Gold looks technically superb, and the fundamentals look even better.
Trump is beginning to pressure Japan to push the dollar lower against the yen.
It’s likely a question of when, not if, Abe orders his central bank to kill the Japanese QE program. When that happens, the dollar could stage a dramatic collapse against the yen.
If the dollar collapses against the yen, it will collapse in an even bigger way against gold.
A rate hike next week should quickly produce “Rate Hike Rally #3” for gold stocks.
An Inflationary FIRESTORM Is Coming:
Silver is beginning to act with less volatility, and more like a slightly “jacked” version of gold!
On rallies, silver is outperforming gold against the dollar, but not excessively so. Modest out-performance by silver against gold tends to occur during long term up-trends. Wild out-performance tends to occur when the precious metal sector is ending a big uptrend.
The current action in the silver market is ideal for investors…
This type of price action is indicative of a rally that may be in the early stages, rather than near an end…
This is very positive for precious metals:
For the funds, this is a very dangerous situation, and one that could produce a violent move higher in the gold price at a time when that seems impossible.
Gold bugs should pay attention to current commercial trader liquidity flows, which suggest that a major gold price rally is either imminent, or already underway!
Stewart Thomson Explains Why Gold May Be In the First Stage of a SIGNIFICANT Rally:
Gold has a cyclical tendency to decline ahead of a rate hike, and rally after it is announced.
This time, the US election may delay the rally, but create one that is bigger and more sustained than the rally of 2016. Here’s why:
Gold stocks and silver continue to exhibit substantial strength in the face of the decline in the price of gold.
Is that strength hinting that a substantial rally will follow a Fed rate hike?
Interest rates rose throughout the 1970s and inflation and gold soared as that happened.
Last year’s rate hike was followed by a collapse in the dollar against both the yen and gold.
Professional investors buy weakness, sell strength, and do so very aggressively…
Western gold community investors need to have a wee bit of patience.
Gold is no longer vulnerable. It has entered a nice buying area.
The $1225 – $1200 price zone is both technically and fundamentally important.
A US government bond market panic is becoming a potential event that serious money managers will need to think about very carefully.
I would suggest they start thinking about it… NOW.
The US election is now only about two weeks away.
The winner of this election is likely to be… gold.
The next crisis will be a full deleveraging event that involves both public and private assets. I call it the “End Game”.
As it unfolds I expect markets to act more like they did in 1929 than 2008, and end with gold revaluation…
The bottom line is that the September – October time frame is crash season for the US stock market, and the situation is grim…
The world is only hours away from key BOJ and Fed meetings that could create a SEA CHANGE in global markets.
A rate hike from the Fed would create panic in the stock market, and investors would flock to gold, just as they did after the first rate hike in December…
If there is no rate hike next week, GDX should challenge the $32 area highs, and lead bullion higher.
If there is a rate hike, GDX and most gold stocks will likely spike lower while bullion soars higher, in a scenario similar to what happened when Janet hiked in December of 2015.
The good news is that after a very brief decline when Janet hiked last year, gold stocks staged one of the biggest rallies in many years.
If she hikes next week, I expect history to rhyme!
Against gold, gold stocks have been in a bear cycle since 1996. That cycle appears to be ending now, and its end will be confirmed by an upturn in bank loan profits and money velocity. A rising oil price floor could be the catalyst that creates the upturn.
For the Western gold community, good times are here, and great times are near!
The September and October time-frame is what I call “US stock market crash season”. The worst stock market crashes have historically occurred during these months, and Friday’s jobs report has the potential to create another one.
The PBOC could announce a major yuan devaluation if Janet hikes rates in September, and that could potentially unleash the type of stock market crash that occurred in 1929…