Gold, Silver, Miners chart analysis 2 August 2020

published on August 2, 2020

Hello and welcome to gold and silver assets it's sunday the 2nd of august 2020 in the comments section we've been hearing how much people have made from their stacks and this is really nice to hear about we

Did have one viewer who asked how much gold they should own so today we're going to talk about gold ownership first of all i'm not a financial advisor so i can't give you

Individual advice and also you are all individuals and so what's right for one of you won't necessarily be right for another how much gold is right for you will depend on a

Few things so firstly what's your individual situation in terms of things like income debt level commitments and your future goals and these will determine how much you

Have available to invest you then need to consider what proportion of your investable amount you want to assign to gold now i think that that should really

Partly depend on what your beliefs are about gold and the financial system in general if you believe that the fiat system will remain strong and that the economy and

Financial system will steam ahead like it has done in past decades then having minimal or no gold would match your beliefs then there's the spectrum which goes from one end where you might think that

Inflation's coming but then that will be subsequently put under control like it was in 1980 and then you've got the other end of the spectrum where there's the belief of total

Collapse of fiat currencies and the financial system so i think that the proportion of gold you hold should partly be based on where you are on that spectrum the other thing to

Consider is what your risk tolerance there are risks associated with holding any asset and yes that does include cash and gold and i'll go into that in a bit more detail perhaps in another

Video but basically it's up to you to assess what those risks are for you and use that to help make your decision one other thing that can be useful is to know what

Other people particularly smart people are doing but the problem is that finding data regarding private gold ownership is very difficult to come by

The reason for this is that one of the desirable properties of gold is privacy i like one of the jokes that they have over on the balance youtube channel which has the quote i lost my gold in an

Unfortunate boating accident i thought that's a good one there let's start by looking at how much above ground gold there actually is well there's over 197

Thousand tons of it and if we were to lump all of that together to form a cube then it would be 217 meters high of that a whopping 47 percent is actually in jewelry form

And 21 is in private investments and 17 is in central banks so what if we were to divide all the gold equally amongst the whole population well that would give us 081 ounces of

Gold per person if we just divided the private investment gold then that would only give 018 ounces per person and if we added jewelry to that private

Investment then that would bring it up to just over half an ounce per person so by this metric if you own more than one ounce of gold you're actually doing quite well however

This isn't a very realistic metric because just like fiat currencies gold will never be evenly distributed what have central banks been doing in terms of gold well on this chart it shows that from

1845 up until around 1970 they were steadily accumulating gold and that dropped off quite sharply in the late 60s really and that continued well into the full

Fiat era and on this chart we can see that for a long time central banks have been net sellers of gold but that seemed to change in around 2010 when they became

Net buyers but remember that this has mainly been driven by central banks in the east and middle east as far as we know most western central

Banks are not buying gold perhaps they're not buying gold because they think that they already have enough so this table shows the official gold holdings

In tons and as a percentage of reserve assets and this is shown for different countries now i know that there is a lot of controversy about the accuracy of these tonnages

But you know this is all we've got to work with so let's just go with it in terms of reserve assets reserve assets can include gold but also include things like currencies and special drawing rights

Now according to this table usa holds 75 percent of its reserve assets in gold whereas for china it's only 24 percent this all seems a bit odd to me but then i realize it's kind of a bit like saying that someone says that they have hundred

Thousand dollars worth of gold but then they don't mention that they have 52 million in bad debts on their books so what about gold allocation in terms of

Investment portfolios so this chart shows how portfolio composition has changed over time so debt in its multiple forms has ballooned both in terms of absolute

Amount as well as proportion of portfolios and they make up a big chunk equities have also increased in proportion over time but on this chart

Gold is barely visible so those are those yellow tips at the top of each bar let's look at that a little bit more closely on this chart we can see that in the

Last 30 years gold has only been less than one percent of all financial assets for most of that time and in fact it was actually less than half a percent for most

Most of that interestingly in 1960 it was as high as 5 now remember that financial assets account for trillions of dollars and so even just doubling from half a percent to one percent in gold

Would exert significant upwards pressure in the price of gold the fact that gold is part of the global financial assets portfolios that tells me that as an absolute minimum having one

Percent of your investments in gold would be prudent the silver market is even more minuscule so from this chart you can see that in 2004

It made up only 004 of gold assets that's really really tiny and remember that the allocations for gold and silver that i've discussed here are based on full belief in debt and equities and

The fiat system let's look at the other end of the spectrum and look at people who believe that the fear system is going to collapse so the examples i'm going to give are

