Oct 29, 2024
- Sadly, investors in the West have what is perhaps best described as a cave dweller’s primal urge to get more of their government’s barbaric fiat. In contrast, in the rising and massively populated East, the focus is on getting more gold… money that is supreme.
Clearly, the time has come for Westerners to emerge from their currency caves… and bask in the glory of gold.
- The next two weeks feature numerous events that could bring volatility to the gold price. The Fed’s pet PCE inflation report is Thursday, and the jobs report is Friday. Then comes the US election, followed by the FOMC decision and a speech from Fed chief Jay.
- These are market-moving events of significance.
Since the Fed’s last meet (which featured an “emergency cut” of 50bps), the interest rate market has done the opposite of what most pundits expected.
- Rates have surged dramatically… but ironically this move appears to have acted as yet another fabulous tailwind for gold!
- Western citizens perhaps tend to look a bit too hard for reasons why supreme currency gold is crushing fiat, while Easterners focus on gold’s simplicity, its awesomeness... and race on key price sales to get more.
- The bottom line: Gold is “bigger” than any single thesis or scenario. This is a key fact that investors need to embrace.
While gold has surged as rates have rallied, a breakdown from this huge H&S top for rates could usher in frenzied Western money manager buying, sending gold straight to $3000-$3300.
There’s ascending triangle action in play and it targets about $2810.
- A negative-for-gold PCE or jobs report would likely see gold trade down towards $2610, but Eastern citizens will be ready to buy any price sale, regardless of whether they predicted it or it’s a total surprise. Dare I implore Westerners to do the same thing?
There’s no question that the RSI and Stochastics oscillators have technical nosebleeds.
- So, at some point there’s going to be a significant price sale. The key for investors is to prepare now to buy it, not after it happens when emotions and analysis tend to change. It’s important to be meticulous about this prep in terms of capital allocation and the buy zones for action.
Silver tends to perform best in the late stages of a major rally for gold, and this chart certainly suggests silver is beginning a very significant surge. How high can silver go if gold roars to $3300? The obvious answer is… a lot higher than where it is now!
Click to enlarge what could be the most important chart for gold stock enthusiasts, regardless of whether they fancy junior miners, intermediates, or seniors.
- Note the stunning position of the key 14,3,3 series Stochastics oscillator at the bottom of the chart.
- It’s beginning to flash one of its rare and mighty buy signals for the CDNX versus GDXJ.
- While this indicates all gold stocks should do well, in 2025 junior mine stock investors are likely to lead the outperformance parade. There’s a strong probability that their investments begin to look more like golden ATM machines than stocks!
Ironically, some investors are cashing out of miners and focusing on gold, just as the greatest bull run in the history of markets looks set to begin for the miners.
- I’m an advocate of personal resets rather than waiting with Godot for a “great one” from the US government. There’s no question that in the past when the West dominated the gold market, many investors overallocated to the miners, as a highly questionable scheme to outperform gold and get more fiat.
- There’s a subtle difference between trying to “outperform” gold, and wisely working to get more of it. This is not a time to be exiting the miners. It’s a time for accumulation and it could soon be accompanied with… extreme jubilation.
I’ll dare to suggest that the worst-case scenario for GDX is handle formation for this weekly chart C&H pattern.
I’m not a fan of overly large single stock positions in ETFs. If GDX had a 5%-7% single position limit, this key ETF would not have declined much (if at all) when silly money managers panic-sold its largest component stocks, basis Q3 numbers.
- There’s absolutely nothing of technical concern on either the GDX daily or weekly charts. The only concern for investors should be getting more, for their next (and likely imminent) rally time score!
Thanks!
