Be Bold And Go For The Gold

September 24, 2019

SPDR fund (GLD-NYSE) gold tonnage roared above 900 tons yesterday, and now sits at about 908. 

That’s solid action, and I’ll dare to suggest there’s more coming!

As the ominous month of October approaches, US stock market investors may have a new problem on their hands; a Treasury Secretary who has angered President Trump.

The potential rift between Mnuchin and Trump may make money managers more despondent about China-US trade deal prospects than they already are.

Goldman Sachs analysts have predicted that a major rise in volatility lies ahead for the stock market in October. 

Gold has a long history of performing quite well in most of these situations. 

Some gold investors tell me that they are worried about a repeat of 2008 for gold stocks.  I have no concerns because in 2008 most money managers had never heard of QE or negative rates. 

Now, they know the Fed stands ready to whatever it takes to provide liquidity to markets, regardless of how inflationary that might be.

Trump also stands ready to act.  He’s the most pro-markets president in a long time, and arguably in the history of America.  Unlike Obama, he’s not afraid to use the power that he has, and to use it pre-emptively. 

Trump will be on the phone with the big bank CEOs in a heartbeat if there’s even a hint of a major stock market decline. 

From there, I would expect him to call Jay Powell, and… I’ll dare to suggest that Jay will take his call!

Rather than cash, I expect gold, silver, and the miners to be the go-to assets in the next crisis.  The mini-crash of 2018 gave investors a hint of what is coming during the next stock market swoon; a major surge for gold!

The chart of US T-bonds.  Note the buy signal in play on the 14,7,7 Stochastics oscillator at the bottom of the chart. 

There is good symmetry between gold and T-bonds now. A bond market rally could help gold and silver make fresh highs for the year.

The Dow versus gold ratio chart.  It appears to be a great time to sell some stock market holdings and buy gold with the proceeds.

The US government is caught in a trade quagmire, has horrible demographics, a peaking business cycle, and government spending and debt are rising relentlessly. 

Trump wants QE and negative rates, Powell tried to hold the line, but when central banks take on governments, it’s the governments that win.

Trump might not get all that he wants, but he’ll get a lot of it, and that’s great news for gold.

The bottom line: From a technical perspective, gold is the asset of choice now.  From a fundamental perspective, it’s the asset of champions.

The superb GDX weekly chart.  After a “flagpole” rally began in May, a bull pennant pattern is now in play.  The bottom line:

While the current reaction could continue, investors need to buy gold stocks now, because the upside potential reward vastly outweighs the risk involved in any temporary pullback.

The short-term chart for GDX.

My www.guswinger.com subscribers use these signals to buy JNUG or JDST.  What’s particularly exciting is that the current buy signal for JNUG is intensifying.

Gold stock investors who are nervous about a liquidity event like 2008 should buy put options and buy them now.  For everyone else, the ongoing theme is sharp but minor reactions that are excellent buying opportunities.  My recommended plan of action: Lighten up on the stock market.  Be bold and increase holdings of gold!

Special Offer For Gold-Eagle Readers: Please send me an Email to freereports4@gracelandupdates.com and I’ll send you my free “Go For The Gold!” report.  I highlight six key gold stocks that are ripping to new highs during the current market reaction.  I provide key buy and sell points of action for these must-own mighty miners!

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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form.  Giving clarity of each point and saving valuable reading time.

Risks, Disclaimers, Legal

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:  

Are You Prepared?

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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.

The volume of all the gold ever mined can occupy a cube 63 feet on each side.

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