Gold and Silver Crashing!
Gary Wagner’s 2024 Outlook and Investment Strategies
In a recent interview with David Lin, the renowned market analyst Gary Wagner shared his insights into the current state of the gold and silver markets, projecting potential movements and examining the technical factors influencing precious metals. Below is a breakdown of the key points discussed during the conversation, reflecting Wagner’s detailed analysis and predictions.
Gold Market Overview: Price Targets and Corrections
Wagner began by addressing the recent movements in the gold market, pointing out that he expected a high of $2,800 for the current year. He emphasized that, while this is likely the peak for now, the market should not experience a multi-year correction as it did in 2011. Instead, Wagner predicts a shorter and less steep correction.
He noted that gold had corrected about 46% from the peak of $2,350, entering a phase he identifies as "corrective." According to Wagner, while a temporary drop below $2,600 might be possible, a counter wave upward is expected before one final move downward. This should complete the corrective phase, likely by Q1 of next year. He believes that, from there, gold will re-enter a bullish trend, potentially breaking $2,800 in the following year.
Comparing 2011 to Current Trends
Drawing comparisons to 2011, Wagner highlighted a key difference in the market's behavior. In 2011, gold hit a high of $1,900, marking the peak for many years to come. However, this year, the market has demonstrated a new high of $2,800, indicating a different dynamic. Even after a recent correction, Wagner maintains a bullish long-term outlook, suggesting that the current market dip does not signal an end to the overarching positive trend.
Wagner also pointed to gold's previous October valuation of $1,957 and compared it to the rise to $2,800 within a year. He sees this as evidence that gold’s long-term bullish momentum remains strong, despite the current $200 correction.
Establishing a Floor for Gold Prices
Discussing the technical floor for gold, Wagner expressed confidence that the metal would not fall below $2,600. He supported this prediction using stochastics—technical indicators based on momentum—and other chart data. In particular, he noted that both the percent D and percent K indicators were below 20, signaling oversold conditions.
To reinforce his view, Wagner shifted to an 8-hour chart, showing even clearer evidence of oversold conditions. He anticipates that the market will enter a counter wave, predicting that the final move could bring prices down to $2,600 or slightly lower, marking the bottom of the correction.
Technicals vs. Fundamentals in Gold Analysis
Wagner stressed the importance of both technical and fundamental analysis. He emphasized that technical indicators provide guidance on market movements but are ultimately secondary to fundamental events that drive long-term trends. He cited a quote from Larry Williams to illustrate this point, likening technical analysis to observing the wake of a boat: useful for understanding direction but not for anticipating when the captain (i.e., the market’s fundamentals) will change course.
According to Wagner, while the current technical indicators show gold in a corrective phase, the underlying fundamentals still point to a long-term uptrend. The recent decline is seen as a temporary valley within a broader upward trajectory.
Silver Market Update: Following Gold’s Lead?
The conversation then shifted to silver, where Wagner and the interviewer explored whether silver’s recent decline was tied to gold's performance or indicative of a broader economic slowdown. Wagner acknowledged that silver had experienced a steeper percentage drop than gold, citing a decline from $34.98 to $30.50—a 12.5% decrease in just a week and a half.
Wagner attributed silver’s decline partly to its higher beta compared to gold, which means it’s more sensitive to market changes. He observed that, unlike gold, silver has not reached new all-time highs, although it recently hit a 13-year high of $35.
Support and Resistance Levels for Silver
Technical support and resistance levels for silver were also discussed. Wagner highlighted key support around $30.50, citing the 38.2% Fibonacci retracement at $30.40 and historical highs from earlier this year as crucial indicators. He identified short-term support at $36.40, with significant resistance at $35 and minor resistance at $32.30.
Strategies for Gold Investors: Short-Term and Long-Term Perspectives
In response to a question about how investors should approach gold given recent volatility, Wagner offered strategies based on different time horizons:
Short-Term Traders: He advised waiting for confirmation of a technical support level of around $2,600 before entering long positions. This, he said, would require clear indicators such as a pivot point or a shift from bearish to bullish sentiment.
Long-Term Investors: For those with a 2-3 year horizon, Wagner recommended viewing the current correction as a buying opportunity, particularly for those who missed the earlier rise from $2,500 to $2,800. He suggested accumulating bullion or gold coins, stressing that now is not the time to reduce holdings.
Wagner also predicted that gold might undergo another correction after rising to $2,700, before resuming a full bullish trend by late Q1 or early Q2 next year. For investors with a 3-5 year timeline, he advised simply holding and potentially increasing holdings during the current dip.
Conclusion and Further Resources
To conclude, Wagner reaffirmed his belief in a sustained bullish outlook for both gold and silver, despite short-term corrections. He emphasized the importance of technical and fundamental indicators, encouraging investors to stay informed and consider market conditions carefully.
For more insights and detailed technical analysis, Gary Wagner can be followed on his premium service at TheGoldForecast.com, which offers subscribers detailed forecasts and market breakdowns. Wagner's content is also available on YouTube and Twitter.