Precious metals and miners need a catalyst to find a sustainable bottom, and I just don’t see that right now. To catch a bid, there needs to be a psychological shift from risk-on to risk-off. That will take either the US economy rolling over in 2019 or a convincing attempt to impeach Trump. These are the most logical triggers, but there is always the potential black swan event.

Consumer Sentiment:

Until there is a noticeable shift in consumer sentiment gold will struggle. Below are some highlights from Friday’s consumer sentiment report.

Preliminary consumer sentiment for September rose to 100.8 from 96.2 in August. The second highest level since 2004-only behind the March 2018 reading of 101.4. Consumers anticipated continued growth in the economy that would produce more jobs and an even lower unemployment rate during the year ahead. Concerns about the negative impact of tariffs on the domestic economy were spontaneously mentioned by nearly one-third of all consumers in the past three months, up from one-in-five in the prior four months.

Other than being concerned about tariffs consumers are optimistic about the economy. Until that begins to change, gold will probably struggle.

I think the entire weekend report can be summed up in the daily chart of gold. The cycle may be rolling over, and at this point, gold would have to close above $1220.70 to preserve it.

GOLD

The price action in gold off the $1167 low has been uninspiring. In 4 weeks prices failed to test the 50-day EMA (currently $1220.84). The current structure is similar to the failed May/June cycle, and we could see prices begin to breakdown next week.

Gold would have to reverse sharply and close above $1220.70 to prevent a failed cycle. Closing below $1189.50 would setup a retest and likely breakdown below $1167. Closing below $1167 would establish a failed cycle and favor a decline to the $1125 level.

US DOLLAR 

Gold needs a decisive breakdown in the dollar below 94.34 to prevent another failed cycle. A rally and subsequent breakout above 95.70 would conceivably send gold back to test $1167.

SILVER 

Silver looks anemic. Prices haven’t closed progressively above the 10-day EMA since June. If gold breaks down next week, silver will probably test the $13.62 low set in 2015. A firm breakdown in gold below $1167 could send silver sharply lower.

SILVER WEEKLY 

I love silver as a long-term investment, but the weekly chart is in trouble. On the bullish side of things we are already at extremes – commercials are net-long, and the gold/silver ratio is at levels not seen since 1995. However, there is little price support if prices break decisively below $13.62. Consequently, cutting sharply through $13.62 could trigger a selloff to $12.00 and even $10.00.

GDX

There was little follow-through after Wednesday’s rally. Gold would have to recapture $1210 early next week to extend the rebound in miners. A daily close above $18.55 would recommend a snapback rally to the $19.75 gap. I think we need to be very careful here.

GDXJ 

Juniors already retraced much of Wednesday’s advance. Closing below $26.74 would have bearish implications.

WTIC WEEKLY 

Oil may be forming a head and shoulder top. A weekly close below $64.00 will confirm the pattern and prescribe a target of $55.00 in October/November.

WTIC DAILY 

If this is a head and shoulder top, then prices need to break below $66.86 next week. It would take a decisive breakdown below the 200-day MA and $64.00 level to confirm the pattern. Closing above $71.40 would distort and likely invalidate the head and should top. I have small positions in SCO and ERY. I’ll consider adding to them if oil declines below $66.86 next week.

SCO 

I have a small position with a stop below $14.57.

ERY

I have a small position with a stop on a daily close below the $34.54 low or dashed trendline.

I’ll keep position neutral in metals and miners for the time being. Gold looks vulnerable going into next week. If prices continue to weaken, I’ll return to net-short.

I like the setup in oil if prices remain below last weeks highs. If oil continues to weaken, I’ll begin adding to my shorts.