Gold and silver continued moving higher for a second week.
The yellow metal traded above its key $1,250-per-troy-ounce level this morning. That put it above its 50-day price moving average for the first time in over a month. Silver is likewise continuing a fresh uptrend; it traded up to $16.50 per ounce this morning.
If gold can get through this level, then its next target would be the $1,268 resistance zone. For silver, a close above $16.50 should help push the white metal toward $16.78.
The fresh uptrends in gold, silver and mining stocks are all playing out according to our E-Wave cycle forecast. And we took full advantage this week with two new trades …
First, you should be filled on Monday’s order to buy more VelocityShares 3x Long Silver ETN (USLV) at $10.63. Fantastic!
This brings our position in USLV up to a 5% portfolio weighing and lowers the average entry price to $11.38. And it’s good we added shares when we did. This week’s rally in silver swings the position into profit territory. And there should be more profits to come, as we expect the silver rally to extend into August.
Second, you should also be filled this week on your order to buy a 2.5% stake in the iPath Bloomberg Coffee Subindex Total Return ETN
(JO) at $17.85. Excellent!
JO is also in profit territory as I pen this issue. There, too, we expect more upside ahead as supply concerns percolate and money managers become increasingly vulnerable to a short-squeeze.
Update on some of our current holdings …
Still not playing out as our cycle models expected, the U.S. dollar remains under selling pressure in the wake of yesterday’s surge in the euro. This comes after ECB President Mario Draghi communicated a dovish monetary-policy stance.
An added headwind for the greenback comes from more drama in Washington. This time as Special Counsel Robert Mueller expands the Russia probe with a closer look at President Trump’s business transactions.
What’s more, domestic political dynamics continue on a dysfunctional track now that yet another attempt to repeal Obamacare fell short. It’s now beginning to look as if NONE of President Trump’s initiatives may get passed by Congress this year.
Both factors hurt the dollar, and have crippled the PowerShares DB U.S. Dollar Index Bullish Fund (UUP)
September $26 Call options.
The one bright spot is that we still have time with these options. We will look to grab any remaining premium on a relief rally in the greenback.
Despite political dysfunction in D.C., plus multiple geopolitical threats from overseas, stocks continued higher this week. That’s hurting our inverse ETF positions: ProShares UltraShort Dow30 ETF (DXD) and ProShares Ultra Short S&P500 ETF (SDS).
But as I pointed out earlier this week in the July Edelson Institute Bulletin, we’re WAY overdue for a steep market correction. It’s only a matter of time before something gives, and we’re now entering the weakest three-month period of the year for stocks. (From August to October.)
The good news is the renewed uptrend in precious metals, as noted above. It is playing out right in sync with our forecast models. Your Direxion Daily Junior Gold Miners Index Bull 3x Shares (JNUG), VanEck Vectors Junior Gold Miners ETF (GDXJ), Seabridge Gold (SA) and Sibanye Gold (SBGL) holdings are all benefiting from the move, with more to come.
We’re monitoring the price action closely for gold, silver and the miners as we approach the next cycle high dates. And we’ll be sure to notify you as soon as it’s time to make any portfolio changes.
Finally, the oil market appears to have more upside. Another probe of the $50-a-barrel level is in the cards.
Supporting that view is a tightening U.S. supply-and-demand dynamic. That’s thanks to this week’s EIA inventory data, which showed inventories falling to their lowest level since January.
While a late-week round of profit-taking sets in, we see that as only temporary.
And the reason for that is uncertainty surrounding Monday’s meeting between OPEC and non-OPEC producers in Russia. Especially with Saudi Arabia talking up prospects for additional supply cuts.
If oil prices continue to drift a tad lower near term, we’ll look to add to our already-profitable U.S. Oil Fund (USO) position. We expect another leg higher in crude in August, and even more strength in October. Stay tuned.
In the meantime, hold all other positions and remain alert for new trades coming your way again very soon.
Good investing,
Mike and David
