Precious Metals: Fundamental And Technical Analysis

by humagaia

It's all very well investing in precious metals. It's just like buying money. But when is it 'the' time. That's when precious metals fundamental analysis & technical analysis helps

Changing your fiat money for precious metals with intrinsic value is a hedge against currency devaluation.
But when is an investment hedge strategy against underlying problems in the economy the correct option?
That is where fundamental analysis comes in.
But when is it right to invest with regards to the ebb and flow of investor sentiment?
That's where technical analysis comes in.
Conjoining these two techniques gives the best point in time for the purchase of each of the precious metals available to you for investment.

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Precious Metals Technical Analysis

You probably know some of the theories and charts employed by technical analysts to follow precious metal trading.

You are probably also familiar with the fundamental or 'value' approach.

Before you decide to trade in precious metals, it would be sensible to read about the technical analysis of precious metals investment..

By studying patterns of current and previous activity, technical analysts attempt to predict future trends.

The extent of upturns and downswings is gauged from the analysis of similar recent occurrences, and various early warning indicators are monitored.

No major research department, or precious metals dealer, is without its chartists, simply because of their ability to produce a history of price trends clearly.

The interpretation of the trend is in the hands of the user of the chart.

The practice of charting, and indeed the wide availability of weekly and monthly chart publications, is simple evidence of its popularity.

Technical Analysis Of Precious Metals

Key Point

So extensive is the use of technical analysis in precious metals trading that you will frequently hear of chart-dominated buying based on penetration of resistence levels shown on the chart, or of chartist-based 'stop-loss' selling driving prices lower, when previous support levels have been breached.

Stop-loss orders instruct a broker to sell his client's assets when the price falls to a predetermined level. They are used to protect profits that have already been made, or to prevent further losses if the market continues to drop.

The Role Of Fundamental Analysis In Precious Metal Investment

When you use fundamental analysis of precious metals markets you are trying to establish the geneal state of the market, through past supply and demand statistics, and attempting to predict future physical flows of metal, to and from the market.

The major problem is that the only truly accurate statistics are too late for the event, and so you have to make an estimate or projection. In essence, therefore, given the number of known factors affecting supply and demand, you will only use fundamental analysis to prepare a broad-brush picture of the future statistical balance, for a particular metal.

The most difficult task of all is to predict changes in private investor sentiment for gold. As, although industial uses absorb most new gold production, investor demand creates the swing factor that actually accounts for major price moves.

In addition to the basic supply and demand factors that fundamentalists analyse, monetary and general economic factors play a major role as well, in determining prices, especially in the case of gold. These factors influence the gold price.


When you trade in precious metals you cannot be expected to engage in detailed technical analysis of trends. But you may learn a great deal from spending time scanning such analysis.

Pay particular attention to the analysis of how previous trends have developed.

Particularly important to you will be the identification of clear levels of price resistance, and price support, in the market.

Precious metals fundamental and technical analysis, for the personal investor, are indicators rather than investment strategy musts.

Updated: 02/06/2021, humagaia
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blackspanielgallery on 06/10/2016

The real problem is when something happens with no past, such as when China bought heavily into silver. Another problem is what works in one country may not in another, as currencies change in relation to each other. A strengthening currency may look good compared to bullion, while a falling currency might not. One has to use more of a weak currency or someone with the stronger currency will buy the available metal.

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