Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Sector Correction is Maturing

Commodities / Gold & Silver 2020 Jun 20, 2020 - 02:30 PM GMT

By: Gary_Tanashian

Commodities

Gold Stock Seasonal Average

The HUI Gold Bugs index has over the last 2 decades (encompassing both bull and bear markets) tended to bottom in July per stockcharts.com‘s data for the index. A seasonal average is not a directive, but it is a () guide to be factored. Last year gold stocks bottomed in May as we caught what would be a violent upswing. This year I expect the low to be in June or July.


Why Gold?

As the stock market’s broad relief rally lumbers on, drawing the ire of bears that think it should be otherwise, a chorus of dissenting voices is blaming legions of shut-in Millennials and their Robinhood trading accounts for the excess. Maybe that plays a small part.

But here I’ll repeat that the Fed is balls out printing money (really funny munny), manipulating Treasury and Corporate bonds and stating that it will have virtually no limits in this MMT (I would turn around MMT to call it what it actually is, TMM or Total Market Manipulation). They can give it a fancy name like Modern Monetary Theory but by any other name it is chicanery and a scam that society will suffer the fallout from some day.

They are cheapening the munny units in order to give the appearance of rising asset (especially stock asset) units. Say it again… “they are cheapening the munny units in order to give the appearance of rising asset units.”

Hence, gold. The shiny rock, the bullion, the anchor to monetary sanity. In this surreal monetary realm it is something real.

The goal of investing in or trading the gold mining sector is to capitalize on the desperate actions of monetary and fiscal policymakers vs. gold’s stability. Last week we covered a lot of details: Gold Stock Correction and Upcoming Opportunity. No need to repeat the details. People who know how to play this sector have been patiently managing the correction (whether that means selling into it, buying during it, being psychologically prepared for it, etc.) and planning for its end.

We keep a long list of quality miners, explorers and royalty charts updated every week in NFTRH for this very outcome; an end to the correction and the next phase of gold’s bull market, which it is consolidating now, per this daily futures chart. If the negative RSI divergence does not resolve into a sharp drop soon it is going to then be big time fuel for what could be a hysterical run up to the 1940 target and possibly beyond.

Gold had become over-loved by financial refugees in March. They are now buying stocks again.* That is perfect because they should not be aboard the next phase. Their role will again be to knee-jerk and chase later on. Despite the consolidation since March, the daily chart (via TradingView) shows a completely intact situation at the up trending 50 day average.

Gold/SPX Ratio

I’ll leave you with one final chart. There has been a reason gold has under-performed the stock market since the terror of early spring. That reason is because cyclical asset markets are and have been on a massive sentiment relief rally and sentiment will do what it will do in the short-term. Just remember that simple fact when you see the inevitable rationale like this that certain interests will try to feed you: Here Come the Golden Ghost Stories.

Gold/SPX has done a great job of taking out the excess while remaining intact. 5 year chart…

The Not So Great Reset

Lunatics far and wide talk about something called “The Great Reset” but that too is tin foil, whether aspects of it are true or not. It does not help your market management to have that crap in your head. Instead, let’s boil down the picture to the gold sector and realize that as the terror stricken sentiment of March and April is being reset, so too is the over-enthusiastic sentiment in the gold sector.

The next bull phase should be arriving before long.

* I have been selectively long the stock market since March as well, but very aware of the gathering risks, which I personally and the NFTRH service manage accordingly.

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas, all archived/posted at the site and delivered to your inbox.

You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Or follow via Twitter ;@BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2020 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in