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Yields set to fall & gold set to soar

Commentaries & Views

Aug 29, 2023

  1. Global gold bug excitement continues to build, and rightly so, as the current metals market rally gains momentum.

  2. US bond and gold charts are showing strong synergy, and on that note. Double-click to enlarge this 30yr T-bond chart.  A double bottom is in play at 118.

  3. Importantly, it coincides with a similar but short-term pattern for gold at about $1893, which is also near the key round number of $1900.

  4. Double-click to enlarge.  The double bottom for gold is much peppier than it is for bonds.

  5. Also, bonds have sunk to their October 2022 lows on the current reaction, while gold is an astonishing $300/oz above its equivalent lows.

  6. Savvy gold bugs aren’t surprised.  Gold is the world’s ultimate asset, so outperformance against its supposed competitors is not the exception, but the norm!

  7. For a look at the key US ten-year bond yield chart. Double-click to enlarge.  The short-term outlook for rates is clearly to the downside.

  8. I’ve urged investors to lock in short-term time deposits and T-bills… while eagerly pushing the buy button for gold, silver, and their favourite miners.

  9. Is the stock market in sync with the action on the gold and interest rate charts?  For a look at a key SP500 chart.. Double-click to enlarge.  Note the synergy between the left shouldering and the right.  The bottom line is that a September meltdown for stocks looks increasingly likely.

  10. That would produce a rush into bonds, pushing down yields and potentially creating a massive rally for gold!

  11.  What about oil?  Double-click to enlarge.  In the short term, oil looks vulnerable.  A dip towards $70 seems likely.  That’s supportive for lower rates and higher gold.

  12. Double-click to enlarge.  The base pattern on this chart is of significant size. In the medium and long term, oil could move much higher and that would mean substantial inflation lies ahead for the average US citizen.

  13. Geopolitics?  Forbes pegs Foxconn superstar Terry Gou’s net fiat worth (about $7.2 billion) at almost three times that of American billionaire and former president Donald Trump. 

  14. It’s still too early to predict that Terry will win Taiwan’s upcoming 2024 election, but if he does it would likely create another wave of de-dollarization.

  15. That new wave would come on the heels of the BRICS expansion announced last week for January 2024.

  16. What about Russia?  US politicians tried to ruin the Russian economy so the impoverished citizens would start a civil war, but the hideous scheme has backfired. 

  17. Ominously, a civil war in America now appears to have more potential than one in Russia does.

  18. With Ukraine ruined and Russia muddling along reasonably well instead of imploding, the US government, as expected, is seeking another target to scapegoat for its own incompetence.  It is aiming its debt-funded wrecking ball at China. 

  19.  Is this a cause for investor concern?  Sadly, the US government is blowing a magnificent empire transition opportunity to turn their nation into a gigantic version of Switzerland or Monaco.  Free healthcare for citizens instead of bombs and wars, a savings mentality, no income tax… the list of benefits is almost limitless, given the power of the dollar and provided action is taken now. 

  20. While that action won’t be taken, I’ll dare to suggest that the outcome of the new China bashing scheme will ultimately be seen as more comical than concerning…  but only for investors with lots of gold! 

  21. What about silver?  Double-click to enlarge.  The metals are often soft on Tuesday, and I do expect a small rise in 10year bond yields to complete the topping formation there.  The small consolidation in silver is likely to continue for another day or two…

  22. And then another leg of the barnburner rally is almost certainly the next order of silver bug business.

  23. Double-click to enlarge this magnificent GDX chart.  The rally from the $27 area low has created a huge bull wedge pattern. 

  24. Just a week ago, I urged mine stock bugs to be eager buyers alongside me around that $27 zone, targeting a near-immediate surge to the $32-$33 target area.  If the target is acquired, and I’m projecting that it will be, it would mean a rough 20% gain (and more for some individual miners) from the buy zone… and it should be just the beginning of a major move higher!


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.