What's next for gold?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Several international storms are taking place, along with the popping of the biggest financial bubble ever, cautions Mary Anne and Pamela Aden, editors of The Aden Forecast.
So it’s no wonder the markets are feeling overwhelmed and confused. It’s a complicated and unique time, and one we can’t remember being similar, except perhaps the 2008 financial crisis and the bursting of the 2000 tech stock bubble.
These type of events don’t happen often but when they do, it’s very difficult and painful. A bear market remains in the driver’s seat and stocks are likely headed much lower. In fact, our next downside target suggests stocks will soon be breaking down to new bear market lows.
Overall, equities are bearish and vulnerable, and it’s best to stay on the sidelines and out of the general stock market for the time being.
Meanwhile, gold took a cue from soaring interest rates and a strong U.S. dollar by falling along with the stock and bond markets. Gold fell from its mid-August high, tested the July lows near $1,700, and it’s now holding just above it. In the end, gold remains in a two-year sideways band, while silver and gold shares have both been weaker than gold, falling to a two year low.
One thing is certain, all the recklessness done on a monetary and fiscal basis will come back to hit us one way or another at some point in the future. The world will be affected and it may not be much longer if interest rates continue to soar.
Global debtors cannot afford to pay their debt in dollars at a higher interest rate. Gold should soar in this environment.
Gold bull markets tend to last 10 years. Today’s bull market will be 7 years old in December. This means gold technically has 3 to 3 1/2 years left to blossom into a full bull market rise. In other words, gold is likely to peak in 2026 ,and it remains in a strong solid mega uptrend.
Another good perspective is comparing gold’s bull market today to the one in 2001-2011. Today’s bull is getting closer to the breakout time when the last bull market shot up in the strongest part of its bull market. This is exciting because the time of truth is coming within the next few months or less.
The downside is equally important in the big picture because we should have a criteria for the end of the bull market. With gold now retesting its 2021 low, it’s at a critical juncture. If $1675 is clearly broken, gold will have fallen down from the 2020 high area. The two year sideways band will be over.
This means if gold stays below $1675, we could then see the lower side of the 2011 top area tested, which is near $1536. If this occurs, it would also be near the 2008 uptrend, and the Dec 2022 time period. This is a vital support and possibility. And incredibly, as low as that is compared to today, gold would still be in a major high area in the big picture.
Silver is weaker than gold and has been for most of the year. Silver is oversold and the downside may be limited. Silver is at a 2 year low and its quickly approaching its 2018 uptrend. Meanwhile, silver will remain vulnerable by staying below its 65 week average at $22.50.
Meanwhile, gold and silver shares appear to be at or near their lows. Gold, silver, and gold shares are oversold, and the downside looks limited. In the gold share space, Agnico Eagle Mines (AEM) and Hecla Mining (HL) have held up the best, and if you want to buy back positions like we mentioned last month, these two would be your best bet.