In a recent interview on the VRIC Media, renowned technical analyst Gareth Soloway provided a nuanced outlook on the precious metals market, alongside his perspectives on equities and Bitcoin. Soloway, Chief Market Strategist at VerifiedInvesting.com, drew upon his extensive experience to caution investors about a potential short-term pullback in gold while underscoring the significant long-term opportunities within the sector.
Soloway, who boasts over two decades of experience in dissecting market trends, emphasized the robust performance of gold in the current year.
"I think that's the fear trade, right? It's the store of safety where we've seen this kind of weird dollar treasury movement away from a store of safety. That's been historically kind of where money runs to. And it doesn't leave much else besides gold."
He attributed this strength to its role as a safe-haven asset amidst prevailing economic uncertainties and a noticeable shift away from traditional safe havens like the U.S. dollar and treasuries. Despite his overall bullish stance on gold for the mid-to-long term, Soloway alerted viewers to technical indicators suggesting an imminent short-term correction. He pointed to a parallel trend line analysis indicating that gold had reached a level of "short-term maximum greed," potentially leading to a pullback towards the $3150 or even the $3000 mark.
"I did go bearish in the near term just over the last couple of weeks. And I want to show you why... look at where the market ran into the 2011 bull market high. If we zoom into that, that's where gold pierced and immediately pulled back from. And that to me, on a technical basis, extrapolates into the idea that there was a short-term maximum greed that was reached, kind of a blowoff top in the near term. And I expect gold to pull back here in the near term, probably to about 3150, maybe even retest 3,000."
Shifting to the broader equity markets, Soloway expressed considerable caution. He argued that the market's recent upward movement is likely a temporary "rip your face off rally" typical of bear markets, drawing parallels with bounces seen during the dot-com bubble and the 2008 financial crisis. He anticipates further declines, potentially leading to new 52-week lows.
"Even though we're bouncing here, I don't believe that this is a long-term bounce. I don't believe we're going to see new all-time highs. I think we're going to see new lows, new 52-week lows. Maybe not till summer, but I do think it is coming."
In contrast to his cautious outlook on U.S. equities, Soloway highlighted potential in undervalued emerging markets, particularly Brazil, as indicated by the iShares MSCI Brazil ETF (EWZ). He suggested a rotation of capital towards these regions.
Gareth Soloway's interview on VRIC Media offers a timely and insightful perspective for investors. While cautioning about potential short-term headwinds for gold and significant risks in the equity markets, he underscores the enduring strength of gold as a long-term investment and highlights emerging opportunities in international markets and the evolving role of Bitcoin. His emphasis on technical analysis and probability-based decision-making provides a valuable framework for navigating the current volatile financial landscape.