Gold Price Forecast - The Invaluable Palladium, Platinum And Gold-To-Silver Ratio Lessons

The universe being as rich as it is, neither the world, nor the precious metals market ends with gold. In today’s article, we’ll look at palladium’s strength, platinum performance, and listen to the message of the gold-to-silver ratio. Of course, the point is to detect where gold and the rest of the precious metals market is likely to move next. After all, they all tend to move together during the really big moves. Let’s start with palladium.

The interesting detail is palladium’s weakness. This precious metal was the one that soared most profoundly in the past few years and while it recovered some of its 2020 declines recently, it appears to be back in the bearish mode as its unable to keep gained ground, even despite the move higher in the general stock market.

The previous leader is now definitely lagging. And you know what’s leading? The previous laggard – gold stocks. The HUI Index is marked with brown in the bottom part of the chart. When leaders are lagging, and laggards are leading, one should recognize that the market is topping – and that’s the key take-away from the palladium analysis right now.

Platinum has been moving back and forth recently, unable to continue its rally. The reason? The previous support at about $800, has now turned into resistance. The previous slide and breakdown below $800 was followed by a rebound, but without the breakdown’s invalidation, this rebound is merely the verification for the breakdown. It’s not bullish, but bearish. It’s yet another sign pointing to lower, not higher precious metals prices in the next few weeks.

This is further confirmed by the gold to silver ratio as this relative valuation hints at the upcoming moves across the precious metals. It didn't invalidate its breakout above the 100 level. Conversely, the breakout was confirmed, and it means that we should expect even higher values of the ratio. And yes, the values near 150 level are quite possible, implying tough times ahead not only for the white metal.

This just goes to confirm that lower, not higher precious metals prices are likely over the next few weeks.

Summary

There is a canary in the goldmine, and it’s palladium. Its weakness is a telling omen for the precious metals complex as such. And so is the platinum or gold-to-silver ratio message. The clouds on the horizon don’t bode well for the yellow metal either – let alone the white one or the miners.

The following days are not likely to be pleasant times for anyone who refuses to jump on the bullish bandwagon just because prices moved higher in the previous months. But what’s profitable is rarely the thing that feels good initially. As silver often moves in close relation to the king of metals, forecasting gold’s rally without a bigger decline first is thus likely to be misleading. The times when gold is trading well above the 2011 highs will come, but they are unlikely to be seen without being preceded by a sharp drop first.

Naturally, the above is up-to-date at the moment of publishing and the situation may – and is likely to – change in the future. If you’d like to receive follow-ups to the above analysis, we invite you to sign up to our gold newsletter. You’ll receive our articles for free and if you don’t like them, you can unsubscribe in just a few seconds. Sign up today.

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.