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
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Listen to What Gold is Telling You

Commodities / Gold and Silver 2018 Dec 10, 2018 - 04:32 AM GMT

By: Gary_Savage

Commodities

Listen to what gold is saying. It’s not deflation that we have to worry about. We’re about to enter a multi year period of rising inflation. Seriously did you think years of QE weren’t going to have consequences at some point?

For a long time I’ve maintained several key macro views.

  1. Gold started a new bull market in late 2015.
  2. The dollar started a secular bear market in early 2017.
  3. Stocks have not topped yet. We still have higher highs ahead.

First off let’s look at the stock market.


Did we not learn anything from the last two bear markets? Central banks don’t just stand on the sidelines and watch quietly as everything comes crashing down. They fight back. That means tops in our modern markets form as megaphone patterns. The last top in 2007 was a megaphone pattern as Bernanke slashed rates and printed money in the attempt to prevent the real estate market and economy from unraveling. Ultimately it failed and resulted in an inflationary storm that just intensified the recession.

The same pattern is beginning again in 2018. The megaphone top has begun. Now we just need to test the lower zone of the pattern and panic central banks back into reflation mode.

This should start with the Fed balking on the December rate hike. And they will balk if the market breaks the October low next week. This will be the beginning of the end for the dollar. The only thing holding this pig up has been the expectation of continued rate hikes. Remove that and the dollar will be toast. (and if we get a final trade deal with China the megaphone pattern could morph into a melt up).

Next let’s look at the CRB.

Currently commodities are moving down into a 3 year cycle low. At first glance that would seem to be deflationary. But what most people fail to take into account is what happens after the 3 YCL is struck. Markets reverse and start moving back up. A 3 YCL gets everyone on the wrong side of the market. Looking in the wrong direction so to speak. It pulls the rubber band far to the downside, but what most people fail to anticipate is what happens when the rubber band snaps back. In our current setup the last 3 year cycle has been a long basing pattern. Long basing patterns like this generate powerful rallies. Commodities are setting the stage and building the fuel for a major thrust out of this multi-year base.

And this brings us to gold … which is trying to warn anyone who is listening what is coming.

First off notice that gold did not make a lower low in September when the dollar broke out to new highs. That was the bell ringing that something had changed. Also notice that gold is starting to accelerate higher over the last several days even though the dollar is only down marginally. Gold is anticipating the reflation.

As of the close this week gold has broken through two major resistance zones.

There is some minor resistance in the 1260-1280 region, but the next major resistance is at 1300-1310.

Next let’s look at the miners.

You can see the breakdown from the long consolidation zone. Then the false breakdown below the post election low allowing smart money to enter at the exact bottom just like the bear trap before the baby bull.

Miners are preparing to re enter the consolidation zone. Once they do it shouldn’t take long for them to test the top of the zone.

I posted this chart several months ago. Notice the volatility coil that formed on the monthly charts. The initial push out of a coil tends to be violent… but it also is more often than not a false move that is soon reversed producing a much more powerful and durable move in the opposite direction. It shouldn’t be long before GDX re enters the coil consolidation. I’m betting it will be before the end of the year. It’s even possible GDX might test the upper consolidation zone around $25 by year end or early January.

Listen to what gold is trying to tell you.

It’s saying the rate hiking cycle is coming to an end.

It’s saying central banks are going to reflate.

It’s saying the dollar is going to roll over into a bear market.

It’s saying inflation is coming.

Like our new Facebook page to stay current on all things Smart Money Tracker

Gary Savage
The Smart Money Tracker

Gary Savage authors the Smart Money Tracker and daily financial newsletter tracking the stock & commodity markets with special emphasis on the precious metals market.

© 2018 Copyright Gary Savage - 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