A Head Fake in Precious Metals: The Bear Market Drags On

By Goehring & Rozencwajg

2022.10.27

Ever since silver staged a furious catch-up rally back in the summer of 2020 — something that has always signaled a long corrective phase — both gold and silver have been quietly drifting downward. Since reaching their peaks in the summer of 2020, gold prices are now down 15% while silver has fallen more than 35%. Gold and silver equities, as measured by the GDX and SIL ETFs, pulled back over 40% and 50%, respectively.

In our last commentary, we outlined the emergence of several important fundamental trends that gave us confidence to say the correction phase in precious metals prices might be ending.

Unfortunately, one of the more important trends, which we thought was flashing a strong buy signal in Q1 has reversed. In past commentaries, we have discussed how the gold bull market’s next leg would be driven by western investors, not by eastern investors as was the case in the huge gold bull market between 1999 and 2011. We follow 16 publicly traded ETFs that invest in physical gold, to track the interest of western investors, which has now turned decidedly bearish.