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

An Alien Invasion Will Cause Gold Price To Soar!

Commodities / Gold & Silver 2023 Aug 19, 2023 - 08:51 PM GMT

By: Avi_Gilburt

Commodities

As many of you that follow my public articles likely know, I am an avid reader. And, from time to time, I will choose to read other public articles on various markets.

What truly burns my buns are articles that present market fallacies as the basis for their "analysis." And, sadly, this is all too commonly seen in the metals complex.

So, just the other day, I read an article that called for a major rally in gold primarily due to an expectation of China invading Taiwan. And, to just add a cherry on top, they noted that if that did not cause gold to rally, then it will rally due to it being a safe haven during market volatility/declines, due to inflation, due to the Fed lowering interest rates, due to central bank buying of gold, etc. In other words, they simply threw the kitchen sink of reasons as to why gold is going to rally in their eyes.


Folks, these are outright fallacious drivers of gold. All anyone has to do is simply do a bit of historical research and they would stumble upon the truth. Yet, too many choose to proffer these fallacies and peddle them as "analysis."

Ben Franklin once noted:

"So convenient a thing it is to be a reasonable creature, since it enables one to find or to make a reason for everything one has a mind to do."

So, if someone is bullish on gold, then simply note you are bullish on gold. But, please do not insult me by providing reasons which history has shown to be outright fallacies. Let's start with this ridiculous fallacy that gold is a safe haven during times of market declines/volatility.

Since I do not have to re-create the wheel regarding this issue, I am simply going to link to an article I wrote years ago, which outlines historical facts regarding gold's "safe haven" status. And, no, it has not proven to be the safe haven that analysts and the media continually parrot.

Sentiment Speaks: Time To Buy Gold As A 'Safe Haven'

Let's now address the central bank buying fallacy. If one looks through history, we would see that the gold market has often (not always) topped when central banks were buying heavily, and has bottomed when central banks were large sellers. I know this sounds quite counter-intuitive, but the facts are the facts. And, again, here is an article I wrote some time ago which outlines those facts:

Why Is Central Bank Buying Of Gold So Important?

Let's now discuss the common theme of gold being an inflation hedge. Well, we all know we had the highest inflationary pressures we have seen for many decades during 2022. Yet, did anyone care to even look how gold reacted during that time? Since gold declined for the great majority of 2022, I think it has shattered the inflation hedge fallacy for anyone who is being intellectually honest.

Now comes my favorite discussion . . . and that is what happens when the Fed lowers interest rates. Well, I am going to take you back in time for about a decade. And, if we remember, not only was the Fed lowering rates at the time, they were engaging in Quantitative Easing. And, everyone, along with their mother, grandmother, and grandmother's dog were calling for gold to skyrocket during that Fed action. But, is that what happened?

Well, again, I am sorry to use historical facts to burst your bubble. During that time, gold had already begun its decline towards the $1,000 region we were expecting to see, and the rate declines did not even phase it. Yes, the historical facts suggest that not only did gold not rally while the Fed was lowering rates, but it was declining during that period of time.

Lastly, let's address this China/Taiwan issue. So, now I am going to challenge you all to do your own homework, as I am not going to spoon-feed this one to you. Go back and review many of the recent global issues we have seen over the last decade or two and see gold's reaction to those events. While most would assume that gold would consistently rise on these types of events, the historical facts paint a very different picture. So, good luck while you do your historical review.

At the end of the day, I am just so tired of seeing all these fallacies regurgitated time and again without even the slightest effort made into reviewing or presenting the historical evidentiary facts. And, I sincerely hope you begin to become a more discerning investor rather than simply buying into fallacious arguments as to what will drive gold in the future.

Truth be told, I am not saying that gold will not rally should China invade Taiwan later this year. But, the reason for the rally will not be due to the Chinese invasion. Rather, it will be due to the fact that gold is approaching an extreme in near-term negative sentiment which will cause it to turn in the opposite direction. It is just that simple.

And, industry professionals such as Doug Eberhardt have expressed their views about how well we have used our methods to identify the turns in the market while we have ignored all these fallacies:

"I can attest to your accuracy on actually buying both gold and silver from us as close to the bottom as one could. . . Your timing on buying the dips is uncanny Avi! People should be aware of this . . . Avi has the magic touch. Listen to him."

Also, I want to give you a quick update on a silver article I wrote a number of months ago. I will note that my larger degree perspective has not changed in silver. I still think we are setting up for a potentially parabolic rally, which should continue over the coming year or two.

In my last article, I expected silver to hold the 22.50 region (in the futures) and begin a rally. But, the rally that we saw made me suggest to subscribers to lighten up on their positions or to hedge their positions as we were moving through the 25 region. As I explained to them in real time (before the current decline began), the structure was not confidently suggestive of a break out being set up, and that another decline that could take us as deep as the 21 region had risen in probability.

As we now can see, the market took the more protracted pullback path, and it looks like silver can bottom out in the 21-22 region (September futures contract). It will likely be from this support region that the next rally can begin, and set up the potentially parabolic move I am expecting as I look out towards 2024.

In the meantime, I am going to prognosticate that the catalyst for the next silver and gold rally will likely be an alien invasion. I mean, it could have a better track record as a catalyst than all the fallacies constantly being presented by analysts and the media!?

Avi Gilburt is a widely followed Elliott Wave analyst and founder of ElliottWaveTrader.net, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded FATRADER.com, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.

© 2023 Copyright Avi Gilburt - 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.


© 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