Heighted market volatility over past several weeks has investors flocking to stable market segments such as fixed income, utilities and precious metals. Of the group, the one segment that has captured the media’s attention the most is precious metals, which is likely due to the reputation of being regarded as a safe haven during market selloffs. In the article below, we’ll take a look at a few charts from across the precious metals spectrum and try to determine how traders will look to position themselves over the weeks or months to come.
GraniteShares Platinum Shares ETF
Due to the relatively low level of platinum mined to date and shortage of supply, this commodity is one of the world’s most sought after stores of value. Investors who seek physical exposure to platinum often turn to exchange traded funds such as GraniteShares Platinum Shares ETF (PLTM), which is the lowest-cost physically backed platinum ETF on the market. As you can see from the chart below, the 50-day moving average (blue line) recently moved above the 200-day moving average (red line), as shown by the blue circle. This bullish crossover is known by technical traders as the golden cross and is used to mark the beginning of a long-term uptrend. Given the proximity of the support levels the risk-to-reward ratio is clearly in favor of the bulls and most will likely protect against a sudden shift in sentiment by placing stop-loss orders below $8.30.
SPDR Gold Shares
There are few charts across the precious metals segment that is a better indication of the fear that is dominating the markets than the SPDR Gold Shares Trust (GLD). As you can see from the chart of the SPDR Gold Shares, the demand for gold is extremely strong and the step-like pattern clearly shows that there are no signs that the uptrend will reverse any time soon. As investors continue their flight to safety, precious metals such as gold and platinum will likely to be some of the market’s top beneficiaries. In the case of platinum, you can see that it is in a much more favorable position from the perspective of an active trader because it provides nearby support levels for determining the placement of stop-loss orders. Given the distance to the 200-day moving average, holders of gold will likely be more susceptible to more volatile price fluctuations and short-term opinion.
iShares Silver Trust
Silver prices are currently trading in one of the strongest uptrends found anywhere in the public markets. As you can see from the chart of the iShares Silver Trust (SLV), the strong moves higher followed by brief periods of consolidation have proven to be profitable setups in the past and many will expect this behavior to continue into the future. More specifically, Monday’s close above the dotted trendline will likely be used as confirmation of the next leg higher and many will likely protect against a sudden selloff by placing stop-loss orders below $15.75.
The Bottom Line
Most segments of the financial markets have experienced shifts in the underlying uptrends over the past few weeks. As investors scramble to seek shelter from the volatility many are turning to precious metals. Based on the charts discussed above, precious metals look to have promising upside remaining before any significant reversal.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.