Gold and Silver Are Coiling. What Happens Next?

After last year’s powerful rally, gold and silver have settled into a trading range that may be quietly building pressure for the next big move. Beneath the surface, metal is flowing east to Asia, American stackers have stepped back, and mining stocks sit near historic lows in ownership while the Fed keeps quietly accommodating Washington’s ballooning deficits.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

The precious metals markets made a big push last year through January before the Warsh nomination and the US started the Israeli war with Iran. That brought on a big correction that was due, in part, and then a bottoming pattern began with gold in the 4,500 to 4,000 range, with silver in the 55-to-70-dollar range. In this trading range, a good deal of oil/gold volatility has taken place over the summer months with the speculative part of the market moving between the two asset categories based on war-related news and the short-term Fed winds about interest rates, the dollar, and the CPI.

As a market sits in a range of prices, the next question becomes: will the price break higher or lower? Surely in a fiat-money environment, such a market will do one thing or another, but not stay in the range forever. All the while, individuals, institutions, and central banks are buying and selling within the range based on their short-term perceptions and their long run plans, but mostly on economic circumstances given the environment.