The Next Big Rally in Gold Stocks Is Coming

They are at it again. Articles catching on to the US dollar breakdown are appearing in the smaller media (e.g., blogs and websites that are ‘perma’ pro-gold, anti-USD, anti-stock market, pro-financial Armageddon, pro-emotional “analysis”), where the thickest bias and dogmatic views are aimed at less experienced investors through emotion.

Yes, gold is bullish. It has actually been bullish on the big picture since it took out 1378 (what NFTRH had targeted as the “bull gateway”) back in 2019. That began the next leg of the ongoing bull market that began in 2001. Yes, friends, gold moves slowly. And why shouldn’t it? Bubbles, like the grand one that is still alive in stocks, move faster. They move faster on the upside, and boy, do they move fast when they burst.

This post from 2020 shows gold’s 1378 gateway having been taken out, the resulting rise to make a higher right side of the bullish Cup, and projecting the need for a corrective handle to be built. Accompanying the chart in that post:

Gold is fine. Don’t sweat the correction. Well, if you are a momo who got on because you listened to the media, then you should sweat it. You need to sweat it, because the gold price needs you gone, sanitized, cleaned and buffed.

A subsequent 2 years of handle-making (longer and sloppier than I’d originally projected) sanitized the situation, alright? But today is not the day to be listening to gold stock news in a vacuum because it is not just gold and gold stocks that are bullish in the face of the US dollar breakdown.

It is US and global stock markets, and increasingly, as per our recent projections, the prospect of the commodity complex (CRB index) finally shaking off its year-long downtrend. CRB has not quite done that yet, but if the USD breakdown is real, a significant rally can erupt in broad commodities as well.

One day gold mining stocks (VanEck Gold Miners ETF (NYSE:GDX)) will be preeminent (in my opinion), but that day is not yet, not today. Gold stocks are bullish. But the same can be said for broad stocks and – if our thesis about a significant anti-USD trade is correct – commodities of most kinds.

The best fundamental backdrop for the gold mining industry is counter-cyclical. It is when things fall apart (and bubbles burst). It is amid deflationary pressure and asset market liquidation that gold will hold its value relative to stocks, commodities, and just about anything else that’s not nailed down (like the heavy anchor of monetary stability, insurance, and value).

As the 2020 quote above states, “Gold is fine”.

Microcosms of a real post-bubble environment happened in 2000, 2008, and 2020, to varying degrees. As bubbles burst the damage was summarily papered over by heroic (and ultimately one day, destructive) acts by central monetary planning authorities like the US Federal Reserve and debt spending fiscal planning authorities like the US government. Last week, I wrote: 

h2 The Continuum Broke/h2

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Which leads us again to one of the main reasons we’d even consider a genuine “post-bubble” now as opposed to previous decades. Once again, I, a man who stares at charts, am just awe struck by the profound look of the Continuum chart of the 30 year Treasury yield. How orderly the Continuum was when we used to have those downtrending moving averages and rally ending arrows painted red. How orderly, how systematic. But last year? Rebellion! Something broke and since that moment it has been our job to consider what broke and how it may affect the forward macro.

As noted above, the 2 Horsemen of the Sound Money Apocalypse (that has run for decades) have been monetary (central bank) and fiscal (government) policy, always at the ready to be deployed as needed against the markets’ natural cycles in the age of corporate, market and insofar as the rich have gotten exponentially richer due to this macro rigging, selective social… socialism.

If you disagree with me that our markets are the product of socialism (or worse, communist style central planning), please clue me in as to how I am wrong. When government or government associated and all powerful entities are able to regulate, control how the money is created and where it goes, how is that not socialism as opposed to productive endeavor, which feeds a sounder, less dysfunctional, more equitable economy and financial system? Yes, you are reading an idealist right now. But as you know I am also very cold and ruthless in not falling for my own ideals until/unless the time comes for a phase change.

This is exactly why I respect the ongoing stock bubble until it is no longer ongoing. It did not burst in 2000, 2008, or 2020. It was sustained by policy. Today on a bigger picture (beyond this moment), we have a chance in the years, maybe even months ahead, for a major phase change due to the implications of the Continuum and other indicators we keep track of.