Just A Matter Of Time

Gold’s been laboring in a consolidation pattern for a couple of months. But signs are now pointing toward a break-out to the upside very, very soon.

It’s only a matter of time before gold breaks out to the upside. It could be just a few weeks, days, hours…or at this very moment.

As you can see from the chart above, gold suffered a familiar sharp sell-off in early March as the reality of the Covid-19 pandemic hit home.

I say it was “familiar,” because we saw the same kind of liquidity-driven volatility as the 2008 Great Financial Crisis emerged. Using that lesson, I told Gold Newsletter readers to begin scooping up some of the bargains that had been created by this temporary reaction.

From those over-sold lows, gold made a furious run higher from mid-March to mid-April, and many of the junior mining stocks that we’d picked up doubled or tripled in value along the way.

Then…nothing. Gold settled into a now two-month-old consolidation phase, a classic “flag” pattern, as it digested those gains.

As experienced traders know, if a market is in a bull phase (and gold is definitely in a full-blown bull market), then these types of consolidation patterns usually resolve with a breakout to the upside.

The odds say this will happen with gold at some point, and likely very soon. In fact, with gold up about $12 today, it could be happening at this very moment.

Other technical indicators, including gold’s Bollinger Bands and 14-week stochastic (both of which we’ll cover in next week’s Gold Newsletter) are also pointing toward an imminent breakout.

Plus: The Fundamentals

There’s more, as the fundamental picture is also arguing for a turn higher.

First off, there’s seasonality. Historically, June is typically one of the worst months for gold. I had thought that the tremendous liquidity being thrown at global economies would have overwhelmed this seasonal factor for gold this year, but apparently the need to digest those earlier gains put the metal firmly back into its seasonal pattern.

Second, some of the generous fiscal stimulus programs enacted immediately after the pandemic hit, most notably the rich unemployment benefits in the U.S., are scheduled to roll off at the end of July.

Rest assured, they’ll be extended, even if at a lower level. So this will shower more, ever-cheaper dollars onto the economy, and further support gold.

Finally, we’re seeing not so much a second wave of the pandemic but a resurgence of the first wave as economies open back up. The trend right now is disturbing — especially for those of us with young adult children returning to their social lives, as Covid is spreading like wildfire now that bars have reopened.

Once again, bad news on the pandemic front only encourages the Fed to ramp up their existing programs and invent new ones. I would not be surprised to see the central bank buying U.S. equities and joining the negative-interest-rate club if this trend continues.

Breaking Through

One last point….

As I was preparing the chart above, I accidentally clicked on this old chart in my list showing gold with its key resistance levels.

I had originally prepared this chart back in 2018 to show that that $1,372 high of mid-2016 was the key resistance point, and that after this was surmounted we would see a quick run to the next resistance levels around $1,785.

As you can see, here we are.

The point here is that we need to get past this next line of resistance, but from there on we have clear sailing. The next big resistance will be the nominal record of $1,920, but clearing $1,800 puts us directly in line for a new record high for gold.

In other words, a major new breakout in gold seems imminent, and this could be the next important step toward a new price record.

If you’re not positioned for this run, you need to be. Now.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference

P.S. Many of the best junior mining companies — stocks that had doubled or tripled already off of their March lows — have come back in price thanks to gold’s extended consolidation over the past couple of months.

As I note above, gold and these stocks seem poised for the next breakout, and this may be your last chance to get aboard at advantageous levels.

In short, you need to subscribe to Gold Newsletter right now to get our top picks. (Our July issue, with two new hot picks, will be dispatched next week.)

To get you onboard, I’m offering you another chance to subscribe at half price. Just CLICK HERE.