Are Silver and Gold in Bull Markets?

By: Jeff Caldwell, II

It is common to use charts over the course of the previous year to judge the price and performance of stocks, bonds and commodities. However, gold and silver are currently trading at or near two-year highs. Both have performed very well over the course of the past year.

Let’s check out silver’s one year chart. The value of the commodity is in dollars on the left, and the month is on the bottom:

Investopedia defines a Bull Market: “A financial market of a group of securities in which prices are rising or are expected to rise.”

Here’s a look at gold’s one year performance:

Attempting to judge how a price will respond in the future, people read charts to figure out resistance levels. A resistance level is when a price was touched before going back down. All gold has to do is break the resistance level of $1,400 to continue its climb. Check out this 5 year chart:

If gold breaks above $1,400, the next resistance level would be about $1,475. Then $1,600.

Going back to when gold hit its all-time high on August 22, 2011, the chart shows the price began decreasing shortly after sequestration legislation passed on August 2, 2011. Sequestration is automatic cuts in government spending.

The first cut from the sequestration bill went into effect January 1, 2013. Gold dropped, but the stock market kept rising.

The further decrease in price was also tied to the belief of the Federal Reserve raising interest rates in combination with the mandatory budget cuts.

The price of both metals were the lease expensive when the Federal Reserve announced the completion of the first interest rate hike in nearly a decade on December 16, 2o15.

Starting in early 2016, the price of gold and silver began rising as the market anticipated that the Federal Reserve would not raise interest rates. The first month the Fed announced it would not increase rates, gold and silver went higher.

Looking at the present, recent United States Jobs Data states the U.S. beat expectations by adding 255,000 jobs in July. In response, Gold has ended the week down three of the past four weeks.

Due to jobs reports, will the Federal Reserve raise interest rates in September?

If the Federal Reserve raises interest rates, will the price of gold and silver respond as it has historically to governmental cuts and rate hikes?