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Trump Comment Sends Gold Higher, Here Are The Potential New Comments That Can Send Gold Soaring

Trump Comment Sends Gold Higher

A comment from Trump that dollar has already moved too high is sending dollar lower and gold higher.  There is significant institutional buying and light buying by the 'smart money.'

Some of the buying in gold appears to be a hedge against long stock positions.

Gold has broken out of last week's range.

Both yen and euro are stronger against the dollar.

There is a high probability of Trump making new comments that can send gold soaring.  Before discussing the potential new comments that precious metal investors should be keenly tuned to, let us look at the chart of gold ETF GLD. 

The Annotated Chart

The annotated chart is of gold ETF GLD. Similar observations can be made from silver ETF SLV and gold miner ETF GDX. 

Please click here for annotated chart of gold regarding Trump’s statements.

The following are the key observations from the chart.

Last year, gold decisively broke to the upside from the downtrend line in existence since 2011 as shown on the chart. 

Gold is still far away from the first resistance shown on the chart.

The last rally failed before reaching 38.2% Fibonacci level foretelling a large drop in gold in late 2016.

The present rally is still far away from 23.6% retracement level shown on the chart.

The starting point of the recent rally was still far away from the strong support shown on the chart. This means near term strength.

In simple words, technical position at present is such that gold can make a significant move in either direction.

Statements That Can Cause Gold To Soar

Here are the two potential statements about Europe that Trump has the propensity to make; these statements can send gold soaring.

  • Trump provides support for quickly doing a trade treaty with the United Kingdom encouraging United Kingdom to do a hard exit from EU. 

  • Trump makes more statements that are seen encouraging European Union (EU) member countries to leave EU. 

Here are the three potential statements about China that Trump has the propensity to make; these statements can send gold soaring.

  • Trump states an intention to declare artificial islands built by China in the South China Sea as illegal.

  • Trump declares his intention to name China a currency manipulator.

  • Trump declares his intention to abandon one China policy.

What To Do Now

Here are our calls.  Adjust our positions according to The Arora Report ratings and allocation stated below. 

If inclined to trade very short-term, right now trade from the long side.  At The Arora Report, we have 21% gains in six days on a very short-term position in gold miner ETF NUGT.  As a caution, conservative investors should stay away from miners and focus on gold.  Short-term trades in miners are suitable only for aggressive investors.

Gold investors would want to stay tuned to analysts with a consistent track record of calling gold correctly in both bull and bear markets.  Consider running away from gurus who are stating that they know for sure gold is going much higher.  The real truth that has been affectionately dubbed Nigam’s Second Law of Investing is highly applicable to gold here, ‘No one knows with certainty what is going to happen next.’

Current Ratings On Gold And Silver

The Arora Report precious metal ratings are used by bullion dealers, jewelers and investors across the globe.

Here are our current ratings from The Arora Report precious metals algorithms.

  • Suspended in the very, very short-term, a lot depends upon Chinese day traders. There is simply not enough data to rigorously model their behavior.

  • Positive in the very short-term.

  • Neutral in the short-term.

  • Neutral in the medium-term.

  • Mild Negative in the long-term.

  • Positive in the very long-term.

Inputs to algorithms include technicals, relationship between currencies, interest rates, sentiment, money supply, global geopolitical picture, global GDP growth, inflation in key countries, leading indicators of inflation, risk appetite, etc. 

Some of the inputs are adaptive, i.e., their weight changes based on conditions and co-relations. The adaptive nature of the algorithm has been the most important reason behind consistently accurate calls on gold and silver by The Arora Report over the years.  Experience has shown that algorithms that are static stop working after a while because market conditions change.   For this reason, investors and traders should avoid algorithms that are fixed.

These ratings are reviewed daily and changed frequently for subscribers to The Arora Report to help both long-term investors and short-term traders.  These ratings are used by bullion dealers, jewelers and investors across the globe.  For definition of time frames, please click here.

Full Disclosure: As appropriate, subscribers to The Arora Report are provided precise buy zones and sell zones as appropriate.  Further, subscribers to The Arora Report may undertake short-term trading positions in addition to the very long-term generational opportunities.

By Nigam Arora
Chief Investment Officer
Courtesy of www.TheAroraReport.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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