first majestic silver

Oil $100: The Big Number For Gold

President of Graceland Investment Management
October 25, 2022

America’s impaled stock market investors finally got a bit of a rally.  Ominously, they seem far more concerned about stopping the Fed’s tiny rate hikes than stopping the growing number of homegrown terrorists who enjoy shooting their children. 

US stock market investors have devolved into welfare bums who live for QE handouts and negative interest rates provided by a central bank soup kitchen.  Their madman president is a draft dodger who now ruins millions of Euro citizens with his relentless war mongering and sanctions… while promising that killing babies is how to reduce the inflation he creates. 

The US government is beginning to look like Caligula on steroids.  Stock market investors cheer the madness and most horrifically… they seem eager for more.

For a “just the facts, please” look at the action.  The SP500 CAPE ratio is in the historical stratosphere.  It’s barely below the highs of 1929, yet the market is billed as “incredibly undervalued” by mangled investors who bought it at CAPE 25 and higher.  The bottom line:

The US stock market hasn’t offered real value since the early 1980s, doesn’t offer it today, and is unlikely to offer any for the next decade or two.

Is history about to repeat itself?  Are the US stock market and then gold miners both poised for a modest rally, then a reaction, followed by an explosive move higher for the miners while the stock market tumbles?

I’ve added the USO oil ETF to the chart.  Oil is likely the key factor in determining whether history repeats again.

It doesn’t matter if the Fed hikes rates.  What matters is whether those hikes stop an inflationary surge or not, and oil is the main fuel of the world, so it is the main factor for inflation. 

A surging oil price in the face of Fed rate hikes could create institutional stock market terror and a history-making rally in the miners.

The daily oil chart.  Oil broke out of a small bull wedge pattern and sits in the right shoulder zone of an inverse H&S pattern… but there’s no upside action.

With the US mid-term elections about two weeks away, is it possible that the government is meddling in the oil market to stop a rally from happening?

That’s unknown, and whether there’s government meddling or not, gold, silver, and the miners need oil to shoot over $100 to grease the wheels for a rally at least as big as the one that occurred early this year.

The weekly gold chart.  I predicted a strong rally from about $1614 and that happened, but I suggested investors needed to be nimble.  Here’s why:

Most of what has been happening in terms of upside action for gold and the stock market is related to short covering by retail investors, leveraged hedge funds, and market makers.

Friday was “OPEX” (option expiry) day for the SP500.  Market makers have until tomorrow morning to cover short position hedges they bought against the put options they wrote for funds and retail investors.

These short-term time horizons are partly why short-covering rallies tend to be so violent and short-lived.

The short-term gold chart.  As gold arrived in the $1614 buy zone, I suggested an inverse H&S scenario was possible, and now the price is in the right shoulder “build” zone.

A move under $1630 would put the pattern in jeopardy, and bring the enormous $1570, $1450, and $1400 buy zones into focus.

The CDNX junior resource stocks chart.  There’s a bull wedge in play but there’s no upside action even with the stock market rallying violently.

Many individual junior miners look better than the CDNX and are sporting superb bull wedge patterns with upside action and breakouts.  At $199/year, my juniors newsletter offers good value for junior mining stock enthusiasts.  I have an “inflation buster” special offer this week, which is just $169 for 15 months of exciting junior investing action!  Click this link or send me an Email if you want the offer.  Thank-you.

The GDXJ chart is incredibly bullish, but the right shoulder of the inverse H&S pattern is a bit mushy.

The SIL chart.  There was a channel breakout, but since then price has just oozed along the top of the channel.  The bottom line for the miners:

Oil, oil, and yes… oil!  The metals markets need oil to blast over $100 while Jay keeps hiking, to lay the groundwork for the next big meltdown in the US stock market… 

And the next big rally for gold, silver, and the miners!

Special Offer For Gold-Eagle Readers: Please send me an Email to [email protected] and I’ll send you my free “GDXJ Golden Leaders” report.  I highlight six GDXJ component stocks poised for the biggest gains in the coming weeks.  Key buy and sell tactics are included for each great stock!

Thanks!    

Cheers

St

Stewart Thomson 

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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.

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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:  

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.


One cubic foot of gold weighs more than half a ton (1,306 pounds).
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