- New Science in old markets -

Gold, platinum, silver all extend, Cable too. Sell FTSE

The bottom extension we reported in gold yesterday has been repeated today and joined by others in platinum and silver:

plat-gold-silver-exts

These extensions are stronger evidence that this drop will end hereabouts and we would now start to buy. Platinum may be the better candidate as the long-run historic relationship is for platinum to be more valuable than gold - typically 15-20% or so over decades. This peaked at 110% in early 2008 when platinum hit a peak price of $2400, while gold was $1140 - see arrows on chart below, and platinum is now $300 cheaper than gold:

gold-platinum-spread

In other news, the £ has dropped sharply overnight in what is being blamed on an algorithm-driven 'flash crash' in thin conditions. This has produced a bottom extension - or more precisely will produce such a signal if prices stay with the current range until the close. This chart shows that signal, generated as if the market had already closed today. Buy some:

cable-extension

This produces an interesting further idea. The weakness in the £ that began with the Brexit vote in late June has produced a boost for the main UK index, the FTSE. This is because perhaps 70% of the earnings of the companies involved is non-£, so a weaker £ has made them cheaper to buy.  That boost has faded lately and lower lows in the £ have not produced the same surge of buying in the FTSE as the earlier drop did. If the £ is now about to stop falling for a while this will probably produce a fall in the FTSE, so brave hearts could sell some short here. There is some reason to think that the FTSE is overvalued now anyway, as the weekly top extension signal shown in the second chart below indicates:

ftse-daily-and-weekly-update