Gold & Silver Are Stabilizing After the 'Trump Shock'

There was an irrational knee-jerk reaction to sell gold and silver after Trump won the presidential election, but they are now stabilizing and setting up for a continuation of their prior uptrend.

Last week saw relatively quiet, low-volume trading across gold, silver, and other financial markets, largely due to the Thanksgiving holiday in the United States. The week began with gold and silver pulling back, partly on news of hedge fund manager Scott Bessent—who happens to be a gold bug—being nominated by President-elect Donald Trump for Treasury Secretary.

Additional pressure came from reports of a cease-fire between Israel and Hezbollah. However, when the cease-fire was almost immediately violated and the U.S. dollar and bond yields finally retreated after their relentless rise, gold and silver rebounded.

Overall, the gold and silver are showing signs of stabilizing after the "Trump Shock" a month ago, positioning them for a resumption of their prior uptrend soon.

Gold has recovered roughly half of the losses incurred during the post-election sell-off following Trump's victory—a reaction I believe was irrational and overblown. Despite that setback, gold remains in a confirmed uptrend and holds a strong technical position.

Currently, it appears to be entering another consolidation phase or trading range, building momentum for its next upward move. Over the past year, gold's bull market has shown healthy, orderly growth, rising in a stair-step pattern from one consolidation to the next.

This current phase seems to be following the same constructive pattern, reinforcing my optimism. I remain confident that gold is on track to reach $3,000 soon, potentially following the conclusion of this consolidation.

Despite taking a hit after the election, silver has stabilized and formed a double-bottom pattern, marked by two hammer candlesticks—frequent indicators of market bottoms. This potential reversal is unfolding at a key technical juncture: the confluence of the uptrend line established in February and the downtrend line from May, further reinforcing the case for stabilization and a bottoming formation.

For the bulls, the next critical step is to drive silver above the overhead resistance zone at $32 to $33. A successful breakout should pave the way for silver's bull market to resume, passing through $35, $40, and beyond.

I closely monitor silver priced in euros, as it removes the impact of U.S. dollar fluctuations, offering a clearer perspective on silver's intrinsic strength. Recently, silver briefly broke above the key €29 to €30 zone before retreating. However, given the double-bottom formation and the two hammer candlesticks previously mentioned, I’m watching closely for another breakout attempt in the near future.

Since early October, copper has been under pressure, largely due to the strength of the U.S. dollar. This weakness has also weighed on silver, as the two metals share a close correlation. Copper is currently hovering just above its very important $4 support level and I want to see if it can launch a sustainable bounce from here, which would give silver a much-needed boost.

Another encouraging sign for precious metals is this week’s sharp pullback in the U.S. Dollar Index, a key benchmark tracking the dollar's performance against major global currencies.

The index recently failed to break through the critical resistance zone at 106–107, a level that has acted as a strong ceiling for the past couple years. Since commodities like gold and silver often move inversely to the U.S. dollar, the dollar's recent strength has been a significant headwind for these metals over the past month or so.

However, if this pullback in the dollar continues, it should create a supportive environment for gold, silver, and copper, helping to drive their prices higher.

Similar to the U.S. dollar's rally, U.S. Treasury bond yields had been surging until the past week, putting further pressure on gold and silver prices. Since gold and silver don't generate any yield (and that’s perfectly acceptable for crisis hedges), rising interest rates often drive investors toward higher-yielding assets, weighing on precious metals.

This past week, however, the 10-year Treasury note yield failed to close above a key overhead downtrend line and is now pulling back. This pullback, assuming it continues, should be beneficial for gold and silver prices.

Regarding Bitcoin, cryptocurrencies, and their relationship with gold and silver, I’ve observed a significant shift in investor sentiment within the precious metals space since the big election one month ago.

Sentiment toward gold and silver has turned notably negative, based on my extensive interactions on social media and insights gained from running this newsletter.

Many small investors are increasingly discouraged with gold and silver (despite both being up nearly 50% in the past year), opting instead to pivot toward speculative cryptocurrencies like Bitcoin, XRP, Dogecoin, Ethereum, and others.

These investors are throwing caution to the wind and souring on precious metals, lured by the "get rich quick" mentality that has taken hold in the crypto arena once again.

I believe it’s a grave mistake to abandon gold and silver—time-tested stores of value for thousands of years—in favor of unproven digital assets that lack a track record of resilience.

The frenzied speculation surrounding obscure cryptocurrencies with little to no real-world utility is eerily reminiscent of the crypto and NFT mania of 2021, which ended disastrously. I see no reason to expect a different outcome this time around.

I also want to highlight that poor investor sentiment is often quite bullish from a contrarian perspective.

Historically, retail investors—"the crowd"—tend to be wrong at key market turning points. They often become overly bullish at market tops and excessively bearish at market bottoms. A contrarian investor takes the opposite approach, recognizing opportunities where others see despair.

At the moment, small retail investors are feeling pessimistic about gold and silver, but they’re misjudging the situation. Both metals remain in confirmed uptrends, and the recent U.S. presidential election has changed very little fundamentally—it merely triggered an emotional, short-lived reaction.

My optimism remains steadfast; I haven’t wavered in my confidence in the long-term outlook for gold and silver.

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