There is growing evidence that the world is evolving towards chronic massive deficit spending and new money printing schemes based on Modern Monetary Theory. We think gold is in the early stages of a new bull market that will eventually carry prices well north of the last peak around $1930 per ounce. We said back on August 20th and again on September 11th that a correction would be healthy and would provide gold buyers a great opportunity.
For a while, it looked like we could be wrong. Gold stubbornly stayed above $1500 and bounced all the way up to around $1560. The news continued to be positive for gold with stories of FED easing, European Central Bank easing, impeachment, attacks on the Saudi Oil fields, and unusual activity in the money markets.
Gold has now broken decisively below $1500, the “neckline” of a short-term head and shoulders top.
So far, we have seen an intraday low of about $1460 and spot prices around $1470. That puts us in the upper portion of the price range we projected. We think it possible that we could see lower prices and this might take several more weeks to settle. But we are now entering the buying zone we wrote about.
We don’t expect to be able to call the exact low. No one will know the exact low until after the fact anyway. If we can get gold prices between $1400 and $1450, consider it a gift and get the portfolio insurance you need.
Years from now if government funds Medicare for all, medical care for all illegals, the Green New Deal, universal basic income, free college, bail outs for the unfunded pensions for state and local governments, and a hundred other foolish things; you will be glad you own gold. It will not matter if you missed the bottom by $25.
It will matter if you miss this opportunity.
Charts courtesy of stockcharts.com. Information is derived from sources believed reliable but investment results cannot be guaranteed.