Gold shines on specific weekdays and seasons, but beware round numbers – Interview with Phil Carr

Gold prices have been on the rise amid the coronavirus pandemic and massive monetary stimulus. Veteran and new traders are taking advantage of the lockdowns to enhance their skills, and there is more than meets the eye. Phil Carr, Head of Trading at The Gold & Silver Club, is a top commodities expert and shares his tips. In an interview with Yohay Elam, Carr also provides tips for traders and also discusses other metals that are often overlooked. 

Yohay Elam: How are you coping with the lockdown?

Yohay Elam: A bit of easing from Monday?

Phil Carr: The lockdown has been ok

Phil Carr: The sunshine certainly helps

Phil Carr: Exactly, this is welcome

Yohay Elam: Indeed, sunshine helps...

Phil Carr: It does indeed, Vitamin D

Yohay Elam: some say it´s useful against coronavirus, Vitamin D

Yohay Elam: In your videos, I´ve seen that you urge people to take the opportunity and enhance their skills.

Yohay Elam: Are club members reporting that they are sharpening trading skills?

Phil Carr: 100% Yohay - this has been a common theme with all of our existing and new clients.

Phil Carr: They have taken this lockdown as an opportunity to sharpen their trading skills

Phil Carr: And the volatility has provided plenty of trades

Yohay Elam: indeed, especially in March

Phil Carr: March was incredible

Yohay Elam: The focus is shifting to other topics, with Sino-American tensions now in the spotlight

Yohay Elam: Is gold still the go-to asset in times of tensions?

Phil Carr: Gold is getting bid again, we have been building positions this week off the lows as mentioned in the week ahead report

Phil Carr: *buy the dips

Phil Carr: As long as traders are aware of the cycles

Phil Carr: Gold lows are often on Tuesday / Wednesday's

Phil Carr: This week gold dipping sub-1700 was ideal to re-load

Yohay Elam: Suffering early on before recovering

Phil Carr: Exactly

Yohay Elam: How about silver? Does it also have a pattern?

Phil Carr: Now we have the Thursday and Friday rally outlined in this weeks gold asset of the day

Yohay Elam: It is often overlooked

Phil Carr: Silver has been incredible lately, 18% move this month and 2% today

Phil Carr: It is often overlooked

Phil Carr: For those that trade silver the Gold To Silver Ratio should be tracked

Yohay Elam: The ratio provides an indication

Phil Carr: The Gold To Silver Ratio is now trading lower at 97.37 down 1.4% today

Phil Carr: Silver is up 1.85% at $17.74

Phil Carr: Gold is up 0.36% at $1728.

Phil Carr: The perfect time to buy silver was at the peak of the ratio when the ratio hit all-time highs of 125: 1

Phil Carr: This is when silver hit 11-year lows of $11.60

Yohay Elam: A buy the big dip opportunity

Phil Carr: When the ratio sells-off, gold and silver will go up but silver will outperform

Phil Carr: Exactly that

Yohay Elam: That's a great tip for traders

Phil Carr: For sure

Yohay Elam: I've seen that in your videos, you talk about the positioning of money managers, hedge funds, etc.

Yohay Elam: Is that a major factor in trading these precious metals?

Yohay Elam: More than fundamentals or technicals?

Phil Carr: I would classify that as a research-driven approach - it certainly has an impact to track this data

Phil Carr: Funds increased long in gold more than usual in the latest week which is often a strong sign at this time of year for a breakout into June.

Phil Carr: Same occurrence the last week of May in 2019

Yohay Elam: Seasonality also plays a role, like in energy commodities?

Phil Carr: Before gold shot up from 1300 - 1550 in 3 months

Yohay Elam: That was one huge move

Phil Carr: Seasonality and cycles certainly have an impact for commodities - there are specific reasons for demand increasing at certain times of year which happen regularly

Phil Carr: Absolutely

Yohay Elam: Palladium also had a massive move last year

Yohay Elam: a metal that is well down the list

Yohay Elam: but provided an opportunity

Phil Carr: Palladium doubled from August to March

Phil Carr: This is actually the cycle for Palladium, the highest probability time of year to hold a position, is a long in August and bank the position at the end of March

Phil Carr: It's a market we trade and has been amazing for us in the last year

Yohay Elam: Demand in the industry grows in the autumn and winter?