All people who own businesses that sell and store precious metals now these people do tend to get a lot of stick for talking their own book and i've

Heard some people say oh well you know if they believe so much in gold then why are they selling it to other people and i don't think that that's valid at all

Firstly we all need to make a living in some way and you need to make a living in order to be able to buy gold in the first place their businesses are just their own way

Of making a living so they can add to their own personal stacks but also they're doing something that they strongly believe in and actually are helping other people in

Achieving the same goals secondly these guys do have skin in the game so they do invest a large proportion of their income into the precious metals

I don't know the exact figures for everyone but certainly for egon it's over 50 percent and for andy well he says that he's been in the habit

Of buying precious metals every couple of weeks regardless of the price and he's been doing that for decades this is daryl and his brother brian from as good as gold australia

And i really like these guys they've got a really lovely old-school aussie charm about them anyway they sell gold in australia and they often give us really good vignettes about themselves and their

Clients and they've been buying gold for themselves for years and basically they've openly said that they're all in

I also think that mike maloney and gregor gregerson are also pretty much all in but interestingly they've taken things a step further and are basically playing the gold

Silver ratio so therefore both have actually mainly invested their funds to accumulate silver with the aim of changing to gold when the golden gold silver ratio drops that way they

Aim to end up with even more gold at a later stage um i think that that is a very valid strategy but i think you've got to have guts to do that my worry would be

Not being able to get gold when i when i actually want it if there are any shortages and then i'll be stuck with silver obviously these guys probably won't have that problem because they've got you

Know direct contacts with wholesalers and so on i've talked about the spectrum of gold ownership and the percentages seem to range anywhere from one percent to

100 percent now of course there are lots of other factors to consider and i'll talk about those other factors in future videos but i do like to keep these videos relatively short and digestible

Overall it's up to you to decide where on that spectrum is right for you i'm sure many of you are itching to know my personal answer to this question how much gold is enough for me

Well my answer is more next up the market update let's start by going back and looking at that comparison of the dow from the great depression

And the current day so i hadn't forgotten about this it was just that things weren't really doing very much price has been moving kind of sideways for a while and as you know

I do like to look at the bigger time scales and so following this every single week probably wasn't going to be that helpful to anyone really anyway let's go back so as we remember

Back in 1930 there was a 48 drop and the peak to trough was uh 48 in two months that was followed by a 48 rise and that actually took quite a while

That happened over five months and again that's from the the trough to the peak what's happened in 2020 well we had a very steep drop it was only 38 so it's less than

It was in the great depression however it did happen nearly twice as fast there so it could over 40 days from peak to trough and we've had this rise and this was actually a 488

Rise and from that trough to the peak it was 26 months which again is just over half the time of this rise so it's interesting just looking at those proportions which seem to be quite

Similar and of course things are never going to be identical so what we had back here was we had this ascending wedge price popped out the top and then just

Rolled over and interestingly just at the apex of that wedge is where things just plummeted uh from there basically and if we look at 2020 again price

Popped out of the top so i've tried to draw this wedge in the same way that it was drawn in 1930 so yep price popped out the top came down but actually the bottom of the

Wedge ended up being support and so since then we've been moving sideways but never really been able to breach the top of that wedge again so far and momentum seems to be slowing

Certainly once we drop below the wedge it's just been knocking knocking on the lower trend line really and now it's just kind of slipping downwards so the question is

Is this going to play out just like this the answer is i actually don't know um there are a couple of possibilities here a lot of people are saying oh well you know there's unlimited intervention of course there was

Intervention in 1930 so in this time the banks and big financial players were actually putting money into the stock market to try and keep it propped up and that obviously failed

But the argument here could be well you know at that time it was limited because of the link to gold whereas nowadays you know there are no limits so that could be enough to push things up

A lot further the but then the flip side of that is that well maybe they need to have a further drop to have an excuse to print more you know maybe they they can't just

Print willy-nilly right now without having such an excuse i don't know um basically for me this doesn't have any asymmetry in it it could actually go either way um

I'm erring on the side of a down move just because you know this is an imprint of human psychology here and this pattern has been replicated in so many bubbles that we've seen in the past so

If you look at my video bubble tops and pops that goes through some of them but anyway at the end of the day i don't really have a dog in this fight um as i said there's just no asymmetry

Whichever direction it goes i think it will still be good for the precious metals and so i'd rather stay out of this game and um just going back again

To learn some lessons i guess from some of the analysis that we've done so the first thing that um we were talking about remember we were likening this to lemmings falling off a cliff

