Technical Scoop: Temporary Rallies, Stagflation Possible, Precious Recognition

Excerpt from this week's: Technical Scoop: Temporary Rallies, Stagflation Possible, Precious Recognition

Source: www.stockcharts.com

Another day, another record for gold. Gold is a go-to safe haven in times of economic uncertainty, geopolitical tensions, and loss of faith in governments. The result was a 3.0% gain for gold this past week and a close at the magical $3,000. Normally we’d have to say that these landmark points are points of resistance. We saw it at $1,000 and $2,000. We’d break through, then there’d be a pullback, sometimes a spooky one. There are a lot of nervous nellies on this ride and they’ll hit sell on any little down gyration. With an RSI at 66 we seem to have room to move higher. But then the current RSI is diverging negatively with the one seen earlier when gold hit $2,974. Then there was a 4.5% drop. Nothing goes straight up. A choppy rise is preferable to a straight up rise. We could be forming what appears to us as a potential rising wedge triangle or ascending wedge triangle. We seem to have room to get to $3,050 or even $3,100 before pulling back. The triangle appears to break down under $2,925 and if that happens it could take us down to $2,760.

Other precious metals rose this past week. Silver was up 4.9%, while platinum gained 4.8% and is back over $1,000. Near precious metals saw palladium up 1.9% and copper gaining 4.0% as it marches towards $5.00. The gold stocks gained as the Gold Bugs Index (HUI) was up 4.9% and the TSX Gold Index (TGD) gained 4.3%. Gold is now up 13.6% in 2025 and silver 17.8%. Compare that to the TSX down 0.7% and the S&P 500 down 4.1% in 2025.

Gold is benefitting from the chaos in the U.S. with tariffs, threats against judges and media, and threats to annex Canada, Greenland, and the Panama Canal. Is the U.S. constitution in trouble? There has been constant talk of lowering the value of the U.S. dollar (note: it’s already happening). One way would be to revalue gold upward just as they did at the height of the Great Depression. We note the gold held in Fort Knox still sits on the books of the U.S. at $42.22. Despite a steady stream of central banks adding to their gold reserves, the U.S. has stood pat but still has the world’s largest gold reserves.

We live in nerve-wracking times and, while cash and bonds are good safe havens, gold is the best as it has no liability. And a reminder that cryptos are just flickers on a screen still open to hacks, theft, and money laundering. Bitcoin, after a monumental rise to over $100,000, is down 9.8% in 2025.

Source: www.stockcharts.com

Are we finally going to see a breakthrough for silver to new highs? This past week we took out $34 resistance. We also took out points that suggest we should get new highs above $35.07 seen in October 2024. All-time highs at $50 still seem remote. Nonetheless, pullbacks can be expected. As of now, the line in the sand is at $31.30, although we’d also like to see $32.25 hold on any pullback. The RSI is at a reasonable 64 so we are not overbought at the moment, suggesting room to move higher. We break out firmly above $35.50. It has been a choppy rise for silver, with good rises offset by steep pullbacks. Silver continues to be the forgotten companion to gold. Or, as we call it, the poor man’s gold. Silver remains relatively cheap and the gold/silver ratio, currently

at 87, remains quite elevated. We have seen recent buying in silver stocks, suggesting that they may be forecasting a pending rise in silver prices.

Source: www.stockcharts.com

Onward and upward. Gold stocks have been the best-performing asset so far in 2025 with the Gold Bugs Index (HUI) up 24.4% in 2025, including a 4.9% gain this past week as gold prices reached record highs. The TSX Gold Index (TGD) is up 28.2% in 2025, including 4.3% this past week. Can they keep it up? We might catch pullbacks first, although the RSI on the TGD is not as yet overbought. There has yet to be a mad rush into gold stocks or even gold for that matter, despite the stellar 2025 performance and the collapse of the broader markets.

The TGD made fresh 52-week highs this past week but the HUI remains below its high. A possible divergence? We seem to have good support for the TGD down to 410, but under that we could fall to 390. We’re a long way from a major breakdown under 360. Within sight now is the all-time high for the TGD at 455. We are 5% under that level. Too bad the HUI can’t claim the same as it remains down 46% from that 2011 high. We are 14 years and counting to see new all-time highs for the gold stocks once again. A reminder that it took 25 years for the DJI to regain its 1929 high and 34 years for Japan’s Nikkei Dow to regain its high. It took roughly seven years for the DJI to regain its 2007 high. It is possible we have made a temporary top, especially if gold falters at $3,000 resistance, which is a distinct possibility. Support levels then become important. We wouldn’t want to see the TGD break under 388, the most recent low.

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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.  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.