Gold: Buy Here & Forego Fear
It didn’t matter what help the US government gave their national team in the game against Belgium; the result was the same; a knockout.
Clearly, it doesn’t matter what help the government tries to give its fiat in the fight against gold… it’s always going to end with a knockout win for gold.
For a look at a key weekly chart:
Note the fabulous position of the key 14,5,5 series Stochastics oscillator.
I suggested buying the $4100-$3900 zone recently, while keeping lots of “dry fiat powder” to buy even more at $3500-$3200… if a dip into that area were to occur.
Those $4100-$3900 buys (gold, silver, and miners) are done and now investors can reasonably anticipate a well-deserved rally to the modest sell zone of $4800-$5000.
Headwinds? There are some, and to view them:
The Iran war and the Ukraine war have caused some central banks to dip into their “rainy day” gold bullion savings. That selling has offset the ongoing buying by other central banks.
Also, rather than selling its own gold, the Indian government has weaponized tariff taxes and attacked innocent gold-oriented citizens. That’s likely removed 50-75 tons of monthly demand from the market.
When it comes to gold, most Western analysts are somewhat on the silly side of the analytical ledger; all they appear to know about gold is that it pays no interest.
Even though gold surged from about $1800 to $5600 with rates in the $4.5%-5% range, these analysts promote a bizarre narrative that if rates rise more, the ability of government to pay the enormous interest on its debt is not a problem…
But investors supposedly need to sell their gold in a panic and rush to buy some of that outrageous debt.
The problem is compounded by the government’s CPI, PPI, and PCE inflation reports, which understate the amount of inflation being experienced by the average citizen… making “real” interest rates appear much higher than they are.
In a nutshell, gold is more likely to move towards $4800-$5000 than $3500-$3200 now, but because of central bank selling, the Indian situation, and Western analytical poppycock, the price action is likely to be sluggish.
Western analysts also enjoy telling investors to buy the overvalued US stock market with the fiat proceeds they get from abandoning their gold, silver, and mining stocks. That’s dangerous.
Major bear markets tend to begin with the “riff raff” stocks and averages falling first, while the Dow Industrials power higher, and that’s what’s happening now.
Investors in the riff raff stocks are told that the rising Dow proves everything is fine; their incredibly overvalued stocks will supposedly soon join the more reasonably valued Dow stocks and rise to new highs.
July is generally a good month for the stock market and the August to October period is “crash season”. The higher the Shiller/CAPE ratio goes as these riff raff stocks stall and the Dow moves up… the more danger there is for amateur investors and the holdings they bought via “price chase”.
This is the spectacular silver chart. In a strong market, the price of an item will often stop above a support zone, rather than hitting or falling below it. That’s the case with silver now.
The $50 zone for silver is roughly in sync with $4000 for gold. When clear value is apparent, investors shouldn’t worry too much about when or where a “final” low will present itself. It’s more important to simply do some modest value-oriented buying.
What about the miners?
This is theCDNX daily chart. There have been some very nice rallies from the three buy zones within the current consolidation…
But perhaps the consolidation is now over, and a much bigger rally is soon to occur? While it’s not guaranteed, it’s the most likely scenario.
The drop from mid-April has been more of an ooze than a violent decline and that is how most consolidations tend to end.
Junior mine stock investing isn’t for everyone, especially with size, but as this gargantuan gold bull era rollout continues, these miners look set to outperform everything! At $199/year, my junior resource stocks newsletter is an investor favourite, and I’m doing a special pricing this week of $169 for 14mths! Send me an email or click this link if you want the special offer and I’ll get you onboard. Thanks!
This is the stunning GDX chart. A massive bull wedge is in play, with GDX right at the technical sweet spot for a breakout… with silver bouncing off $50 support and gold rising from $4000.
Senior miners like Barrick and Newmont are sporting “bulletproof” debt to equity ratios in the sub 0.20 zone. Gold stocks (both junior and senior) are in a sweet spot here. The bottom line is that it’s time to buy modestly… and there’s no need for fear!
Thanks!
Cheers
St
Special Offer For Gold-Eagle Readers: Please send me an Email to [email protected] and I’ll send you my free “Get Jacked With J!” report. I highlight key GDXJ stocks that could surge after Fed man Jay’s speech this week! Both core and trading position tactics are included in the report.
Stewart Thomson
Galactic Updates
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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.
