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Gold & a failed oil price cap

Commentaries & Views

  1. As empires peak and fade (or burn), the supposed leaders and key figures of the empire tend to engage in maniacal meddling in the affairs of other nations… and enjoy bragging about it.

  2. One of America's most famous meddlers is Janet Yellen.  In addition to appointing herself as a tax rate "lord" for the citizens of the world, she has decided that she willset the price buyers will pay for Russian oil. 

  3. Double-click to enlarge.  If Janet is successful in forcing Russian oil exporters to accept $40-$60/bbl, could gold tumble to the huge $1400-$1300 support zone?

  4. The $1675-$1700 is a huge support zone, and gold is linked to oil, so of course a major decline in the oil price could negatively affect gold.

  5. For the good news. Some energy market experts believe Yellen's meddling could backfire and send oil to $140.  JP Morgan analysts have an even more horrifying scenario, where the meddling sends it all the way to $380!

  6. Double-click to enlarge, for a more positive view of the weekly gold chart.  The RSI oscillator and Stochastics are the most oversold since 2018.

  7. This is the most likely scenario for gold from the $1700-$1675 area: a pause and then a nice rally.

  8. Gold rallied after the CPI report, but it was "small potatoes".  A much bigger move upside is likely to occur after the July 27 Fed meet, which takes place next week.

  9. The smart money commercial traders are piling on long gold positions and selling shorts on the COMEX. 

  10. This is another indication that gold is ready for a big bounce higher against US fiat.

  11. The dollar index looks toppy and a break under 105 could create significant selling. 

  12. The euro is bouncing from "par" with the dollar.  The par zone is significant and a major rally for the euro is likely.  That's also good for gold.

  13. China's economy has rebounded (along with more debt).  If that continues, Chinese citizen demand for gold will jump too.

  14. What about the miners?  Double-click to enlarge this key CDNX chart.

  15. A significant bull wedge breakout may now be in play.

  16. With the Dow and gold both up early this morning, odds favour more upside action for the miners today. 

  17. Double-click to enlarge this important XME chart.I highlighted $40 as a key buy zone, and XME was up yesterday with gold quiet and the Dow down. 

  18. My main current concern is that the American government is trying to wage war against Russia in Russia's backyard… and it could go badly awry "sooner than expected" creating a huge surge in commodity prices.  XME is a fabulous way to play all the metals (both base and precious).

  19. The US government failed badly in its wars against lesser opponents like Afghanistan, Iraq, and Syria.  The current US president is a draft dodger with alleged mental issues… and a huge 2021-2025 war cycle is in play. 

  20. Taking on Russia in its own backyard and using debt to do it seems to be an act of war mongering madness destined to end in much bigger failure for America than the myriad of failures of the past…

  21. But it's fabulous news for gold and silver.

  22. Double-click to enlarge this GOAU chart.  There's no question that given the price volatility, serious gold bugs need to hold substantial amounts of fiat cash, gold bullion, and consider put options if heavily engaged in the miners.

  23. At the same time, the current set-up for a massive rally in the miners is the best in many years; volume has surged in GOAU, Stochastics and RSI are heavily oversold… and it all gets officially underway with a breakout over the amber downtrend line. 

  24. That breakout looks like it will happen on (or even before) the July 27 Fed meet, which is only about a week away from today!
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.