Last night’s “historic” rate hike from the BOJ didn’t provide the big meltdown in the dollar that many FOREX traders were hoping for.
Here is the dollar index daily chart:
There’s a modest channel breakout and the chart is mildly bullish. The bottom line:
Should gold bugs be concerned about the surging dollar?
For some key insight into the matter, check out this weekly yen and gold chart.
For awhile, the yen was viewed as a bigger safe-haven currency than the dollar, and it moved in sync with gold.
That synergy has ended, and gold is trading at all-time highs against both the yen and the dollar… while the yen melts to one disturbing low after another.
Clearly, gold bugs have nothing to fear from the actions of the BOJ or the Fed. There will always be some temporary synergy between the world’s biggest government fiats and gold…
But over time all the fiats fail and gold reigns supreme.
In the long run, gold outperforms all currencies and most assets too, including the mining stocks that mine gold itself! The bottom line is that the awesomeness of gold is sublime… and almost surreal.
This is the weekly gold futures and SGOL ETF chart. A pullback to $2100 for gold and $20 for SGOL is likely in the short term (a month or two). In the medium term (one to two years), a surge to $2400 or even $2600 is the most likely scenario.
Look at the daily gold and SGOL charts:
The Fed is unlikely to announce a rate cut after tomorrow’s FOMC meet, but Chair Jay has sounded increasingly dovish in recent months and I expect that to continue tomorrow.
Along with the 2021-2025 war cycle insanity and ravenous physical demand from China and India, Jay’s dovishness is helping put a nice bid under gold… and it’s happening while the dollar and rates move higher.
While the daily gold chart is overbought and the weekly action hints at a pullback…
Gold is so fundamentally supported right now that a pullback may not even happen! The current pause could play out as a bull flag on the charts rather than as a more meaningful reaction.
A daily focus on the big picture is critical for investors as stagflation, the 2021-2025 war cycle, a wildly overvalued stock market, debt ceiling horror, and empire transition dominate the investing landscape. I cover this big picture 5-6 times a week along with the key technical action in my flagship Galactic Updates newsletter. At $199/year, investors feel the price is too low, but I’m offering a $179/15mths “special offer” that investors can use to get in on the winning action and meticulous analysis. Click this link to get the offer or send me an email and I’ll get you a payment link. Thanks!
What about the US stock market and crypto, should gold bugs be involved in these assets?
At my crypto newsletter, I urged crypto bugs to ignore the ETF banter, and book juicy profits alongside me into my $70,000 sell zone.
I suggested investors put some of their proceeds into gold on the next $100/oz price sale, and to lightly buy crypto on a bitcoin pullback to $50,000. Crypto is a bit of a mystery to many investors, but there’s no mystery that it’s been a good tool to use… to get more gold.
Look at the US stock market (also as a tool to get more gold):
Stock market investors should be sellers here and be prepared to put a lot of their proceeds into gold on the next $100/oz price sale.
I’m a US stock market buyer at Dow 28,700. A move to there from the current zone would be roughly a 10,000point price sale.
I don’t like to see investors buying the stock market unless there’s at least a 20% price sale in play, and that would be the case if the Dow fell to the key 28,700 zone now.
Most gold bugs are focused more on miners than crypto and the Dow… and rightly so: Senior and intermediate mining stocks typically rally about 20% when gold rallies 5%.
That’s a four to one advantage for the miners, but gold stock bugs should note that this outperformance tends to happen only a couple of times a year… and rarely lasts for more than a few months each time it occurs.
The good news is that with gold poised to rally about 20% (from $2100 to $2400-$2600), the miners are likely poised for an 80%+ “surge to the stars!”
Look at the GDX daily chart:
The chart is outrageously bullish and a few dovish words from Jay might be all it would take to launch the next move up.
This weekly BPGDM (gold stock sentiment) chart is arguably the most enticing chart in the world right now. The Stochastics oscillator is finally flashing a buy signal, and these signals tend to be followed by very strong rallies in the miners. The technical action seems to be suggesting that tomorrow’s FOMC statement will be just what the gold stock doctor has ordered… to thrill and enrich mine stock investors around the world!
Thanks!
Cheers
St
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Stewart Thomson
Galactic Updates
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
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