Gold Bull Market – August 2019

There is a new Gold Bull Market in progress.

You may have realized that already, or perhaps you’re still doing research trying to determine whether it is true or not.

In either case, let’s take a look at what the yellow metal is up to right now here on planet Earth.

 

Gold Bull Market – New Highs

Gold in Australian Dollars Pole-Vaulting Higher (monthly)

The price of Gold in Australian Dollars is more overbought than in any of the other currencies we are looking at today

MACD has almost reached the level of overbought-ness that marked the end of the 2001-2011 Gold bull market - perhaps price will take a well-deserved rest soon - remember, however, that overbought can always become more overbought

Part of this strength could be due to the fact that Australia is a major producer of the precious metals

More likely is the fact that Australia has been the most aggressive cutter of interest rates lately (two 25 bps cuts back-to-back in June and July) - we also have the Australian central bank publicly talking about going to negative interest rates in order to stimulate the economy

As fiat currencies are intentionally devalued, real money (Gold and Silver) climbs higher - the relationship is not hard to understand

 

Gold in Canadian Dollars at Resistance (monthly)

Gold in the Canadian Dollar is currently at a resistance level identified by the upper median line extension of the Andrews Pitchfork

MACD has plenty of upside before becoming oversold in this time frame

Notice that Canada, like Australia, is a major producer of Gold and yet the price of Gold in Canadian dollars is nowhere near as overbought as it is in Australian dollars - what's the difference? - Canada hasn't intentionally devalued their currency (yet)

 

Gold Price in British Pounds (monthly)

The price of Gold in British Pounds continues powering higher

Brexit concerns are probably adding fuel to the Gold bull market in the Pound

The EU government is a group of unelected elitists who decided that Europe needed a centralized government and proceeded to create one - hopefully Brexit, Frexit, and Italeave will be the final nails in the EU coffin

 

Gold Price in Yen (monthly)

 

The price of Gold in Yen has reached a resistance level at the upper median line of the Andrews Pitchfork

This would be a good place for price to pause and digest its recent gains

The drivers we identify in the lists below may overpower any tendency for Gold to rest at this point in its emerging bull market

 

Gold Bull Market – Pending New Highs

Gold Price in Europe Today (monthly)

The price of Gold in Euros is dealing with resistance at the upper median line of the Schiff Pitchfork

In 2012 the Euro Gold price reached $1386 (monthly chart) - the current high so far is $1370 (monthly chart) - a spike up to test the prior high and round-number resistance at $1400 would not be surprising

 

Gold Bull Market – US Dollar

Price of Gold in US Dollars Today (monthly)

Round-number resistance at $1500 hasn't stopped the price of Gold in US Dollars

This is yet another chart where MACD is telling us that this new Bull Market in Gold is just getting started

 

Will Gold’s Bull Market Continue?

It’s obvious that Gold has done well in the last year.

Are there any reasons we should expect this emerging Gold Bull Market to continue?

Let’s list some of the factors that might provide fuel for Gold’s upward trend (in no particular order):

  • Trade and currency wars between US and China
  • Ongoing protesting/rioting in Hong Kong and China’s eventual reaction
  • Geopolitical tensions with China, Russia, Iran, North Korea, Venezuela, Turkey, Argentina, India/Pakistan
  • Russia establishing new naval bases in Iran / Persian Gulf
  • Russia providing S-400 missiles to Turkey (a supposed NATO nation)
  • Russia providing S-300 missiles to Iran
  • Brexit
  • Global currency war that escalated in the past weeks with a surprise devaluation of the Chinese Yuan and multiple interest rate cuts (US 25 bps, New Zealand 50 bps, Australia 25 bps [June], Australia 25 bps [July], India 35 bps, Thailand 25 bps, Philippines 25 bps)
  • US President tweeting repeatedly that the US Federal Reserve needs to start another “lengthy and aggressive rate-cutting cycle”
  • US President tweeting repeatedly that US Federal Reserve Chair Jerome Powell is screwing up
  • US President tweeting that the US Dollar needs to be weaker not stronger – that’s the world’s reserve currency we’re talking about
  • Massive failure of the latest attempted US-led regime-change in Venezuela
  • Doubling-down on the latest failed US attempt at regime change with a blockade of Venezuela
  • Several years of massive Gold buying by central banks around the globe
  • Negative interest rates on 25% of the world’s bond market
  • Dramatically falling bond yields around the planet
  • US political "leaders" ("poorly educated, spoiled children" would be a better descriptor) calling for MMT, Socialism, and the end of capitalism
  • Peak Gold production

 

The trouble with Socialism is that eventually you run out of other people’s money.”

~Margaret Thatcher – Prime Minister of the United Kingdom from 1979 to 1990

 

We could continue with the list above, but perhaps it would be more productive to step back and look for dominant themes instead of trying to itemize all of the drivers for a continuing Gold Bull Market.

These are the relevant high-level issues fueling Gold’s upward price trend:

  • The long-running marathon for fiat currencies on planet Earth to reach their true value (zero) has now turned into a sprint
  • Everything is cyclical, including societies/forms of government – the final stages of the political/societal cycle typically involve trade wars and currency wars which ultimately lead to hot wars
  • 4th Turning Theory by William Strauss and Neil Howe
  • The Universe is in a constant state of change, but the rate of change is not constant – at times the rate of change accelerates dramatically - we are currently in one of those periods
  • Global debt levels have become unsustainable both at the individual level and at all levels of government (city, state, federal)
  • More and more people are realizing that the only real tools central banks have at their disposal are the printing press which spits out worthless fiat currency and the bullshit they spew in an attempt to obfuscate the fact that all they know how to do is run a printing press

Now I tell ya’ folks, it makes me somewhat uncomfortable writing this week’s missive.

I strongly dislike “gloom and doom” content that intentionally plays on people’s fears, and yet that’s what the lists above remind me of.

Unfortunately, however, those lists are a pretty good summary of what I believe is currently happening in the world.

Could I be wrong? Absolutely!

And I hope I am – the resolution of the issues and themes I have cited (assuming they are accurate) will not be pretty.

 

So, What Do We Do?

First of all, a caveat.

I am not a financial planner or advisor. I don’t have any formal education in economics, and I don’t hold any licenses related to monetary or financial matters. I’m just an engineer trying to make sense of the world around me.

With that said, I’ll share with you some of what I am doing personally to take advantage of the current Silver and Gold bull market.

First of all, I don’t hold any stocks that aren’t related to the precious metals, Silver and Gold. The current “bull market” (“bullshit market” is a better descriptor) in stocks that aren’t precious-metals-related is driven by a very small handful of companies that just happen to have significant weighting in the headline indexes (Dow, SP 500, Nasdaq). For a more accurate picture of the overall equity markets look at the NYSE Composite index (NYSE: NYA).

Second, I have moved most of my liquid capital into physical Silver and Gold with a heavy weighting (no pun intended) towards Silver. I vault metals at facilities like the Perth Mint in Australia.

Finally, I have designated a portion of my capital as “speculative” and I am using that money to purchase selected shares of the best Silver and Gold mining companies. As with my physical holdings, I am significantly overweighting Silver.

 

Does This Strategy Make Sense?

Every individual has to answer that question for themselves.

Again, I am not a financial advisor and I don’t play one on TV. What anyone does with their own money is a personal decision and each of us is responsible for the financial choices we make.

The precious metals provide financial protection in case any of the world-altering outcomes listed above come to pass. 

They also offer the potential for dramatic wealth increase as this secular Silver and Gold bull market runs its course.

Please seek guidance from a qualified and licensed financial advisor before making any changes in your personal situation.