And so the first thing is that we don't know where the cliff edge is and so when we were first looking at this i was talking about the wedge actually being over here like this and so i was

Assuming the cliff edge was was around here and actually that wasn't the case all right now i'm thinking it's probably around this area here where we are now

There are lots of different ways that you could draw this lower line so another possibility is to actually draw it like this this line here was actually drawn from the line chart so that's actually

The you know the closing prices each day so the first problem is we don't know where the edge of the cliff was the second thing was that chart patterns can fail so we thought we had

This smaller wedge here and you know it did look pretty good and it did drop out of it but it didn't proceed to continue downwards to the target it actually just turned around and move

Upwards but the other interesting thing to note is that we saw lots of wedges within this um so there's one there there's another one over here and so

What we're seeing is lots of wedges within a much larger wedge so you know that's a kind of fractal thing going on there so is it that this first wedge was actually

The clue to the larger pattern sometimes i've seen that also with triangles that are forming as well so the thing to learn here is that sometimes patterns can be called too early and so it's a matter of being

Wary of that but i don't know how to avoid that really um that's a tricky one i think with this one though that comparison with the 1930 dow

Would have helped because when i first called this wedge i didn't actually look at the time scales so how long it took um to reach that what we thought was the peak there so

You know that's something that might have helped as well so i think it's useful to try and look back at the things that you've analyzed and try and pick out

You know what the issues have been because you know nobody's ever going to get this perfectly right here and so it's really good to kind of have keep a diary of what your thoughts are

And learn from that next we'll look at gold in us dollars on the monthly scale and whoa look at this massive green candle here that's huge and it's moved to all-time highs

In us dollars of course it has been at all-time highs in other currencies for quite some time now and as we said last week this is a momentous move here so we are looking for more ops upside in the longer term

But remember now we're at four monthly candles the most we've ever seen was six um so yeah potentially we could be moving further up but of course the more

Candles we have and the further up we go potentially the bigger the fall so you know also this move has been very very rapid it's kind of parabolic move really and parabolic moves usually don't end

Very well you usually get a sharp movement downwards as punishment so let's see um i am expecting a red candle in the next one to two months so we'll keep a watch on that

But as i said before i'm not expecting price to go below the 1741 level it may not even get that far but that's probably the most that i'd be looking at in terms of downside and let's have a

Look more closely at the four hourly scale and see what's happening so we had this big rise here and on this four hourly scale we've got what looks like an ascending triangle now i just wanted

To point out this here which basically just poked out of the top of that triangle and then got smashed back down again and it's this kind of trading action that makes it very difficult

To trade so if we see a break above the top of this then yeah there's more upside here but remember we've got this big round number of 2000 and that's going to be a kind of

Psychological level that may affect things it's it's very difficult to know um price could steam upwards certainly if it does go through that 2000 level then you know we've got

A quite a big target here of 2050 further upwards of course this could break out lower and so it's also worth watching this lower trend line in which case then we'd be going back

Down again silver did exactly what we thought it would so this is silver on the monthly scale in us dollars and we were looking at these

Areas here as a resistance zone i plumped for the middle of that zone and said 27 was the target but actually price got rejected before that at just above the 26

Level so i think it went up to about 2620 and that coincided with the bottom of these wicks here so this whole zone here between 26 and 28 is going to present

Some resistance there so it's not going to go through easily what's going to happen here there's going to be a bit of frustration going on we've had this amazing excitement with

This big move here but because of this i think we're going to have a little bit of choppiness and sideways movement or consolidation before we make that next step upwards

There and here we have silver in us dollars on the daily scale and not really much to indicate what's go coming next so we saw that rejection

Here at 2620 it could have another stab at that before making its move down we've got this trend line that goes back until march and

I think that may well hold actually and so the lowest we're looking at is 20 here at the moment if we if we get a drop of course as i said price may well just

Consolidate here before making its next move upwards and looking at the miners they've been a bit lackluster considering that massive green candle we had in gold we haven't seen the equivalent here in

Terms of the miners and in here we can actually see that they're in a short term downtrend here over a longer time span you can see that we are still in an uptrend and that has not broken

And so we still have to assume that price is going to keep moving upwards until we see a break of that and remember that we do still have all these messy gaps that do bother me a

Bit um but let's see what happens well i'm sure most of you are basking in warm sunshine i'm freezing over here always whinge about the cold so i'm off to have

Something hot to try and warm me up that's it from me this week all the best and see you next week bye

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