Monday , 2 October 2023

Now’s the Time To Buy More Battered Down Gold Stocks – Here’s Why

Gold is at a good point to turn up [so now is the time]…to undertake more accumulation of battered down gold stocks.

The original article has been edited here for length (…) and clarity ([ ])

Gold continues to build towards a breakout from a major base pattern, a giant Head-and-Shoulders bottom that we can see to advantage on its latest 10-year chart below. At present it is battling the headwinds of a dollar rally, but a dollar rally won’t stop it.

Gold: 10 Year Chart

On the 10-year chart [above] it looks like “all systems go” for gold, with the price advancing steadily towards the neckline resistance at the upper boundary of the pattern on greatly increased volume, which has driven volume indicators to new highs, a very bullish sign…Volume…has been expanding steadily since the price rose out of the final bear market low late in 2015…so do you think that this bullish action for all this time is going to be derailed by a dollar rally lasting 2 weeks, or even 2 months? No, thought you didn’t – me neither.

Gold: 3 Year Chart

…On the 3-year chart [below]…

  • we see in more detail the trend of higher lows since the late 2015 bottom, itself clearly very bullish, as is moving average alignment, with the 200-day rising steeply, but not too steeply…
  • we see the impressive big buildup in upside volume…[with] On-balance Volume…flirting with new highs recently…
  • we can also see where any somewhat deeper reaction due to a continuation of dollar strength is likely to terminate (at one of the two supporting trend lines from the lows that are shown, and it is considered much more likely that any such reaction will stop at the higher trend line).
  • Furthermore, as we will see later when we look at the dollar charts, it could turn up here and break out almost immediately if the dollar should now roll over and drop.

Gold: 6 Month Chart

Whilst the 6-month chart is of limited use technically, it does show that gold is actually at a good point to turn up here, as it is close to a zone of support which is underpinned by the rising 200-day moving average in quite close proximity. This looks like a pretty good point to undertake more accumulation of battered down gold stocks.

US Dollar Index: 6 Month Chart

…The USD’s impressive rally over the past couple of weeks has caused gold to drop back. Although this rally has broken it out of what looks like an intermediate base pattern, it nevertheless rates as a countertrend rally at this point because it has brought it up to resistance close to a quite steeply falling 200-day moving average, and moving averages remain in bearish alignment, as we can see on the latest 6-month chart below…

US Dollar Index: 2 Year Chart

The 2-year dollar index chart does not look at all encouraging for dollar bulls. While bulls may derive some comfort from the fact that the dollar has broken out above the downtrend line from the late 2016 peak, it has not broken out of the adjusted parallel downtrend channel shown, and is instead at its upper boundary, at resistance and at its falling 200-day moving average, a combination of circumstances that should at least lead to its pausing here, if not reacting back, especially as it has become overbought on its short-term oscillators. Going just on this chart, the dollar could be done here and turn tail and go into decline again, which would be good news indeed for both gold and silver.

US Dollar Index: 5 Year Chart

It is worth zooming out and looking at the dollar index also on its 5-year chart, because on this chart we see that it may be at the lower boundary of a giant Broadening Formation. Whilst these patterns are bearish in nature, what quite often happens with them at this stage is that a period of wild and erratic trading ensues which is followed by a breakdown from the pattern and a collapse. Thus we could see a more significant advance by the dollar over the medium-term before it turns lower again.

One would think, based on the continuing and even accelerating abuse of the dollar involving profligate spending and careening deficits, that it would be incapable of staging a significant rally at this juncture so what is going on here, why is a dollar rally possible?

  1. the dollar would only be rallying against other currencies, other fiat – all the main global currencies are being debased and reduced in value at breakneck speed, and that includes the dollar.
  2. …the power of the Neocon Cabal that runs the United States and its various overseas interests rests on the continuation of the dollar as the global reserve currency, and the recycling of dollars by those who accept payment in dollars into Treasuries. It is a system that enables the United States to indulge in unlimited spending and push the bill for it off onto to the rest of world, since all they have to do to receive good and services from the rest of the world is to print up more and more paper in the form of dollars and Treasuries, created these days electronically, and hand them over in exchange – it can run careening deficits in perpetuity in the confident knowledge that it can inflate away the debts at some point in the future.

The reason that the dollar is rallying now is that the Fed is treading a fine line raising interest rates gradually, while the vassal States like Europe and Japan have been ordered by their Master to keep their rates lower, in order to create a differential – a big enough difference to attract sufficient capital into the U.S. to prop up the dollar and the Treasury market. The economy may slow and the stock market crash, but they’ve got no problem with that, as the bond market is far bigger and thus much more important to them than the stock market…

If the dollar is knocked off its throne as the global reserve currency, that’s it, the show’s over, and the United States becomes just another country – another country with an outsize and crippling debt problem. This is the reason that the U.S. will go to any lengths, including invading and destroying other countries, to maintain the dollar’s dominance…

When World War 3 Happens Gold Will Do A Moonshot

The late Larry Edelson pointed out in Winds of World War 3 and on numerous other occasions that there is a very dangerous confluence of war cycles that peak in the years 2019 – 2020 and, the way things are shaping up, it doesn’t look like the world is going to get through this period without major conflictWhat we are looking at here is the accretion of two…opposed axes of power, the axis of the West, and the Asia axis, that will comprise the two sides in a potential 3rd World War. The pieces are all falling into place…and when…[war erupts] gold will do a moonshot.

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