Gold’s time has finally come.
Or so I thought on Thursday
As news broke of guns firing and missiles striking, gold rocketed…
We gold bulls had been waiting a long time for our day in the sun.
Years of playing second fiddle to bitcoin, stock markets, bonds and energy – and now
suddenly gold was shining.
In less than 24 hours gold rose as near as dammit by one hundred bucks.
From around $1,880 to $1,974 an ounce.
In doing so it broke out above $1,920, which, as the old 2011 high that held for so long,
is one of the pivotal price points of resistance that stood out like a sore thumb.
Silver looked even stronger, going from $24 to $25.60 per ounce in the same time frame.
There was a lot of crowing on social media.
And then something extraordinary happened, the likes of which I don’t think I’ve
ever seen.
I remember reading an article by a veteran mining trader once upon a time in which he
recommended, as part of his trading strategy in bull markets, to always listen to that
little voice in the back of your head on the rare occasions that piped up.
Well, late yesterday morning, a little voice was definitely chirping.
It wasn’t just gold and silver that had spiked of course.
Oil had gone above a hundred bucks.
Grains had gone limit up.
Platinum and palladium had gone nuts.
The Dow Jones and the S&P 500 were capitulating - and I mean capitulating.
“America isn’t going to allow this to happen,” said the little voice.
“It’s going to call in the Plunge Protection Team.”
Call me a conspiracist, but such a team exists.
I guess it began in the Panic of 1907 – then the worst stock market crash the US had ever
seen – when financier JP Morgan famously co-ordinated the major banks and wealthiest
individuals over a gruelling week to provide the liquidity required to shore up the capitulating
system.
He was then seen walking about the floor of the stock market loudly and visibly buying
shares, deeming these great companies bargains.
Something similar happened in 1929.
Over the course of the last century or so Morgan’s effort has gradually formalised
and in 1988, after the crash of 1987, President Ronald Reagan signed Executive Order 12631
which established the “President’s Working Group on Financial Markets”, aka the PPT.
There’s only so much the PPT can do of course.
2008 showed that.
But it is at times such as yesterday that its services are required.
It was one heck of a turnaround.
The Nasdaq went from 3% under to 3% positive for the day.
The Dow and the S&P rallied.
Commodities pulled back.
And precious metals took one of the biggest daily beatings I think I’ve ever seen.
Gold fell a hundred dollars in nine hours.
Silver, which had been at $25.60, went to $23.80.
You’d think on the day that the threat of World War III was perceived to have drawn
a great deal closer, gold stocks would rally.
No, they fell.
Why bother with gold if when Russia invades Ukraine and the divided politics of the US
suddenly unites, as lawmakers from across party lines sign a letter asking President
Biden to seek Congress approval to send troops to the Ukraine, meaning a direct confrontation
between soldiers from Russia and the US, it still can’t rally?
I tell you: investing in gold is like being stuck in a toxic relationship you can’t
get out of.
I tend to advise tuning out the news where possible.
Whatever intellectual process you use to make investment decisions – be it fundamental
or technical analysis – is fine, but don’t let the news be your main decision-maker.
Unless you have some extraordinary source of early information that is.
Such things are hard to come by, unless you are on Twitter 24-7 at which point you will
drive yourself nuts.
The problem with news-driven decisions is that there is always somebody who is getting
the news before you.
That said, you can’t help thinking that these are news-driven markets.
First the question was how serious is Russia?
We have the answer to that.
Pretty serious.
Now we are asking – how long is the conflict going to go on for?
A few days or longer?
How embroiled is the west going to get?
Sanctions, it seems, are not going to be enough.
With each development, markets are going to swing wildly.
But the bottom line for gold is this.
Plunge protection team or not, gold is going higher.
On the daily chart, even with yesterday’s action, the short, medium and long-term averages
are all sloping up and in golden alignment.
The trend is up.
On a weekly chart the averages have all coiled and converged, they are starting to slope
up and gold is starting to break out.
On the monthly chart, we have the most beautiful of cup-and-handle set-ups formed over 11 years
(see the chart).
This is widely agreed to be a bullish price pattern.
Don’t expect to be treated well.
Gold will batter you, bruise you, lie to you and lead you up the garden path.
You really don’t deserve such treatment.
$1,920 is probably going to remain a problem – as will the old 2020 highs at $2,100.
March is usually a crappy month for gold
I still say: it’s going higher.
And the other precious metals will follow
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I’ll be back with another video soon.
In the meantime cheerio