Gold, silver still have 'a lot of potential' for upside after a record year, chart analyst says

Gold and silver's rallies could continue into the new year.

The two precious metals closed out their best years since 2010 on Thursday following a year of unprecedented volatility brought on by the Covid-19 pandemic.

Barring some minor hurdles, the new year could bring new records for the commodities, Matt Maley, chief market strategist at Miller Tabak, told CNBC's "Trading Nation" on Thursday.

"They both look pretty good here. We do need a little bit more upside in both of them to really confirm that it's reigniting its upward trend," Maley said, referencing a chart of silver prices.

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After a substantial rally in the first half of 2020, silver and gold both "saw a downside move in August and September," with silver breaking below a trend line extending back to its March low, Maley said.

"That really worried me. I though, 'Geez, this is going to be a problem for silver,'" he said. "But then, instead of making a lower low, it held its early-fall lows and made a double bottom. That was bullish."

That propelled the metal to make a new higher high above its November peak, another "very bullish," sign, the strategist said.

"Now, … it's slightly above that trend line, but it needs to move a little bit higher to kind of confirm that it's reversing its trend," Maley said. "But it's getting very close. So, a lot of bullish potential there."

Gold, on the other hand, remains in a "downward-sloping trend channel," he said.

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"It's bumping up against the top line of that trend channel right at $1,900. So, if it can break above that, that's going to be bullish," Maley said. "We really want to see that followed by a nice higher high as well. So, that 1,950 level is really the one I'm looking at to confirm that we're going to return to that upward bias in gold. So, again, both have a lot of potential, but we need a little bit more upside before we can really raise a green flag again on the two commodities."

Gold prices closed for the holiday at $1,901.60 on Thursday. Silver prices ended trading at $26.52.

Delano Saporu, founder and CEO of New Street Advisors Group, said his firm was in a "holding pattern" with its gold and silver positions despite being bullish over the long term.

"There has been a slight pullback and there's speculation about why," Saporu said in the same "Trading Nation" interview. "There's some people that think there might be an outflow out of the precious metals and into cryptocurrency, which has rallied a bit over the last few months."

That trend could continue to play out in 2021, Saporu said.

"I'm staying in a holding pattern with the precious metals as a percent of the portfolio that I have for most clients and we're looking into possibly dollar-cost averaging into something that is also a store of value, which is bitcoin," he said. "We're seeing a big momentum shift into … the cryptocurrency. I think that trend continues as you see more adoption, so, that's kind of what we're looking to do as far as the precious metals."


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