Gold/Silver Spread: Thinking Ahead, We Just Shorted the Christmas Spread in June!

Gold/Silver Spread

This morning the December gold/silver (x7,000/oz.) spread rallied as high as +$7,095. This fulfilled the hypothetical order criteria to short the spread at +$7k (premium gold). Initially, we are going to risk this position to a two-consecutive day close above +$9k.

December Gold Silver (7,000 oz.) spread 20-minute

December Gold Silver (7,000 oz.) spread 20-minute

Although the spread has been stuck in a trading range for the last half a year, don’t forget that the Q4 peak is the third-highest price of the last four decades. At some point, the spread should break out of the downside of this range.

Gold Silver (7,000 oz.) spread monthly

Gold Silver (7,000 oz.) spread monthly

Once the December gold/silver (x7,000/oz.) spread can start a well-defined downtrend, we will look for setups to add to the short position. After peaking at such lofty heights and going into a multi-month consolidation phase, we would not be surprised to see a one or two-year bear market emerge that takes the spread all the way back down to -$20k (premium silver). We expect to take full advantage of it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s