I’ll dare to suggest this is the greatest time in history to own gold, and NOT because it is going “vastly higher”…
For the first time in history, all US central bank actions are bullish for the entire precious metals sector.
Gold stocks continue to take out key highs, but in the big picture, the upside action has barely started.
Silver now has what appears to be a bull flag pattern in play. A pullback within the pattern is likely now, but an upside breakout would suggest silver is going to $26 quite quickly…
Silver often acts like a levered version of gold. I don’t think investors who feel the urge to buy silver now are making an error, given the huge amount of institutional enthusiasm for the entire precious metals sector that is occurring now.
Having said that, given the importance of the $21.44 price zone, a decline to about $18 could easily happen. I don’t think the next price movement can be predicted easily at this point in time, but if they are buyers now, silver-oriented investors should prepare themselves to take more buy-side action at $18.
On a weekly chart basis, gold must close above $1336 and GDX must close above $27.61 to open the door to another significant price advance for the precious metals sector.
The twenty-year bear market in gold stocks against gold was caused by a “perfect deflationary storm”. That storm itself was caused by a bear market in money velocity and bank loan profit margins. The storm is ending. Inflation is beginning to creep higher, and doing so at a time when the US business cycle is peaking.
A rate hike that follows Brexit turmoil could put the Dow into crash mode, and send gold straight towards $1400.
While gold should now consolidate Friday’s gains over the next couple of days, the consolidation may only last for the next few hours!
Horrifically, the institutional surge into the yen and gold safe havens in the first five months of 2016 may only be an appetizer of what lies ahead.
Gold is trading in a broadening formation because institutional investors are beginning to sense a loss of control, emanating from both government and central banks.
The current gold price correction is exactly what “the golden doctor has ordered”, as the gold price meanders calmly down towards key support that begins near $1225.
In about a month, I expect the gold price to begin rising again, as buyers there return to the market with size that is large enough to send shock waves throughout the Western gold community…
Was the entire gold price rally during the 2000 – 2011 time frame really just a giant bear market rally? Well, when viewed on the gold versus money base and inflation-adjusted price charts, the answer is probably: Yes.
The good news is that rising inflation is now launching a new major bull market for gold in inflation-adjusted prices, and against the US money base. That’s why gold stocks are staging such a stunning performance against all fiat currency, and against gold too!
If gold is beginning a fresh inflation-adjusted bull market, gold stocks are likely only beginning what could be a multi-decade period of dramatic outperformance against fiat currencies and gold bullion.
There’s a very large inverse head & shoulders bottom pattern forming in gold, and I expect the right shoulder low could occur around the April 19 time frame.
While anything is possible in any market at any time, including new lows for gold, I think the Western gold community is starting to look pretty good here, given the sizable institutional buying taking place “across the board” in gold stocks.
Because a lot of that buying is value-oriented, even if gold did “impossibly” go to a new low, the substantial institutional commitment to gold stocks that is in play now is likely to accelerate. Simply put, there’s a wave of confidence sweeping through the institutional investor community about gold stocks, and I think it’s time for the Western gold community to grab an extra gold stocks surfboard, and have some fun!
Gold has staged a majestic upside breakout. My $1320 target is coming closer.
It’s important to understand the difference between the gold market now, and during the 2009 – 2011 rally:
All lights for gold are green, and rather than beginning a correction, gold may be poised to intensify its rally.
India may cut the import duty on Sunday night.
If the dollar declines further against the yen, while an Indian duty cut occurs, gold could stage a powerful “overshoot” move, well beyond the $1310 target zone, and closer to $1400.