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Gold bullion RSI: a massive buy signal

Commentaries & Views

  1. To view an important weekly gold chart. Double-click to enlarge.  Gold is consolidating after reaching substantial resistance in the $1800 area. 

  2. There was wild gyration in 2012 around that resistance zone and a breakdown that disappointed investors.

  3. In contrast to the price action then, the world’s “Queen of Assets” could now be forming a bull flag pattern.  Gold may be getting ready to move towards $2000, and then on towards $3000, in a fairly short period of time.

  4. Double-click to enlarge one of the world’s greatest charts.  Most analysts believe that when the RSI oscillator rises above 70 the market is “overbought” and will suffer a decline in price.

  5. That’s often true on short-term charts, but on this long-term quarterly bar chart, it’s clear that a rise to 70 is a massive buy signal.  Historically, that buy signal is typically followed by gains of hundreds of percent!

  6. Given the incredible bullishness of the long-term charts, all investors should own core positions that reflect gold being a major asset class rather just than a trading tool.

  7. Short-term traders will generally do best if they own core positions in physical gold, in addition to trading positions. 

  8. After all, gold is money!  Fiat is debt, and US citizens appear to be getting worried that all their government cares about is going deeper into debt while pretending the Fed-soothed stock market reflects the average person’s financial pain, which it doesn’t.

  9. Mainstream media (on both the political left and right) want citizens to take on debt and spend all their money.  That’s so the government in power can brag about “big growth”, and ignore the horrifying debt taken on to get that growth. 

  10. The citizens are starting to rebel.  They appear to be taking matters into their own hands and are saving for not just a rainy day, but for the next crisis. 

  11. That crisis is inevitable, given the ludicrous debt worship mentality showcased by both major political parties in America.

  12. Negative rates make government debt bigger and do nothing to help the average citizen.  With already horrific debt levels in play, bigger government with more debt is not good for GDP growth.  It’s bad, and it sets the nation up for economic catastrophe.

  13. The citizens understand this disturbing reality, and already the US savings rate for 2020 is akin to that of Swiss citizens, in the 12% range.  That’s solid action!  

  14. There’s a gargantuan inverse H&S bottom pattern on the S&P500 price/earnings chart.  Heavyweight money managers are already calling the US stock market ridiculously overvalued. 

  15. What happens if the P/E ratio for the S&P500 shoots to my target near 30… what will they call it then, South Sea 2.0?  

  16. Double-click to enlarge.  Yes, the market is ridiculously overvalued.  Yes, the market may be little more than a poster boy for the creep state (governments, central banks, and ultra-elite).

  17. On the other hand, my focus is not on whether government propaganda is good or bad (it’s bad) or whether central bank money printing is good or bad (it’s bad). 

  18. My focus for investors is major support and resistance zones and that’s why our buys at 21,700 and 18,300 look so spectacular.

  19. The 27,000 and 30,000 areas on the Dow are significant resistance zones, and we will be sellers there regardless of what the government or central bank says or does.  It’s that simple.

  20. Also, there’s no guarantee that the Dow will break above 25,000.  It likely happens, but if the Fed stops printing money, the market will collapse again.  At some point the Fed will take a break from printing, and the market will collapse. 

  21. That’s why it’s so important that investors focus on the big support zones (15,500 and 14,200 are the next ones for the Dow), rather than just listening to creep state propaganda about how wonderful everything is, while surveys suggest 30% of Main street America’s small businesses could be closed permanently.

  22. What’s wonderful today is gold, silver, and the companies that mine these mighty metals! 

  23. Double-click to enlarge this “Prince GDX” chart.  After a spectacular rally from my last major buy zone, GDX has finally arrived at the $37 resistance zone, and is doing that as gold nudges towards $1800.

  24. It’s time to book a little profit, but not too much, because a major breakout is in play for most miners.  A move above $1800 for gold should turn this breakout into a rocket ride towards all-time highs, for most component stocks in both GDX and GDXJ!
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.