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The Big Story Is Gold Bug Glory

Published 06/20/2023, 03:33 PM
Updated 02/07/2024, 08:50 AM
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Most gold investors in America tend to focus on the “fear” trade.  Negative real rates are good for gold.  Recessions are good for gold.  Almost anything bad that happens is deemed as good for gold.

In China, there’s the “love” trade.  Good times and good news are celebrated with big purchases of gold.  Many Western gold bugs don’t realise that there’s a big fear trade for gold in China too, and on that note… 

China Lending Rates

Rates are starting to fall in China. That’s negative for the yuan and positive for gold!

China Large Caps

It’s unknown whether the iShares China Large-Cap ETF (NYSE:FXI) (ETF of 50 major Chinese mainland corps) will break out of the huge inverse H&S base pattern or fade and test the lows.

Real estate is also shaky there.  As a rough rule of thumb, Chinese gold import numbers tend to dip at the onset of bad times, but as things get worse, imports surge as there’s a big rush into gold!   

TNX Quarterly

What about the US stock market?  In America, stocks (stonks?) rally when growth collapses, provided the central bank welfare office prints up fiat and offers rate cuts for the stock market investors who are de facto Fed welfare recipients.

The problem now is that the stock market investors are likely celebrating the Fed’s rate hike pause very prematurely… there may be several decades of stagflation and rate hikes ahead.

Goldman Sachs on US Inflation

Goldman predicts “delayed onset” inflation is coming.  That’s my main scenario.  The Goldman view is perfectly in sync with my bond market chart. Delayed onset inflation (DOI), when it becomes actual inflation, is likely to drive investors out of the US stock market and into the miners.

QQQ Weekly

The weekly Nasdaq ETF chart.  Note the massive overhead resistance.

NASDAQ Daily

The daily QQQ chart shows near-parabolic action.  One of my US big stock market mantras is to sell out of the market or buy put options on August 1 each year, to prepare for “crash season”.  That typically lasts through the month of October and if there is a crash, investors can rebuy their stocks then.

Fear & Greed Index

This year, given the rampant greed and rally in the Nasdaq that’s currently in play, I’m suggesting that investors book profits or buy put option insurance right now.

Gamblers and “stock market haters” can also buy put options or short the market today, preferably with modest size.  The bottom line:

It’s a very good potential reward versus real risk play!

Gold Weekly

The simplest and most important chart in the world… the weekly gold chart.

There’s a small double bottom in play at the $1936 lows. Note that on a strong market like this one, the RSI oscillator can turn up in the 50 area, and Stochastics can do it too! 

CDNX Daily

What about the miners? The enticing CDNX chart.  Many analysts and investors are underestimating the upside potential for the miners. 

In the cash market, gold went to new minor trend low, but silver and the miners did not.  That’s a very bullish sign.  Fiat money printer Ben Bernanke would call this action a big green shoot… if he was sane enough to become a legitimate gold bug. 

Junior miners look set to outperform everything as the gold bull era rollout continues. I cover the “hotties”, but there’s also a key big picture focus, so junior bugs stay grounded rather than getting overly excited about any one situation. 

Gold Miners ETF

A look at the “big boys”, aka the senior miners via GDX (NYSE:GDX), the glorious GDX daily chart.  There’s a small chance of a dip to $27, but the odds of that are shrinking by the day, and really, by the hour.

GDX staged a channel breakout on Friday, and did so while the US stock market had a very rough day. 

Also, my go-to candlestick chart maestro points out morning star formations on an array of miners, and that’s another green shoot for investors.

I should mention that the Newmont absorption of Newcrest puts a serious amount of copper into the company’s portfolio. Barrick is also rumoured to be on the hunt for copper resource elephants. 

I’m predicting that over the next five years gold (and silver) miners move into copper in a big way.  What does that mean for investors?  It means that mainstream money managers are going to be not just open to buying the gold stocks, but will be eager to do so.

The dead-ahead electric car era is part of the truly immense gold bull era… an era that involves empire transition from West to East, US debt worship going more awry than it already has, an end to the US stock market boom in early 2024 that coincides with a huge rally in oil, and a wave of de-dollarization that blows all mainstream analyst minds. The bottom line is this: It’s a glorious time to be a gold bug, and it’s only going to get a lot more glorious.

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