The USD Index, on the other hand, just broke above its key resistance line.
Something absolutely stunning happened over the weekend, and I think most gold investors are missing its profound implications.
The United States directly bombed Iran's nuclear facilities using B-2 stealth bombers and bunker-buster bombs, marking America's formal entry into what many are calling the most dangerous Middle East crisis in decades.
Iran's parliament has reportedly backed threats to close the Strait of Hormuz in retaliation - a waterway through which about 20 million barrels of oil flow each day, roughly a fifth of all global oil shipments. To put this in perspective, that's the equivalent of threatening to shut down the world's economic throat. If oil exports and trade are disrupted, or if Iran tries to block the Strait of Hormuz, the global oil market could face an existential crisis.
Oil price certainly got the message – it jumped to about $75 recently. And so did the USD Index – it just broke above its declining resistance line, which is a major technical signal.
This is already bullish, and it will be remarkably bullish once the breakout is confirmed. The downtrend is probably over.
But here's what should make every gold investor sit up and take notice: Gold is NOT rallying.
Gold previously ignored other signals, and we saw signs from platinum and silver, but this…
Think about this for a moment. We have:
· Direct U.S. military strikes on Iran – while previously even mentions of the U.S. – Iran conflict caused gold to soar
· Threats to close the world's most critical oil chokepoint
· A crisis that could spiral into a full-scale regional war
And gold's response? Gold has actually dipped 2% in the week since Israel began its airstrikes on Iran, and even initially declined after resuming this week’s trading. At the moment of writing these words, gold is down by about $8.
This is not how gold is supposed to behave during genuine geopolitical crises!
When the ultimate "safe haven" asset fails to rally on news that should send it to the moon, that's not just disappointing - it's a screaming sell signal.
The market is essentially telling us that when faced with what could be the most serious geopolitical crisis since the Cuban Missile Crisis, gold investors are selling, not buying. This suggests that whatever underlying bearish forces have been building in the gold market are so strong that even the threat of World War III can't overcome them.
I've seen this pattern before - when an asset fails to rally on what should be its most bullish possible news, it usually means much lower prices are coming. It's like a rocket that fails to launch despite having maximum fuel - something is fundamentally wrong with the engine.
The implications are profound. If gold won't rally when the U.S. is literally bombing nuclear facilities and threatening to spark a regional war, what exactly WOULD make it rally? The answer might be "nothing" - at least not for the foreseeable future.
Did mining stock investors saw that coming?
On Friday, we saw the lowest daily close of this month!
Additionally, the GDXJ is just pennies away from its April high. Given today’s remarkably weak reaction, it seems that we might be just hours away from the invalidation of this breakout and the beginning of a much bigger slide. And this could be very profitable – if one is positioned to benefit from it, that is.
Thank you for reading my today’s analysis – I appreciate that you took the time to dig deeper and that you read the entire piece. If you’d like to get more (and extra details not available to 99% investors), I invite you to stay updated with our free analyses - sign up for our free gold newsletter now.
