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…
All eyes in the Western gold community should be watching Janet at Jackson Hole on Friday, and all hands should be on the gold stocks buy button!
An upside breakout for both gold and silver looks imminent…
In regards to gold stocks specifically, I called the 2014 – 2015 period the greatest accumulation zone for any asset in the history of markets. That was a bold statement, and the price action in 2016 is already hinting that my view may be the correct one.
Silver is very responsive to inflationary pressures, and if gold stocks are outperforming silver in a massive way, it’s an indication that inflation may be poised to rise in a MUCH bigger way than most analysts believe is possible…
I think all members of the Western gold community should own some silver bullion.
It doesn’t have to be a large amount, but owning some is a very good idea.
The gold market is quiet, and there is seasonal softness.
That may be about to change, as both the US and Japanese central banks are having policy meetings this week…
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…