Disclaimer: Nothing in this blog post, or in any other post on this blog, should be construed as personal investment advice. This is for entertainment only and for my own amusement in particular. If you want investment advice, hire a financial advisor.
I mentioned just a few days ago that gold and silver had gone parabolic and that I wouldn't be buying any time soon. Now y'all know why. They got some haircuts last Friday. Gold got a buzz cut, falling by about ten percent, and silver's barber missed the hair completely and outright decapitated it with a wild thirty percent crash.
It was silver's worst single-day drop since 1980.
So now that it looks like the inevitable correction has begun, let's start looking for support levels. Here's the ten-year chart for gold:
Upon inspection, it looks like the previous low prior to this bull run was at around the 1620 level, give or take, so we'll go with that for the starting point. We'll call the peak 5600 even to (hopefully) make the math easy. That gives us a total rise of 3980.
We'll look at Fibonacci retracement levels of 61.8%, 50%, and 38.2%, because I think those are the most likely to be relevant here. (We'll use the same percentages for silver in a moment.)
3980 x .618 = 2459.64, for a support line at 4079.64
3980 x .5 = 1990, for a support line at 3610
3980 x .382 = 1344.64, for a support line at 3140.36
Due to the previous retracement of around 50%, give or take, I think the 3610 support line is the likeliest bottom, so if gold does indeed fall to that level, then that's where I'll be looking to buy either gold or gold mining stocks. If it reaches the 61.8% line, though, and then treads water there for a sustained time, then that line might be the bottom, so I'm not counting that one out. And, of course, due to the parabolic nature of this latest spike, a decline to the 38.2% level is also possible. But I'm leaning towards the 50% line.
Now let's look at silver.
We'll assume silver began its climb in 2022 at around 17.50, give or take. We'll call its peak 121. That gives a total rise of 103.5. Fibonacci numbers then look like this:
103.5 x .618 = 63.96, for a support line at 81.46
103.5 x .5 = 51.75, for a support line at 69.25
103.5 x .382 = 39.54, for a support line at 57.04
As I write, silver has already fallen through the first Fibonacci line, so I think we can safely eliminate the 61.8% retracement level as a support level. Silver is more volatile than gold, as Friday's action makes eminently clear, so I suspect even more confidently for this metal to keep falling to the 38.2% retracement level. It could even fall all the way back to below the previous highs of around 30, because it did something similar in 2022, falling back to below its 2016 highs after a spike up in 2020. I won't jump into the metal at 57.04; I'll want to see it tread water there for a while before I'm convinced it's a bottom.
So that's my thinking at the moment.
