In the first part of this multi-part research post, we highlighted what we are calling a Crazy Ivan price event (borrowed from the movie Red October. The one thing we want you to take away from this article is that August 19, 2019, should be a major price inflection date where the price is very likely to begin a new downside price trend in the US and global stock markets. This will likely push commodity prices to extremes and may very well push Gold and Silver into the stratosphere as fear and greed take hold across the planet.
In Part I we highlighted how the VIX and the NQ are set up to react to this Crazy Ivan pricing event and how we believe many traders/investors are simply unaware of the potential for this type of large reversion price move. We want to be clear, we believe the US markets will be somewhat immune from extended downside risks. This does not mean there won't be a downside price move and this does not mean that the markets won't experience the Crazy Ivan reversion trend. It will likely happen just as we are expecting, yet we believe the US stock markets will quickly recover from this move – like it has done many times in the past.
Our research that highlighted this August 19, 2019 date and the potential for what we are calling the Crazy Ivan price move is rooted in our super-cycle analysis, predictive modeling tools, and other specialized proprietary price modeling solutions and utilities. We believe we've identified a key inflection point/date that will start what we are calling a “breakdown move” which will lead to the Crazy Ivan event throughout the globe. As we stated in the first part of this article – we don't know the exact composition of this event yet, but we do know that is should begin to happen near or after August 19, 2019.
Now, let's get busy digging into the Gold and Silver charts for all our followers.
Gold 2-Week Chart Interval
This first Gold 2-Week chart highlights our Fibonacci price modeling tool and helps to show us where the price is targeting for the initial upside move from the April 21~24 Momentum Base pattern that we called back in January 2019. We believe the current breakout upside price move will initially target the $1597 level before briefly stalling, then rallying further to target the $1785 level or higher.
We believe the Crazy Ivan event could push Gold much higher than our projected levels under certain circumstances:
- The US Dollar weakens throughout the initial process of the Crazy Ivan event
- Cryptos collapse as governments clamp down on rogue exchanges/currencies
- Massive credit and debt issues arise in China, Asia or the EU that threaten future economic output and operations
- Some type of crisis event unfolds where global investors believe war or conflict is imminent. (think Hong Kong, North Korea or somewhere in that general vicinity).
Without these additional impetuses in the metals market, we believe the price will follow our Crazy Ivan expectations (YELLOW LINES, below) fairly closely over the next 30 to 60+ days.
(Click to enlarge)
Silver Daily Chart Interval
Silver, on the other hand, is set up to break substantially higher based on the upside move we expect in Gold and the possibility that the Gold/Silver ratio will continue to contract to lower levels. Recently, the Gold/Silver ratio fell from approximately 93 to 86. This move relates the total number of ounces of Silver one must buy to equal the price of one ounce of Gold. Currently, this level is back up to 89.5 as Gold has rallied faster than Silver has rallied. Related: What Would You Do If You Found A Wallet On The Street?
But what happens when traders catch onto the fact that Gold and Silver will rally as this Crazy Ivan event takes place and that Silver is the true undervalued metal across the planet? At the peak of Gold/Silver prices near April 2011, the Gold/Silver ratio was resting near 32 (yes you read that properly). What would that look like on the Silver chart, below, if Gold continued to rally to levels above $2000? It is really simple to find out.
$2000 (Gold per ounce) / 32 = $62.50 per ounce for Silver
What if Gold rallied a full 100% Fibonacci measured move from the previous 1999-2011 rally? That peak level would be $2700 in Gold and the calculation is still simple.
$2700 (estimate Gold peak) / 32 = $84.375 per ounce for Silver.
Could it happen like this? Yes, in theory, and reality it really could happen that Gold rallies to a level that equals a full 100% Fibonacci price extension and the ratio level falls to levels near 32. If that were to happen, then these calculations would be accurate.
This is why we believe the Crazy Ivan event will become the catalyst for some really incredible trading opportunities and big price swings over the next 6 to 13+ months.
(Click to enlarge)
Concluding Thoughts:
Our $21 upside price target in Silver is really muted compared to our long term price projections. Yet everything hinges on this August 19, 2019 breakdown cycle date and what happens after that. Our research suggests this current downside price move may have been a volatility explosion related to the lack of liquidity in the global markets and to hint that the markets are capable of being far more irrational for far longer than anyone expects.
We are only 9 days into August and we have already closed out 24.16% in gains from the falling SP500 using SDS, and the pop in gold using UGLD, and from the oversold bounce and rally in silver miners SIL.
We urge all of our followers to pay attention to our research, consider your options very closely and prepare for this next move by pulling some of your active portfolio away from risks and into more protective measures. This Crazy Ivan event is just 10 days away and we really want to urge all of our followers to not under-estimate this event cycle.
Warning Signs About Gold, Silver, Miners, And S&P 500
In early June I posted a detailed video explaining in showing the bottoming formation and gold and where to spot the breakout level, I also talked about crude oil reaching it upside target after a double bottom, and I called short term top in the SP 500 index. This was one of my premarket videos for members it gives you a good taste of what you can expect each and every morning before the Opening Bell. Watch Video Here.
I then posted a detailed report talking about where the next bull and bear markets are and how to identify them. This report focused mainly on the SP 500 index and the gold miners index. My charts compared the 2008 market top and bear market along with the 2019 market prices today. See Comparison Charts Here.
On June 26th I posted that silver was likely to pause for a week or two before it took another run up on June 26. This played out perfectly as well and silver is now head up to our first key price target of $17. See Silver Price Cycle and Analysis.
More recently on July 16th, I warned that the next financial crisis (bear market) was scary close, possibly just a couple weeks away. The charts I posted will make you really start to worry. See Scary Bear Market Setup Charts.
By Chris Vermeulen
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