is made to provide accurate and complete information. However, we cannot guarantee that there will be no errors. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of this commentary and expressly disclaim liability for errors and omissions in the contents of this commentary. David Chapman will always use his best efforts to ensure the accuracy and timeliness of all information. The reader assumes all risk when trading in securities and David Chapman advises consulting a licensed professional financial advisor or portfolio manager such as Enriched Investing Incorporated before proceeding with any trade or idea presented in this newsletter. David Chapman may own shares in companies mentioned in this newsletter. Before making an investment, prospective investors should review each security’s offering documents which summarize the objectives, fees, expenses and associated risks. Although Artificial Intelligence (AI) may be deployed from time to time, AI output is monitored and adjusted, if necessary, for accuracy. David Chapman shares his ideas and opinions for informational and educational purposes only and expects the reader to perform due diligence before considering a position in any security. That includes consulting with your own licensed professional financial advisor such as Enriched Investing Incorporated. Performance is not guaranteed, values change frequently, and past performance may not be repeated.