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Gold Stocks: Mighty Bull Flags Begin Now

Commentaries & Views

  1. To view what may be the most important chart in the history of markets. Double-click to enlarge.  Gold is breaking out of a massive inverse H&S bull continuation pattern, and that pattern itself may be the head of an even more massive pattern that targets the $3000 price area.

  2. Double-click to enlarge this fabulous GDX chart.

  3. At my swing trade service, traders are sitting on a veritable mountain of profits, having entered NUGT at about $20 barely a week ago.  It’s $30 now!  

  4. NUGT is a triple-leveraged ETF that tracks GDX.  We are also long Barrick and Agnico Eagle stock, and we hold Kirkland Lake call options.  If the market turns lower, we’ll not only have the profits locked in… we’ll short the market too, via DUST and JDST.

  5. Having said that, long-term investors should not try to top call this market.  Gold is staging a major upside breakout on the charts, and the fear trade is the main price driver now.  Hedges should be reduced, and aggressive speculators should hold call options on quality miners.

  6. Almost all major US money managers and analysts are predicting a major dovish pivot for the Fed at the upcoming July 31 meeting.

  7. Unfortunately for members of the Trump administration “fan club”, these analysts are basing their outlook on a peaking business cycle and the horrifying (and potentially inflationary) effects of the tariff taxes tantrum currently being thrown by the administration.

  8. Tariffs are a global GDP growth wrecking ball, and I’m predicting there are going to be more tariff taxes, more corporate earnings disappointments, and no tax cuts for the working class of America.

  9. The million-dollar question is this:  What does the Fed do when the tariffs begin creating visible inflation as corporate earnings continue to fade? 

  10. If the Fed hikes to fight the inflation, the stock market implodes and gold rallies strongly.  If the Fed does nothing, the stock market likely goes nowhere and gold rallies.

  11. If the Fed cuts (and three big bank analysts are predicting a half point cut at the July meet), the stock market would stagger higher, and gold would probably stage a “moon shot” higher.

  12. Trump put more sanctions in place against Iran yesterday.  Iranian government spokesmen suggested that marks the end of diplomacy.  War isn’t guaranteed, but it’s certainly possible.  The bottom line: Gold is the obvious place for investors to be!

  13. Double-click to enlarge.  While gold stocks continue to soar, the US stock market is struggling.

  14. I’m long TQQQ as a swing trade.  I do still have buy signals in play on the weekly charts for most of the US stock market, but my recommendation as any business cycle matures is to reduce position size on core positions.  Concentrate on short-term trading to reduce risk and relieve stress.

  15. That’s hard for investors to do, especially when their favourite politician, Donald Trump, is the president of the United States.  Like Trump, Herb Hoover was an incredibly successful businessman.  When he was elected, many of America’s business leaders predicted that the business cycle was “defeated”, and America would never have a recession ever again. 

  16. The stock market promptly fell 90% and the nation voted in socialist and war mongering madman Roosevelt.  He gave the citizens food stamps, took their gold, and the banks bought stocks as the ravaged citizens sold.

  17. The US stock market moves higher or lower mainly on interest rate decisions from the Fed (which includes QE/QT) and on earnings growth, or lack of it.

  18. If the Fed cuts rates and earnings don’t start improving, money managers will begin to sell stock market rallies and rate cut decisions.   The gold price rally will intensify in that situation.

  19. Double-click to enlarge.  The price action on this USD vs yen chart is quite concerning, and it fits with current calls from major bank analysts for rate cuts to stop the economic slowdown from worsening.

  20. When the US stock market rises while the dollar falls against the yen, it suggests the rally is not based on economic growth, and risks are rising.  That’s exactly what is happening now.

  21. Double-click to enlarge.  Is bitcoin a safe haven?  I call it an asset that makes investors richer, but whether it’s a safe haven or not is debatable. 

  22. What is clear though, is that gold, T-bonds, yen, and bitcoin are all rallying… as money managers grow more concerned about peaking US growth in this business cycle.

  23. Double-click to enlarge this weekly GDX chart.  A major breakout occurred yesterday, and a flagpole pattern has formed on the chart.  A bull flag on a weekly chart in any market is very rare and carries powerful upside implications.  I think a bull flag may start forming on GDX and many component stocks.  When will the breakout happen?

  24. Well, I’ll predict that the breakout happens around the July 31 Fed meet, as an institutional money manager stampede into gold stocks is unleashed!


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.