US Dollar Gold: It’s a Coin Toss Right Now

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I doubt that Chan Tong-kai knew that he would be the name behind Hong Kong’s social unrest back in February 2018.

That’s the case today after a holiday from Hong Kong to Taiwan ended in chaos. A trip that forced Chan to travel back to Hong Kong alone.

An innocent story? Don’t be fooled…

Chan confessed to the murder of his pregnant girlfriend a month after returning.

Here’s the significance of this.

Chan couldn’t be charged with murder at home.

Not only that, Chan couldn’t be sent to Taiwan to be charged either.

This is because Hong Kong and Taiwan don’t share an extradition agreement.

Consider it the first tremor in the earthquake to come…

Hong Kong had planned to introduce a new law to deal with cases like this. The caveat: Suspects could be sent to Taiwan for trial, but also held in China.

And adding China to this extradition bill sparked the uproar and riots in Hong Kong that are all over the news.

Today, thugs roam the streets, smashing public service systems and destroying buildings.

Yes. On the ground, it’s completely different to what you may have heard in the news.

Tensions like this causes investors to flock into gold…and silver.

Asian yellow gold

For the cases of gold and silver, I’ve highlighted the Hong Kong protests on the charts below.

Source: Optuma

You have the silver price to the left and the gold price to the right.

The question must be asked: Was Hong Kong the cause of the recent surge?

On the surface of it, the timing of the HK event and the precious metals rally appear linked.

But it would be foolish of me to suggest this is the new case for gold.

After all, we have a mad man in the White House. No doubt the trade war tensions are going to continue as far as the eye can see.

All right. Back to it…

Reassess your stop-loss levels now

Here is my view on the recent rally in gold and silver.

It’s not new to suggest that both gold and silver are in a new uptrend. That is, the ‘bulls’ are in control here.

The problem I see, though, is that the recent rally has been rather steep.

I want to see both gold and silver top out and consolidate over a few weeks.

The reason for this is that a vertical move up from here would be rather unstable. It could cause a sharp drop in price once the ‘fair’ market value comes back.

And that’s what I’m concerned about.

If you hold gold and silver already…reassess your exit strategy and consider increasing your stop-loss levels.

If you don’t hold these metals just yet, perhaps hold off and wait for the market to cool down a bit…

For now, these metals should be placed on your watch list. But don’t go all in here. It looks too late for that kind of behaviour.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch