by Jimmy Mengel, Outsider Club:
Last week, I outlined why I felt caution was necessary in the gold and junior space. The failure of gold to rally, despite a weaker dollar, was a clear sign that there was a consolidation in the cards.
After failing to breakout early in the week — despite the U.S. dollar index falling to an eight-month low — gold has consolidated to the ~$1,230 level. There is heavy resistance at the $1,260 level and a weekly bottom at the $1,220 level.
I continue to believe the price trends will lower over the coming months. Gold couldn’t surge higher with a weaker dollar, but a stronger dollar later in the week did contribute to the pullback.
Silver on the other hand had a great week, hitting a 5.5-month high of $16.26 on Wednesday and a new high of $16.34 on Friday.
Silver tends to overshoot gold on the way up but has the same tendency on the way down.
Despite the many emails I’ve received this week about this being the last opportunity to buy silver at these prices, I continue to advise caution in the near term and think there will be better opportunities over the summer months. They’ve already begun to pull back a bit:
Copper fought off breaking under $2.00/lb and currently trades near the $2.17 level. It failed to break $2.20, however, and we could see a sharp move lower in the next week or two.
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