Yohay Elam: amazing and overlooked

Phil Carr: Exactly, typically demand peaks during this period. Then Palladium we usually correct in the spring and bottom out in May / June

Phil Carr: Exactly

Yohay Elam: Moving to oil, one commodity that cannot be described as overlooked

Yohay Elam: Memorial Day in America represents that beginning of the driving season

Phil Carr: Oil is definitely not overlooked

Phil Carr: From -40 back to $35 per barrel in a couple of months

Phil Carr: US Oil up 70% this month

Phil Carr: Up 300% off the lows

Phil Carr: Yes and Oil has certainly found support

Yohay Elam: I guess many traders look at changes in dollar terms

Phil Carr: Hedge funds have been building significant long positions for week

Yohay Elam: Is there an opportunity there, or is this year totally different due to coronavirus?

Phil Carr: *for weeks

Phil Carr: With Oil there have certainly been opportunities, on the sell-side leading into the crash in prices and also on the recovery

Phil Carr: With Oil now it continues to consolidate between 31 - 35

Yohay Elam: Looking for a breakout

Phil Carr: We need a break and close below 31 to provide a sell opportunity or a close above 36 for a move back to 40

Yohay Elam: buy high and sell higher

Yohay Elam: or sell low and cover lower

Phil Carr: Personally we prefer to catch the cycle lows and tops

Phil Carr: The risk to reward is far higher

Yohay Elam: And these cycle tops and bottoms have been far apart

Yohay Elam: Rig counts are published later. They were in the spotlights several years ago, when prices fell

Yohay Elam: Are they growing in importance?

Yohay Elam: Do you incorporate them more than beforehand in your research?

Phil Carr: Historically the cycle low for US Oil is the start of May

Phil Carr: The short term top is this week for Oil leading into a correction in June

Phil Carr: However Oil typically is a range-bound play in June

Phil Carr: October - December much more bearish once driving season dissipates

Yohay Elam: This year, the driving season gets an extra boost with reopening in America

Yohay Elam: and demand seems to be rising in China

Phil Carr: Exactly - I suspect Oil will follow more range-bound price action over June

Phil Carr: And maintain the majority of gains

Yohay Elam: Yet these prices remain low for Saudi Arabia and Russia

Yohay Elam: which need to balance budgets

Phil Carr: We observe this data for profit-taking and trade management

Phil Carr: Correct

Yohay Elam: As a tactical data point rather than a big picture one

Phil Carr: That's it - more from a tactical data point for trade management

Phil Carr: Most traders will be reluctant to execute new positions ahead of the weekend on Oil when that data comes out

Phil Carr: The highlight for us today is certainly gold and silver

Phil Carr: Which is playing out to expectation

Yohay Elam: falling in the first half of the week, rising in the second half

Phil Carr: U.S. President Donald Trump's response to China next

Yohay Elam: Indeed, it seems that markets are waiting to hear from Trump, perhaps some headlines will come out ahead of his speech

Phil Carr: Correct, this marries up to cycles and data also - last week of May is often explosive for gold at the end of the week and first week of June also

Yohay Elam: A convergence of cycles

Phil Carr: Exactly, Trump is due to make a series of announcements on China today

Phil Carr: Exactly

Yohay Elam: Some fear a significant second wave of coronavirus

Yohay Elam: If that happens, and hopefully it doesn't, would that push gold and silver to new highs?

Yohay Elam: Or should we look more to central bank action?

Phil Carr: You got it - I would look at central bank action

Phil Carr: The stimulus measures will be the driver

Phil Carr: Same as 2008, when gold initially corrected then rallied back 30%

Phil Carr: Goldman Sachs forecast of 1800 in 2020 is not that far off now

Yohay Elam: The Fed has proven that it always has something up its sleeve

Phil Carr: $1765 tapped 2 weeks ago, $1730 right now

Phil Carr: They have indeed, and they have done enough to trigger a significant rally in Gold and Silver in the weeks to come

Yohay Elam: So perhaps $1,800 is not the upper bound

Yohay Elam: For Gold

Phil Carr: That's a good point if you view gold on the monthly chart

Phil Carr: Once $1810 - $1820 is breached, there is clean air back to the all-time highs towards $1900.

