- Gold has arrived at significant resistance in the $1900-$2000 zone. Investors need a solid plan of action to deal with the intense volatility that is currently enveloping the market.
- Please click here now. Double-click to enlarge this December futures gold chart.
- In 2011, a key futures contract traded at about $2000. That’s a significant round number, and the gold price is now recoiling from that same $2000 price zone.
- Please click here now. Double-click to enlarge. Basis this popular August contract, gold made a new high, as it did in the spot (cash) market.
- Gold tends to react violently at round numbers like $500, $1000, and $2000. When gold makes its way to $3000, more “price violence” should be expected. What about tactics for today, at $2000?
- Well, nervous investors can buy put options on gold, silver, and mining stocks. That’s the simplest way to protect a portfolio from a big drawdown. It’s a lot like buying fire insurance for a house. It doesn’t cost a lot, but there’s a lot of protection for a modest outlay of capital.
- Not all investors are worried, and those looking to buy can wait for a deeper correction, a fresh high… or just take the plunge and buy this morning’s dip!
- Please click here now. Double-click to enlarge this GDX “staircase” chart.
- The important pattern of higher highs and higher lows is intact. Dip buyers could buy right now or wait for just above the $40 area, with an optional stoploss at $40.
- As long as gold trades at $1800 or higher, I expect GDX will ultimately make a new all-time high.
- That’s because the miners have re-invented themselves as shareholder-friendly cash cows, and lots of money managers want in on the action!
- What about silver? Please click here now. Double-click to enlarge.
- Silver was rising in a narrow channel and surged out of the channel. I suggested the surge would reach my $26 target price, and it did.
- Like $2000 for gold, $26 is significant resistance for silver.
- While a pause is likely, the good news is that a bigger channel is now in play. A move above $26 likely sees silver rise to my next target price of $35.
- Please click here now. Double-click to enlarge this important SIL ETF chart.
- SIL is poised to stage a breakout from a gargantuan box pattern that covers the price zone between $15 and $50.
- Like $2000 for gold, $50 is a round number for SIL, and a reaction is expected. A breakout over $50 would launch SIL toward my $85 target zone, which is also the all-time high for this ETF.
- The pause for gold, silver, and the miners right now is both technical and fundamental. From a fundamental perspective, most of the bad Corona news is priced into the market, and nothing important has happened in geopolitics to “juice” the 2021-2025 war cycle.
- The disgusting government debt growth continues unabated, but there are no fresh surprises at the present time.
- Gold was crushed in 2013 by the Indian government’s relentless import duty hikes. Indian demand then was enormous, and the loss of it devastated the market.
- In contrast, Indian demand in the official market is almost negligible right now, and the current monsoon season has been superb. Farmers are expecting the best harvest in many years.
- The current pullback/consolidation in the gold price should see them take decent buy-side action in the physical market, especially if it lasts for several weeks.
- In a nutshell, the $2000 area produced a significant reaction in the gold price in 2011-2013. Today, gold has a solid technical and fundamental floor at about $1800. Reactions in the price are quite orderly and can be bought with confidence!
The Gold Zone: Investors Need a Plan
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