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Digital Gold And A Mighty Miners Rally

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Published : October 12th, 2021
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Category : Gold and Silver

The world is becoming more digital. In time, citizens will partake in blockchain-based games so powerful… that the human brain will believe the game is reality.

That’s a disturbing thought, but there are more pleasant aspects to the digital world.

In the West, most gold market investors have failed to buy key price sales in the ETFs, and they don’t appear to have had much luck with their leveraged gambling on the COMEX either.

In China and India, digital gold (and now silver) is a growth industry. Investors are excited! Companies like MMTC-PAMP are expanding to meet the surge in demand.

The PAXG digital gold chart.

While most cypto coins are “vapour” coins, with nothing backing them and no business model, gold-anchored PAXG has quietly moved up the market capitalization rankings ladder, and now sits at number 162.

Over the next few years, I expect Indian physical gold demand (with a hefty portion being digital) will rise to an average of 120-180 tons/month.

That alone is enough to move the supply/demand balance in favour of demand, push the price significantly higher, and it’s happening as Western debt worship continues unabated.

Unlike futures market contracts, digital gold coins are backed by physical gold with a 1:1 ratio to the coins. This is positive news for mining stocks investors.

The key GOAU weekly chart. Note the 14,5,5 Stochastics oscillator at the bottom of the chart.

There’s now a crossover buy signal in play, and it’s happening with the miners in one of the most oversold positions of the past three years!

The next thing to watch for is a buy signal from the 5,15 moving average series.

The weekly gold chart. The key to gold, crypto, and stock market success is to keep a daily focus on just a few items of importance.

For technicians, that is support and resistance, with a good oscillator and moving average series.

It’s the same for fundamentals; institutions are either concerned about inflation or not, and Indian demand is either rising or not. Mine supply is either surging or stagnant. KISS. Keep it simple, superstar!

The Western fear trade for gold makes the price action volatile. Investors place large leveraged bets (silly bets?) on changes they predict for US interest rates.

This creates volatility and it means moving averages don’t work as well for gold as for the stock market.

The 10,100 moving average series on the 2hr QQQ chart has a fabulous track record of getting investors into the stock market and out of it at key moments in time.

I think investors who are obsessed with the fear trade have become too emotional about the potential for an American stock market collapse, and even more emotional about its potential to harm their miners.

India will likely become the world’s dominant empire, and remain so for the next 200 years. Because of that, gold will be the world’s dominant currency. It’s that simple, and it’s that awesome!

Power players like John Chambers (former Cisco CEO) recognize what’s coming, and gold bugs need to prepare for it too, with fresh buys on the miners.

Also, inflation-themed collapses of the US stock market happened repeatedly in the 1970s and those collapses helped create huge rallies in gold, silver, and the miners.

Here’s a short-term look at key support and resistance zones for the US stock market.

My suggestion: Watch the $350 level for the QQQ ETF (aka “The Q’s”); if that breaks, it likely happens with a shocking spike in an official inflation number, and a huge metals market rally will be the winning play!

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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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