Apr 29, 2025
- The love trade for gold in China and India is quiet. The hate trade has moved from Ukraine and Gaza to Kashmir and Iran.
- The fear trade in America is alive and well, but it’s taking a breather as the USDX arrives at the key round number of 100 (par) and money managers try to bid the outrageously overvalued US stock market to even more overvalued levels.
- Their bidding appears to be based on the anticipation of “big free trade deals” that may… or may not… lie ahead.
Double-click to enlarge this Shiller/CAPE ratio chart. The state of the American stock market is clear; since the mid-1990s, investor obsession with government and central bank handouts has created a quasi-permanent state of stock market overvaluation.
Double-click to enlarge this key US stock market chart. I urged stock market enthusiasts to buy Nasdaq “hottie” stocks if the Dow dropped from 45,000 to 37,000… which it did.
For a closer look at the action. Because of the horrifying overvaluation of the market, I suggested booking gains of 15% on the stocks, or on a rally to Dow 42,000.
- Gamblers and Trump enthusiasts could bet on a surge back to the 45,000 area highs…while keeping the market’s hideous overvaluation and addiction to handouts in mind.
I suggested the dollar would drop to par from the H&S top and gold would trade at $3200-$3500 when that occurred.
- That projection has played out to a tee.
- Now? Well, there could be more bottoming for the dollar around the par zone and gold could rally a bit higher (even back to the $3500 area highs)… if tomorrow’s PCE inflation report and the Friday jobs report provide the needed support.
- Regardless, the next “move of significance” is likely to be a bigger rally in the dollar and an exciting dip into my buy zone for gold at $3150-$2950.
- I’d like to see more Western gold bugs take this opportunity to really grasp the awesomeness of gold… and jettison the usual silly fear that tends to grip them on these fabulous price sales for the world’s greatest currency.
- Some gold analysts have suggested that investors can form their own “central bank” with gold. I take it a step further and suggest they make “Queen Gold” their government too. The bottom line is that politicians are interesting… and gold more so.
Double-click to enlarge this long-term US fiat failure chart. As the sign says…
- It’s all about getting more supreme money gold!
Double-click to enlarge this short-term chart. The H&S top has morphed into a rectangle. Odds are growing that the break is to the downside, and it targets the outskirts of my $3150-$2950 buy zone for gold, silver, and the miners.
Double-click to enlarge this daily line chart. The $3150-$2950 buy zone is highlighted, and one play for investors to consider is a buy just above $3150, a “meatier” one at $3050, and a third one just below $2950.
- Because gold is so fantastic and fiat-obsessed governments are so pathetic, it’s possible that my projected price sale gets “cancelled”, and gold just races towards $4000-$5000.
- This potential scenario highlights the necessity of owning core positions; ultimately, nobody really knows what comes next and both investors and analysts are surprised as often as they are correct about what comes next… although few like to admit the truth of this supreme money matter. In a nutshell:
- Preparation for managing personal surprise is much more important than predicting what supposedly comes next.
Silver? Last week, there was a day when gold was down about $100/oz… and silver surged $1/oz higher! Regardless of what gold does now, silver could rally to the $37.50 zone before there’s a dip… and from there a run to the $50 area all-time highs is likely to occur.
Due to their mindboggling undervaluation, the miners are also “due” to rally when gold dips against fiat, or at least to trade roughly sideways.
For a look at the GDX daily chart. The bottom line is that gold looks soft in the short term, silver looks good, and the miners look great!
- The bull flag could morph into a bigger drifting rectangle, but that doesn’t change the mantra: dips are to be bought, and the miners are in the infancy of what could become the largest bull cycle in the history of markets!
Thanks!
