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A Historic Time For Gold

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Published : June 05th, 2019
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Category : Today's Editorial

The powerful sell signals I have in play for US stock markets show no signs of abating.

This is the Nasdaq ETF chart.

President Trump unleashed a huge corporate tax cut early in his presidency, and that was very positive news for the stock market. Since early 2018 though, he clearly reversed course on taxes and has donned a ghoulish “Super Tariff Taxes Man” cape.

Trump now seems emotionally obsessed with tariff taxes, QE, rate cuts, and appears to have made no effort to reverse the massive growth in government size and debt.

US population demographics are not good. An ageing population is now trying to wall in an entitlements-oriented political system that depends on the dollar as reserve currency to keep it solvent.

Trump’s calls for more QE at the peak of the business cycle are something out of a “Twilight Zone” novel.

QE is supposed to be an emergency policy tool reserved for severe economic crisis, not for launch at the peak of the business cycle to empower ever-more government spending and debt!

Institutional investors are becoming very concerned (and rightly so) that Trump’s tariff taxes will push the US economy into recession before the business cycle naturally does so.

For those of us who shorted the stock market as my QQQ-NYSE signals flashed though, Trump’s actions are “making us great”.

This is the spectacular GDX daily chart.

In the summer of 2018 a lot of analysts predicted a stock market crash that would drag down gold stocks (like 2008). In contrast, I suggested a stock market crash was likely, but it would be accompanied by a surge in the price of GDX.

That’s what happened last fall, and it’s happening again now. GDX is surging higher as the US stock market nose dives!

Note my $25-$26 target zone for GDX on this daily chart.

My $25-$26 target zone is based partly on the weekly chart resistance in that price zone.

A Friday NYSE close above $23 for GDX, $36 for Newmont, $46 for Agnico Eagle, and $14 for Barrick are what I’m looking for to launch a major run higher for most gold stocks. That may or may not be accompanied by a move above $1370 for gold bullion and a fresh leg down for the tariffs-infested stock market.

That’s a look at my swing trade signals for GDX.

There are multiple gaps in play on the daily chart. That’s very rare in any market. In time, this GDX price action may be viewed as “legendary” in the face of the stock market rout….

If the rally continues and makes it to my target prices!

I issued a general gold stocks profit booking call for investors and traders yesterday, but not for JNUG, which I suggest investors hold for more glorious potential gains until I get a full signal for the sector.

On Sunday the Chinese government issued a white paper stating that Trump has backtracked in tariff tax negotiations. Now a travel warning has been also issued. This is going to generate additional concern for Chinese citizens who are invested in America. They pay close attention to official statements from their government.

SPDR (GLD-NYSE) tonnage surged to the 159 level yesterday. This is clear evidence that US money managers are also going for the gold! Chinese investors are reporting buying additional gold because they believe Trump cannot be trusted in negotiations.

I predicted that Chinese investors would begin buying gold instead of investing in stock markets as the trust issue reared its ugly head, and now it’s happening. The bottom line: It really doesn’t matter whether Trump can be trusted or not.

What matters is what US and Chinese investors believe, and they clearly believe that it’s time to go for the gold!

I believe this is the most majestic-looking chart in the history of markets. All the price action taking place now is exactly what investors should expect to happen in the final right shoulder rally of a H&S bull continuation pattern. Gold’s fear trade in America and the love trade in China and India are in perfect sync, both technically and fundamentally. Investors need do only one thing now, and that is to bask in the golden glory of this historic moment in bull era time!

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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form, giving clarity of each point and saving valuable reading time.
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