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Gold & Silver: Why It’s Unusual to See Different Price Patterns

Plus, a look at gold stocks and palladium

by Alexandra Lienhard
Updated: March 24, 2017

Tom Denham, the editor of our Metals Pro Service, explains why it's unusual for gold and silver to have different patterns -- as they've shown lately -- and what that means for the price trends going forward.


Alexandra Leinhard: Welcome to ElliottWaveTV, I'm Alexandra Leinhard. Joining me today from Alpharetta, Georgia is Tom Denham, Elliott Wave International's Senior Metals Analyst and Editor of EWI's Metals Pro Service. Hi Tom, it's nice as always to see you.

Tom Denham: Hi, Alex.

AL: Now when we spoke last time, you were looking for a correction lowering gold, but still remain bullish overall. And looking at the price charts, that's pretty much how it's played out. So looking ahead in gold, Tom, what are you seeing?

TD: Well, I am bullish in gold. But the thing that's very notable is I had been thinking that gold was going to correct lower than it has up until this week. In fact, as I entered the week I was thinking that the strength that we were seeing from last week was a bounce within an ongoing downward correction. And I had some criteria set for where I would change my mind about that. And by Tuesday the criteria were met. I did take until the next morning before I actually made the formal call that I did not see the chance of another new low coming in gold. And began to point substantially higher. But this was a pivotal week in that sense. And so the big deal is, I'm now thinking that any pullback we have in gold, is a modest correction that will not make a new low below the last one we saw. And that that will be followed up by ongoing strength.

AL: Now, Tom, let's turn to silver. Is that following suit or splintering from gold?

TD: Well, I think it's staying on the course that I was forecasting for both gold and silver previously. I was thinking that both were going to fall in a zigzag fashion. And that still looks very likely with silver. It has risen in a very choppy, overlapping form. While gold has risen in a very clear five-wave impulsive form. And silver has retraced a very modest portion of its last segment of decline, while gold has retraced a very, very significant portion. So what I'm thinking is going to happen is that when gold finally begins to correct down, it will make a partial retracement of its rise. While I think silver will make a complete retracement of its recent rise. Make a modest new low, and then join gold in rising in a persistent fashion.

AL: And looking at gold and silver patterns, is it unusual for them to have different patterns?

TD: It is. And that's one reason why I drug my feet a bit until gold gave me strong evidence that it was rising. Because silver was staying on track very neatly with my concept of a modest rise and then renewed weakness. And so it was a tense thing for me to recognize the break. It's not really the same, but platinum, silver and gold often move in generally the same direction. Platinum often has a different wave count. It's different enough. But it's typically going in the same direction. But silver and gold very frequently have the very same wave count, even though they might make their turns on different days. So it's kind of been a big deal to have my outlook for silver and platinum be very different than the outlook that I have for gold.

AL: Now Tom, last market to touch on today, gold stocks. I assume they're following the same trajectory that you outlined for gold.

TD: Yes. Now the interesting thing with gold stocks is I had offered a bullish forecast for gold stocks sooner than I did for gold. I recognized that it was on a bullish trajectory and had completed its downward correction. And I was anticipating that gold stocks was going to make a new low gold, excuse me, I was thinking that gold stocks would continue up and that gold would make a slight new low before it continued up. But now it seems that gold and gold stocks are on the same path. I just want to give you a little note of the flavor of what's been going on this week. One of my subscribers wrote to me this morning and he said, well isn't this a confirmation? Isn't this a sign of that you're on the right track? That gold and gold stocks are on the same track? And I said well, you know what's been going on here, is I've been saying the glass is half empty because silver is not on the same track with gold. But the reality is, the glass is half full because gold stocks and gold are all the same track.

AL: Well, Tom, the glass is half full is always a good way to look at things, so thanks for taking a couple of minutes to update what you're looking at in the metals markets.

TD: OK, thank you, Alex.

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