America Out Of Control: Good For The Gold Price
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Gold often has a “bad hair day” on Tuesdays, but today (so far) the price action is decent.
Is the sideways drift in the gold price coming to an end, or is there more churning ahead as the summer begins?
What can be said is that a rough $100/ounce sale is in play for gold, and there are 15%-20% price sales for most intermediate and senior miners.
The dollar versus yen chart. There is tremendous correlation between the price action of gold and the yen.
That’s because big bank FOREX traders view them both as “risk-off” currencies. At some point that correlation will die, but for now it is rock solid.
There’s a loose triangle in play for the dollar against the yen, and a meltdown seems likely. That would be good news for gold!
My suggested plan of action for gold market investors is to buy lightly here, because regardless of whether the economy strengthens or weakens, debt goes higher.
It’s outrageous that during periods of economic strength, Western governments and central banks add debt, print money, and refuse to eliminate QE.
The great news is that those outrageous actions are why gold now drifts sideways after big rallies rather than selling off aggressively.
The weekly chart for gold is spectacular.
There’s a gargantuan inverse bull continuation pattern in play, and it’s arguably the most aesthetic pattern… in the history of markets!
Interestingly, the formation of a bull flag now is as likely as a big right shoulder.
What about the stock market? Well, the current action in the stock market is also good for gold.
A huge broadening formation is in play for the US stock market, and broadening formations happen when a market becomes… out of control.
Interestingly, a recent poll highlighted by Fox News suggests that 80% of Americans believe not just the stock market, but the entire nation, is out of control.
It could be argued that my Dow 21,700 and 18,300 buy points are two of the greatest stock market calls of all time, but I’m not seeking accolades. The market could of course crash at any time, but it is likely to rise to 35,000 or even 40,000 first… and become even more out of control.
From the 35,000-40,000 area, I’m predicting another debt-driven meltdown is coming, one that will dwarf the Corona-oriented crash. The bottom line:
Out of control nations and markets… are good for gold!
The GDX chart.
After rising more than 100% in just a few short months, GDX is taking a well-deserved break.
I’ve highlighted $37 GDX as a key resistance zone, and the price action since the miners have arrived there suggests mild consolidation is much more likely than a deep correction.
The superb SIL silver stocks ETF chart.
Like GDX, SIL has rallied from about $16 to $38, but GDX has corrected by about 18% to the $31 area, while SIL has only pulled back to about $33!
The resilience of silver stocks after this huge rally is impressive. All silver stock enthusiasts should be buyers into the pullback, in anticipation of a much bigger rally to come, once the $38 marker for SIL is taken out on the upside!
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
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Stewart Thomson is president of Graceland Investment Management (Cayman) Ltd. Stewart was a very good English literature student, which helped him develop a unique way of communicating his investment ideas. He developed the “PGEN”, which is a unique capital allocation program. It is designed to allow investors of any size to mimic the action of the banks. Stewart owns GU Trader, which is a unique gold futures/ETF trading service, which closes out all trades by 5pm each day. High net worth individuals around the world follow Stewart on a daily basis. Website: www.gracelandupdates.com.
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