Some US gold bugs may have wasted time focusing on the US election rather than the buy zones (major and minor) in the gold market…
Aug 25, 2020
1. The “KISS (Keep it simple, superstar!)” investing principle is important, especially in the gold market.
2. Business owners and stakeholders don’t have a lot of time to be deciphering candlesticks on a gold chart, but there are some easy rules of thumb that can help.
3. Please click here now. Double-click to enlarge this “Queen Gold” December futures chart. When candlesticks have both “wicks” and “tails”, a period of indecision is likely in play.
4. Candlesticks with long wicks are generally negative, and long tails are generally positive.
5. When using a classic “Edwards & Magee” bar chart, the minor highs and lows are a very important aspect of the chart to consider.
6. If the market is making higher highs and higher lows, that’s an uptrend. Currently, gold is drifting. The next positive event would be to see the price above the minor high at $2025.
7. A negative event would be seeing the price drift under the minor low at $1875.
8. Rather than going blue in the face trying to predict the next minor trend action, investors should let the market prove itself. Let the market define the next uptrend or downtrend.
9. Once patience is mastered, it’s exciting to watch the minor highs and lows form on the daily gold, silver, and mining stock charts!
10. Please click here now. Double-click to enlarge this US stock market chart. From my Dow 18,300 giant buy zone, the QQQ ETF has staged a wondrous pattern of higher highs and lows, and until that pattern ends, investors can stay long… and strong!
11. Next, please click here now. Double-click to enlarge this GDX chart. The summer doldrums are in play for gold stocks. For the past four trading days, GDX has been trading in roughly just a one-dollar price range.
12. There may be a higher low coming into play, but Tuesdays are often a rough day for gold investors. My suggestion is not to get excited until the minor high at $44 is penetrated.
13. If the low at $39 fails, a deeper reaction would offer value-oriented investors an opportunity to buy, while momentum enthusiasts should wait for $44+ before going into action.
14. Some US gold bugs may have wasted time focusing on the US election rather than the buy zones (major and minor) in the stock and gold markets. Politicians won’t make investors richer, but professional patience-oriented tactics will!
15. As far as I’m concerned, the US election is already over, and more debt is the winner. Everything else is a side show. A 2021-2025 war cycle is also possible, and arguably likely. It could be both internal and external.
16. Investors need to own physical gold and silver to hedge against this potential war cycle… and against the disgusting debt worship showcased by almost all the world’s politicians.
17. Please click here now. Double-click to enlarge this SIL silver stocks ETF chart. Gold $2000 (and silver $30 and SIL $50) is a round number where “digestion” of gains can be expected.
18. Silver stock enthusiasts should watch for a push to $51 on the SIL chart to potentially begin a fresh uptrend for the silver miners, both senior and junior!
19. From a fundamental standpoint, the Corona crisis debt is likely factored into the current gold price. A new catalyst is needed to fuel the next major leg higher.
20. It’s likely to be extreme civil unrest in America and elsewhere, but it could just be a Fed that reduces its support for government bonds and the stock market. It could be infrastructure spending that pushes the debt load up more than is expected.
21. Ominously, it could be the arrival of inflation at a time when the government can’t service its debt load if interest rates rise. If significant inflation appears and the Fed refuses to raise rates, gold stocks could garner immense institutional interest.
22. Regardless, more digestion without the emergence of a fresh debt-oriented catalyst will probably see the gold price trade under $1875. An end to it will see a nice rally over $2025 and perhaps to as high as $2300 in the medium term.
23. Please click here now. Double-click to enlarge this GDXJ chart. It’s unknown whether silver and key mining stock ETFs will start making higher highs before gold does.
24. My 14,7,7 Stochastics series oscillator is not on a fresh buy signal yet, the price action looks “soft”, and no fresh minor trend highs or debt catalysts are in play, so further consolidation looks to be the most likely short to medium term scenario. The good news is that no investor needs to be nervous. Fresh highs are coming, and when they arrive, gold bug portfolios will come alive and thrive!
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