Gold Eyes Thunderous Rally as PCE Report Looms
Stewart Thomson | Feb 28, 2024 01:57AM ET
With Thursday’s US PCE report dead ahead, whipsaw action could be a big gold market theme this week.
Having said that, a significant rally appears imminent. OUNZ) ETF (gold bullion proxy) chart. A rare inverse H&S pattern is in play for the Stochastics oscillator (14,5,5 series) and a Friday close above $20 should ignite a thunderous rally to $24 for OUNZ and $2400 for gold.
After stalling in the 50 zone, the BPGDM gold stock sentiment index slipped to under 20.
Also, note the RSI oscillator at the top of the chart. It’s been deeply oversold for about two months.
This type of sentiment action tends to be followed with massive rallies in the miners and features the BPGDM soaring to above 70.
What about the dollar? This is the most important dollar chart in the world and fiat bugs should use it to face their folly.
The bottom line: Over time, all fiat currencies end up looking like train wrecks on gold bullion tracks.
Sadly, most investors spend their time trying to get more fiat instead of more gold. The fiat they get then fails against gold and their hard investing work is in vain.
What about crypto? Like commodities, stock markets, and miners, bitcoin is a tool a tool to get more gold.
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The ETF launch has brought significant institutional money into the bitcoin ecosystem. It’s similar to what happened to gold stocks after the 2006 launch of GDX. Bitcoin has been demonetized with the launch, but patient investors can buy it on the big price sales that are destined to occur. An Elliot “C” wave is in play and that means the price is set to rise to $100,000+.
Sloppy crypto investors won’t use any of their profits to buy more gold. They’ll look for a new scheme to make even more fiat one that will eventually go awry.
All proper investing, in a nutshell, is about getting more gold. What about the world’s stock markets, can they be used to get more gold? The Chinese stock market (FXI) daily chart. A significant inverse H&S bottom is in play.
A look at the weekly chart. The $20 area is massive support and rate cuts (and fiat money printing?) could fuel a huge rally. That rally could be the start of a bull run like America experienced from the 1930s until the 1966 area high.
The US stock market (Dow) chart. Traders may be able to use this market to make some big profits by betting it falls.
I’ve highlighted all my major buy zones on the chart and all of them feature RSI at about 30 or lower. It’s above 70 now. Basically, the US stock market is now best described as a wax-winged Icarus with a nosebleed. I ask investors to contrast that picture with the gleam and righteousness of gold!
This is an area for selling, shorting, and put options. The next buy zone likely happens with the Dow down at least 10,000 points from the highest point that it reaches on the current upside run.
What about the miners? Well, Western gold bugs are as passionate about mining stocks as Chindians are about 22k-24k jewelry, and rightly so.
The good news is that a true barnburner of a mining stock rally appears imminent.
On the daily chart, GDX is showing all the classic signs of a double bottom pattern in the making.
There’s big volume on the first bottom that was created by CPI report panic a couple of weeks ago. The second bottom likely occurs with Thursday’s PCE report.
The weekly chart is even more impressive than the daily. There’s inverse H&S action for the price and the Stochastics oscillator is now fully oversold.
Oil has been trading in sync with the dollar and opposite to gold. That’s mainly due to concerns about a global recession.
Gold stock investors should watch this oil versus dollar index chart closely because the next divergence is likely to be a major inflationary trigger.
What lies ahead for America is likely 1970s stagflation on steroids, and Thursday’s PCE report just might be golden trigger day!
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