Gold and Silver for the Long Term

There's a few things to learn about this multi-layered chart.
1) Gold has not closed below 2 consecutive months since it started its bull run in 2001. Consecutive 2 down months is an ideal period to add positions on dips. Any dips should be bought and held till we reach the end of this bull market. The rising 12 month moving average of its volume suggests this bull is strong and is a long way from maturity any time soon.

2) Silver is strongly correlated with gold with a higher beta (volatility). Since 2001, gold has returned 459% in nominal dollar terms, whereas silver has returned 688%, outperforming gold by 40% since 2001. In contrast, the commodity complex returned 52% over this same period, highlighting the monetary qualities of both precious metals against the backdrop of the present global monetary base expansion. Silver's superior long term outperformance is expected to continue.

3) As silver's long-term performance is fraught with a high degree of volatility, I suggest the following tactical approach to investing in silver:

When the gold/silver ratio (5th box, grey line) is above the silver/gold ratio (black line), it means that gold is outperforming silver. When the spread between them is wide enough, it is the optimal time to sell gold and hold silver. I've highlighted three instances in 2003, 2004 and 2008(in dotted vertical line) when this occurs. Vice versa, the best time to sell silver and hold gold is either when the spread is narrow or when the silver/gold ratio (black line) is above gold/silver ratio (grey line). This spread position trade or relative strength tactical approach potentially maximises on the outperformance of the stronger metal at any one time while continuing to stay invested in precious metals for the long term.

This strategy favors gold at this moment.

Good luck to all.

AUD/CHF

I went back long into AUD/CHF again with latest bullish development of an inverse head and shoulders with an ascending neckline - bullish. Stop at 0.8940 with pattern measuring target 0.95. Congestion at 0.9300 horizontal region. Good luck!

Gold

AUD/CHF update: I was stopped out of my longs with profits.

Now for our discussion topic, gold.

As we embark on the last seasonality weak month(for gold) July, it is an opportune time for gold purchase before the start of historically strong August & September months ahead. (I'm referring to data after 2001)

Since 2001, gold has traded within a strong rising channel (in green) as charted below. Ideally, I'd like to see gold correct to the floor of this channel ($1300). However, I think the odds of this is low. More likely is the test of the confluence of its present intermediate trendline and 150 days moving average, $1450, which is a good spot for purchase.


From that entry level, it has 20% immediate upside, which is $1700, a confluence of its channel resistance above and fibonacci arc measured from 2001 as charted below.
COT positioning also reveals the speculative froth has been erased from the gold futures market as large speculators are holding relatively lighter long positions and commercials holding relatively lighter short positions.Let's continue to watch developments closely with the magic number $1450 in mind.
The outlook over the next 2 years remains bright for gold as rising long Treasury yields signal higher future price inflation and central banks reluctant/slow to raise rates resulting in negative real interest rates, a favorable environment for gold.

Good luck to all.