Warning: Gold’s Slingshot Has Started!

I have been positive about gold for the past several months.

That shouldn’t be a shock…

Remember, I’ve been warning that it could slingshot higher during December since July last year. I ramped up this analysis in December, warning that gold would breakout any day and surge in the months ahead.

Take a look at the chart below:

09-01-19 Gold Chart

Source: DollarCollapse.com
[Click to enlarge]

Gold has broken out in December each year since 2013. That’s why I warned the final gold bear market rally ― and the best yet ― could start last month. Here’s how my forecast has worked out for the yellow metal:

09-01-19 Gold Chart

Source: Metastock Trader
[Click to enlarge]

The gold slingshot happened on target. You can see this by looking at the vertical blue line, which marks the start of December. The yellow metal performed tremendously during the US stock market volatility last month. You shouldn’t be surprised. I warned that gold could break out after the US Federal Reserve meeting on 19 December in Markets & Money.

Remember, CNBC wrote on 6 December:

Futures traders are stepping up the pressure on the Fed to ease the pace of interest rate increases.

Amid the latest round of market turmoil this week, the market has lowered the probability of an interest rate hike when the central bank’s policymaking body meets this month. They’ve also reduced the chances of future increases, figuring that even if the Federal Open Market Committee approves another quarter-point move higher on Dec. 19, there only will be one more before it stops.

“How the FOMC chooses to react will greatly determine whether the expansion continues or rolls into recession,” Steven Blitz, chief U.S. economist at TS Lombard, said in a note. “The choice will be to pause: there is no inflation surge to chase down and there are headwinds aplenty.”

There was a good chance the US Fed would raise interest rates at the time. And, while that happened, I warned it could be the last rate rise for some time and that would be bullish for gold.

The yellow metal is now trading at levels it hasn’t been seen since June.

That’s a positive.

I believe the final gold ‘bear market’ rally has started.

What does this mean?

It’s simple.

Gold prices could rise sharply in the months ahead. I hope you are taking this warning seriously…

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The final bear market rally

Remember, as analysed multiple times in the past, gold tends to rally into financial crises and crash during them. I believe the next financial crisis looms in 2020/21 (more on this below) which spells good news for gold. It has rallied into every financial crisis since 1971. And, adjusted for inflation, it has surged into every financial crisis over the past 100 years:

09-01-19 Gold Chart

Source: macrotrends.com
[Click to enlarge]

Every time the sustainability of the financial system has been tested, gold rallied in real terms (adjusted for inflation). The above chart shows every financial crisis over the past 100 years. It’s worth diving deeper into two recent examples to get your head around what could happen next.

Here’s what happened to gold heading into the Global Financial Crisis of 2008:

09-01-19 Gold Chart

Source: Metastock
[Click to enlarge]

Gold rallied sharply into the meltdown, marked by the blue vertical lines. A similar thing happened to the yellow metal heading into the 2011/12 European Sovereign Debt crisis:

09-01-19 Gold Chart

Source: Metastock
[Click to enlarge]

Gold surged into the European Sovereign Debt crisis, before the problems were kicked down the road. I’ll talk about these crises in more detail another week, as there’s a lot to say. The point is, when a financial crisis becomes clearer, gold tends to perform well.

I believe next time will be no different. 

The writing is on the wall

Financial crises aren’t good for much, other than gold heading into the event. So, if a meltdown happens in 2020/21, gold could rally sharply into the event. Likely for three main reasons:

  • The impeachment ‘witch hunt’ against US President Donald Trump

  • The Chinese economy and financial markets melting down

  • Global central banks moving towards higher interest rates & cutting back their money printing policies.

Maybe something else should have made the list (i.e. Brexit or the European banking system). There’s a lot to discuss about over the coming weeks and months, which we will write about in Gold & Commodities Stock Trader. But, considering all events tied together, it makes for the perfect storm heading into 2020/21. Again, that’s probably not good for much…other than gold.

I believe it’s time to take the yellow metal seriously again.

Regardless of your political views, people are becoming increasingly uncertain and worried about the future. The financial system ― especially as we saw over the Christmas break ― is become more unsustainable as a result. That’s why gold, the hedge against the sustainability of the financial system, is starting to gain more attention from investors.

The best gold stocks are starting to surge higher. Gold & Commodities Stock Trader subscribers have been prepared for this move for some time (to find out more about Gold & Commodities Stock Trader, click here).

Regards

Jason Stevenson,
Resources analyst, Markets & Money


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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