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Gold: strong in November?

Commentaries & Views

Nov 1, 2022

  1. November begins on a positive note, with gold and silver on the move.

  2. Double-click to enlarge.  The right shoulder of the inverse H&S bottom pattern was severely tested yesterday, but it survived!

  3. Having said that, it's still a coin toss as to how tomorrow's Fed decision plays out, and the next jobs report is Friday.

  4. Stock market investors are desperate for any dovish words or action from the Fed.  If they get it, gold could shoot to $1730 very quickly.

  5. Double-click to enlarge this "Simple Simon" weekly gold chart. 

  6. Gold has bounced twice from my $1610 area buy zone.  $1570 is a much bigger support and the Fed's decision is likely to determine whether the next move is a rally to $1730 or a dip to that massive $1570 buy zone.

  7. Double-click to enlarge this daily oil chart.  The main price driver for gold right now is not India, China, or the Fed.  It's oil.

  8. Gold's price action is lacklustre because oil is stuck in the $80-$90 mud.  The chart is bullish but for now it's all talk and no action.

  9. A move above $100 for oil would generate major "Here comes more inflation!" headlines in America.  Pump gas prices would rise.  Citizens would get concerned and could protest in the street, as they are doing (with increasing agitation) in Europe.

  10. Gold bugs of the world need to decide if they are short-term traders or long-term investors.  If it's the latter, the big focus needs to be on the winter of 2024.

  11. That's only a year away and if Russian gas isn't allowed to flow again, tens of millions of innocent Euro zone citizens would face an epic health crisis.  Millions of them could literally freeze to death. Gold could go parabolic in this seemingly inevitable situation.

  12. Can a nation of immense wealth and power (and debt) that can't even handle its Cuban and Mexican backyards really be described as an empire?  That's doubtful, but a disgusting backyard is obviously not a concern for the US government as it meddles merrily, in the faraway lands of Ukraine and Taiwan.

  13. By the winter of 2024, millions of mangled citizens of Europe could be joined by millions of ruined citizens of Taiwan, as US meddlers turn that nation into a kind of "Ukraine 2.0" wasteland.  The bottom line: Got gold?

  14. For a look at the US stock market. Double-click to enlarge this Nasdaq ETF chart.  My 10,100 moving average signals need to be respected, regardless of how ridiculously overvalued the market is.

  15. To view that overvaluation. Basis the CAPE ratio, the market is about as overvalued now as it was at the peak of 1929!  When the moving averages move back to a sell signal, US recession will be imminent, and oil could be moving towards $100.

  16. I'll ask all investors to think ahead, to the winter of 2024, with Ukraine, Europe, and Taiwan in serious trouble.   What would the streets of America look like then?  What if oil has soared above $130 and the citizens are dealing with a macabre president in conflict with an equally macabre congress and senate?  To repeat what is obvious:  Got gold?

  17. The price of pump gas in Europe is outrageous, and now the price for electricity is even more so.  Consumers paid more for an electric car because of the lower cost of operating the car.  That benefit is gone but the car prices are still in the stratosphere.

  18. After the Ukraine government finally throws in the white towel on the war, the US-led sanctions on Russian oil and gas won't end, meaning the US government's psychotic war on the most vulnerable citizens of Europe will continue… and inflation will become ingrained.

  19. Stock market investors fantasize about the end of inflation and rate hikes.  They want to relive the 2008-2020 period where their glorious Fed soup kitchen handouts never ended.

  20. That's unlikely to happen.  What is more likely is that a multi-decade era of inflation is just starting.  Rather than exploding in a fireball, trillions of dollars of public and private debt is likely to shrink over the next ten to twenty years, while prices rise, putting America into a "stagflationary gulag."  The good news (relatively speaking) is that the empire is experiencing a somewhat orderly demise.

  21. Stocks of the "old economy" (food, fuel, mining) should do well while the tech wreck likely becomes tech tumbleweed, blowing endlessly across a vast investor wasteland.

  22. Gold stocks?  The miners will catch an institutional bid like they got in the 1970s.  It could start in 2023 but more likely in 2024.  Gold bugs will want to be invested ahead of that crowd and there will be plenty of great rallies in the interim.

  23. Double-click to enlarge this GDXJ chart.  Many gold stocks have enormous rectangle and rounding bottom patterns in play, and that suggests much higher prices in the months ahead.  When the institutional tidal waves into the miners begin to occur, it will be because inflation is a much bigger problem than it is now, and the gold stocks will be priced significantly higher than they are now.

  24. Simply put, it's the birth of a fabulous gold bull era and no gold bug will be left behind!

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.