Rocket Ride, Can it Hold?
October 13, 2021
Heading into the last half hour of trading today, I’m pleased to see the miners still up close to the highs today, and after a stellar day. This is the first day in a long time the miners made gains all throughout the day, and managed to hang onto them, so its a very encouraging sign. I wonder if the market is going to start treating the stagflationary possibility more seriously, and if so, precious metals and their miners should be a great place to be invested.
On top of that, its looks like the USD index might be topping out, or at least due for a break. I don’t put too much weight on the USD index when trading gold and silver, as it’s just a measure of one fiat trash paper vs the others, in my opinion meant to confuse investors and get them to take their eyes off the ball. Below is the daily dollar chart via the UUP etf, I won’t argue whether or not it has seen its 3 years cycle low already, or not, but its clear the dollar could have some downside near term, which should lend support to precious metals.
Another influence I am considering is that the commodities vs. gold relationship looks to be reversing today, after 15 months or so of gold under-performing the other commodities, that looks like it might be changing, more so because we see resistance and overbought technicals on the WEEKLY chart of the GSG:GLD ratio (the Goldman commodity etf with 50%+ oil in it, and only 6 or 8% gold vs. the GLD gold etf (100% gold). While I don’t expect any commodities to get too weak in this economic environment, it is time for gold to take the torch once again as world economies start to weaken for various reasons. If you ask me, the economies never fully recovered from the fiasco that was rearing its head BEFORE the covid event occurred, but now even with all the money printing, we are heading back to the realization of broken supply chains, most small businesses still closed down, not many people traveling, while many are losing their jobs for the now wise decision to NOT get injected with an experimental drug that looks like it makes one MORE vulnerable to the virus than if they did nothing, among other things. All this occurring in the face of central banks starting to tighten monetary policy, which is almost laughable but happening nonetheless. After all, they have to appear as if they are responsible! So while I would not short commodities in a zero interest rate world that is very likely to stay that way for some time, I still would bet on what I see will be the strongest commodities for the next year or so, gold and silver. Everything else has rocketed, while silver is still less than half its 1980 high price! Below is the WEEKLY GSG:GLD ratio chart, if this turns in earnest, we might be on the cusp of the final and strongest run in the gold bull yet. If the stock market starts lower, that will only add fuel to the fire. Get your miners, or get your metals, or some of both.
As I type I see that the intraday technicals have now pulled lower into oversold territory, so I will look to add to positions before the close, or tomorrow morning not long after markets open. I won’t be making large buys as we’re already loaded up for the ride, but I still like to remind myself what one should be looking to do, so they don’t make the mistake of taking profits way too soon or some other error. It’s time to BUY or HOLD, but nowhere near time to sell, despite most miner etfs being up 8 or so days out of the last 10.