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Gold, stock markets, & war

Commentaries & Views

  1. Investors ignore cycles… at their peril.  When I calmly suggested that a key virus cycle year of 2020 would see a “carpet bombing” of markets, most investors were not listening to the cyclical message of the markets.

  2. Sadly, they were wasting time watching the government try to rebuild the American empire with Fed photocopiers, FATCA thugs, more government spending, no savings for a rainy day, and no serious defensive preparation against germ or physical warfare.

  3. I suggested that approach would fail badly, and of course it did. 

  4. Double-click to enlarge this US stock market chart.  I’m now suggesting that the 2021 “year of the war cycle” could see an even more ominous carpet bombing of America.  I expect the bombing to hit many other nations, like the virus did.

  5. Having said that, my projection is for the Dow to rally to major new highs first.  While almost half of America’s citizens have no job and GDP has cratered, the extensive use (albeit waning) of the US dollar in global financial transactions allows Fed money printing to push stock and bond markets higher.

  6. What about inflation?  Well, money printing inflates what it is aimed at.  If money is electronically printed and poured into stock, bond, and real estate markets, that’s what gets inflated.

  7. As the rich versus poor net worth and income spreads widen dramatically, social unrest usually begins, and of course that’s in play now on the streets of America. 

  8. The government will eventually demand the Fed aim much more of its printed money at Main Street, rather than just at the rich.  That’s when serious inflation can happen.

  9. Also, most institutional money managers are still heavily invested in the stock market.  Until they leave and the public is left “holding the bag”, the Fed is likely to aggressively print money to support stocks.

  10. The global winds of war have been blowing, and the windspeed is intensifying.

  11. The period of 2021-2022 should see significant war occur (both physical and cyber).  I’m predicting this war will happen not just in faraway lands like Syria and Iraq, but on the streets of America. 

  12. Once the US election is over, a clearer picture of what lies ahead should emerge.  It’s important for investors to be patient and to prepare for all scenarios.   

  13. Double-click to enlarge this weekly gold chart.  Gold has broken out of a flag pattern, but a right shoulder could still form.  That could happen now, or from higher prices. 

  14. If there is no upside thrust above $1800 within the next 14 days or so, the flag pattern will likely morph into a right shoulder. 

  15. That technical action would be in sync with the time needed to get clarity on fundamentals from the US election.

  16. Double-click to enlarge this daily silver chart.  Silver rallied to my TSR (trendline support and resistance) pause point, and the pause continues.

  17. Both gold and silver are showing strength and solid technical action in their respective resistance zones, but that doesn’t mean that a major upside breakout is imminent. 

  18. As noted, for that, investors should really look towards the aftermath of the US election and the start of the strong physical demand season for gold. 

  19. The Fed isn’t going to be keen to see the stock market collapse this “crash season” (Sept/Oct).  That would make the incumbent administration look very bad right in front of the election.

  20.  I believe the Fed will work very hard to ensure that doesn’t happen, and to ensure there’s no appearance of a party bias for the election.

  21. Double-click to enlarge this daily gold chart.  Some analysts have noted a bearish “non-confirmation” between gold and gold stocks, with spot gold (cash market bullion) rallying above its April high, while GDX has not done so. 

  22. I beg to differ. On this futures chart, gold has not taken out its April high, but key gold stocks have done so, with gusto, and that’s bullish.

  23. Double-click to enlarge.  Like gold and silver bullion, the technical action for GDX and associated miners looks solid, and it feels solid too! 

  24. With Barrick closing over $26 and GDX closing above $35, I only need to see Newmont close above $60 to get more excited.  If gold grinds sideways in the $1700-$1900 area until the election, I expect gold stocks to grind sideways too, with an upwards bias.  After the election, I expect a “mighty blast” higher for GDX, which should reach my $52 area target zone by the springtime of 2021!
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.