A correction at this point would not be surprising or unwelcomed. Gold is obviously over-extended, with an RSI in the low 80s. Past instances where the RSI had reached these levels have often marked price peaks followed by significant corrections, but there have also been many instances where only a brief pause in the rally has followed.
It’s important to note that the two previous instances this year of the RSI reaching these levels have been nonevents, with the gold uptrend resuming in relatively quick fashion.
The next big target, of course, is the next big number — actually the next huge number — of $2,000. A major financial media reporter just asked me if I thought gold would clear $2,000 this year. Well, I told her it could do that this week.
Absolutely nothing gold does at this point will be surprising.
Beyond $2,000, there a bunch of targets for the market to aim for, but this is truly uncharted territory — unless you use inflation-adjusted numbers. In that case, the old high of January 1980 stands tall. In today’s dollars, that’s equivalent to over $2,800.
And given that there’s no limit to monetary accommodation at this point…that in a time of negative interest rates and trillion-dollar coins no idea seems too crazy to contemplate…and that negative real rates of interest are not only possible but necessary…it’s easy to contemplate gold prices significantly above $3,000.
Further evidence: In the Fed’s most recent meeting, concluded this past Wednesday, they essentially confirmed that it will be business as usual — or “unusual” as the case may be — going forward. Chairman Jerome Powell stressed that “We’re not even thinking about thinking about thinking about raising rates.”
I’m not sure how much more emphatically he could say the Fed’s got our back.
With this last little element of uncertainty removed, gold quickly resumed its march higher, although there’s been some further waves of selling that must be absorbed.
Adding it all up, I think the move we’re witnessing in gold has to represent more than short-covering and hot-money trading. I believe we’re seeing the effects of significant shifts in allocations from big, global investors to gold and silver.
There are figurative oceans of liquidity sloshing around the world searching for a home, and gold is but a small tidal pool in comparison. Just a small finger of that global tide finding its way into gold’s backwater could swell it many times in size.
To some extent, this is what’s happening right now.
To understand why big money is flowing into gold right now, we need to review what’s happened since the market mayhem of early March. And that’s precisely what I do in the August issue of Gold Newsletter, published just yesterday.
I also review the technical picture for not only gold, but one other metal (not silver) that just shifted fully into bull-market mode. (You won’t read about this elsewhere.)
Plus, I review dozens of top junior mining stocks, many of which are multiplying in price right now, spinning off huge gains for our readers.
And most importantly: This month I reveal fully six new stock recommendations, including…
Gold posts a blistering rally to new record…