Yohay Elam: Back in 2011

Phil Carr: That's it, 2011 highs

Yohay Elam: What would be a warning  sign that the fall from that peak could occur again

Yohay Elam: Although such a huge fall seems unlikely to me at this point

Phil Carr: I would look out for the end of quarter profit taking which can be severe for gold

Phil Carr: Usually the biggest corrections occur at the end of September and follow through to mid-December

Yohay Elam: Correcting the gains

Phil Carr: Historically that's been the case

Yohay Elam: Another great tip

Phil Carr: Spot on - end of quarter profit taking is very notable for gold, something to have in the diary for each quarter and be sure to bank a few days before this occurs.

Phil Carr: Thank you

Yohay Elam: Do you see potential ECB stimulus as another bullish driver for Gold?

Yohay Elam: Por is it mostly the Fed when talking about stimulus for the precious metal?

Phil Carr: It's more the FED - this week was a good example

Phil Carr: ECB stimulus helped the Euro to rally however gold corrected

Phil Carr: When the FED provides stimulus gold rallied immediately

Yohay Elam: Indeed

Yohay Elam: Great stuff for gold traders. What brought you to specialize in commodities?

Phil Carr: Definitely good for gold traders - Commodities very much the volatility and tangible nature of commodities.

Yohay Elam: Higher volatility than in currencies

Phil Carr: Typically yes

Yohay Elam: EUR/USD can be frustrating

Yohay Elam: Any other commodities you are focusing on?

Phil Carr: Agreed

Phil Carr: Platinum also - it been a great year for trading this metal

Phil Carr: It hit 18-year lows in March, more severe sell-off then gold and silver - and it's still well below 2008 lows

Yohay Elam: Depressed by diminished demand?

Phil Carr: It almost doubled in price since March, it's another great market to trade

Phil Carr: Yes demand switched to Palladium

Phil Carr: However we could see that flip again in the coming months and Platinum recover

Yohay Elam: Another overlooked metal, at least by me

Yohay Elam: Seems highly volatile

Phil Carr: Historically Platinum has big gains from December to February each year

Phil Carr: Its certainly volatile - it respects cycles and seasonality well

Phil Carr: Keep an eye on it in December

Yohay Elam: A gift for Christmas, Platinum

Phil Carr: December - February rally for Platinum can be very lucrative

Phil Carr: You got it

Yohay Elam: So much seasonality in commodities

Yohay Elam: But trading is never easy

Phil Carr: Absolutely, seasonality is part of it - but must also confluence with other factors

Yohay Elam: Indeed

Yohay Elam: Any tips that you have for traders?

Yohay Elam: *Additional tips

Phil Carr: Yes - don't put your stop losses at round numbers, these will often get hit

Phil Carr: I good example being gold this week,

Phil Carr: Gold flushed to 1693 then rebounded back to 1732

Yohay Elam: Within a few hours

Yohay Elam: A fakeout

Phil Carr: So retail traders with SL at 1700 get stop hunted only for the price to rebound +300 points

Phil Carr: Exactly, a fakeout

Phil Carr: Having a target at round number is ok but not the stop loss

Yohay Elam: The difference between the strategy and the tactic

Phil Carr: Spot on - strategy (executing the trade) / then tactics (managing the trade).

Yohay Elam: Sounds advice for any trader in any market

Phil Carr: For sure

Yohay Elam: We have covered a lot of ground and you´ve provided wonderful tips to our readers. Your videos are all always well-received by FXStreet's audience

Yohay Elam: Thank you for being generous with your time

Phil Carr: Its been a pleasure Yohay and thank you, much appreciated - its been a great session.

Yohay Elam: for me as well

Yohay Elam: thank you!