More Profits in FCX, Declines in Copper, Gold to Follow
The current prediction for the price of gold is pretty much the same as the current forecast for copper. And it’s based i.a. on real interest rates.
You know what happened in gold recently? Gold showed some strength. Well… No. That’s not correct. Gold tried to show strength recently, but it failed to do anything meaningful. In fact, it did something meaningfully bearish.
From the short-term point of view, we see that gold’s yet another attempt to move higher was invalidated. This also took place on big volume – just like last week’s reversal.
Gold not only reversed its course last week – it also did the same thing this week!
The implications are very bearish, especially that…
Especially that gold and silver declined once again in today’s pre-market trading.
In fact, gold price just touched the $2,000 level. Invalidating the move above it, and a weekly close below this all-important level would have profoundly bearish implications.
“Gold breaks below $2,000” would be catchy headline and everyone would notice. This would likely lead to more selling. And it’s very likely just around the corner, also given what’s happening in the price of silver.
Silver rallied in the recent weeks and it moved above its early-2023 high, but if you’ve been following my analyses for some time now, you know that silver is known for fake breakouts, and that it tends to invalidate them. In other words, silver is not for beginners.
And as Britney Spears might have sung, oops, silver did it again!
The breakout above the early-2023 highs was just invalidated. And since the white precious metal is moving lower once again today, it seems that it was the move lower that was true, not the preceding upswing.
The big volume that we saw during yesterday’s decline, definitely confirms this bearish outlook.
The bearish confirmations are present not just on the precious metals market, but also other commodities. The share price of the FCX (big gold and copper producer) confirms it.
Actually, the outlook here has been bearish for some time now, and we entered a short position in the FCX in early April. Needless to say, it was a very profitable move. What about the outlook, though?
Well, the Freeport-McMoRan stock price moved sharply lower, yesterday.
This move was notable not only because it happened on big volume, but also because it happened on big volume after a corrective upswing. We saw something like that in early March. Back then it meant much bigger declines in the near future. So, the profits on the short position here can really increase quite substantially soon.
Also, since FCX’s performance is connected to the one of the stock market, and the latter is connected with performance of junior mining stocks, the above points to lower junior mining stock values as well. While I can’t guarantee any kind of performance for any asset, in my view, it seems that very profitable times are coming for those, who had the courage to position themselves accordingly – oftentimes against the emotional majority.
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Przemyslaw K. Radomski, CFA