By Stewart Thomson:
- Gold drifted into the massive buy zone of $4100-$4000 with a key sentiment index (the BPGDM) hitting zero.
- Savvy metals bugs who bet against their own negative sentiment and bought were quickly rewarded with an end to the war in Iran and…
- A massive surge in the price of gold!
- For the BPGDM, the standard RSI and the 14,7,7 series Stochastics oscillators are particularly useful for quantifying a buy zone.
- Both became oversold as the index hit zero… and this occurred as gold edged into the magnificent $4100-$4000 buy zone.
- What now? Will tomorrow’s Fed meet cap the rally and push the price down to the next key buy zone at $3900? Was this sell-off a “final” one, and now a surge to $5600 (and higher) has begun? Is the oil price drop temporary, or is it “here to stay”? What about the overvalued stock market… can the AI boom keep it from collapsing?
- These are all exciting questions, but… not all questions have clear answers. For investors, the most important way to address these questions is to stress test their portfolios against bull and bear scenarios of significance.
- To help do that:
Double-click to enlarge this glorious hourly chart for gold. The inverse H&S target is the $4700 zone! - For this chart, the MACD indicator (20,40,10 series) is often a helpful aid and it’s currently in perfect sync with the positive price action.
- Western gold bugs need to be sure their portfolios are ready to benefit from this potential surge.
- To view the daily chart:
Double-click to enlarge.The oscillators are all bullish and I should mention that a move to $4700 would break the downtrend line that many technicians are focused on… bringing in breakout buying from them.
- Also, note the spectacular bull wedge in play on the OUNZ ETF (shown at the top of the chart).
- For a look at the weekly chart:
Double-click to enlarge. The oscillators are not quite oversold… but please note that they don’t need to be oversold on the weekly chart for monstrous rallies to begin.
- What about the fundamentals of the Iran war and gold? Well, while deranged Hezbollah and Israeli “Gmen” want endless war, in the big picture they are very small players.
There are only about 10 million people in Israel and 6 million in Lebanon. - US Gman Donnie isn’t keen on watching hundreds of millions of Asians go into an economic stone age (and potentially starve to death) simply because a couple of bit players want to keep Hormuz closed and have fun killing each other’s innocent citizens.
- It’s clear that Donnie has much bigger fish to fry than those tiny minnows; Asian economic growth and trade is critical for the entire world, and the window is open to resuscitate it now. This is truly spectacular news for gold!
- Also, the Fed’s new boss Kevin Warsh is watching oil prices plummet with great interest. His focus is core inflation, and unknown to most pundits, a RATE CUT is suddenly becoming as likely as a hold or a hike.
- A daily focus on the big picture is critical for investors as inflation, a wildly overvalued stock market, debt ceiling horror, and empire transition dominate the investing landscape. Thanks!
- Silver is of course “leveraged gold”, and for a look at the daily chart of this awesome metal, Double-click to enlarge.
I highlighted the $70-$60 zone as a “must buy” for silver investors.
- The $90 area is in sync with the $4700 target price for gold, and the price is at the top of that range now. In a nutshell:
- It’s not too late to buy silver and a strong case can be made that $90 will bring only a pause that is followed by a spectacular surge to above the $120 area highs.
- What about gold stocks?
Double-click to enlarge this GDX daily chart. All lights are green; a massive bull wedge dominates the technical landscape and RSI, Stochastics, and MACD are all pointing at higher prices.
- For a look at the weekly chart:
Double-click to enlarge. Stochastics (14,5,5 series) is oversold… for only the third time since 2024.
- Rallies from these rare oversold events tend to be followed by enormous rallies for GDX and its component stocks… and for intermediate and junior miners too. The bottom line: The Iran war is over and gold stocks party time is here. The only question I have for gold bugs in the West is this: did they bring big enough golden party whistles and bull era pompoms, to fully enjoy what almost certainly lies dead ahead!
Thanks! Cheers
Stewart Thomson Galactic Updates
