Metals: The Most Golden Zone to Buy
2024.11.26 17:00
The financial markets action has been quite volatile since the election of “wild man” Trump and his team… and it could get wilder if tomorrow’s PCE inflation report shocks the market.
On the long-term weekly chart for , there is no significant volatility or price action of concern, but gold is not in a significant buy zone either, let alone one for silver and the miners.
Here’s a closer look at two key weekly chart oscillators; RSI (14 series) and Stochastics (14,5,5).
For gold to be defined as being in a solid “across the metals board” buy zone, it should be arriving at significant previous highs or lows on the weekly chart, and doing it with the RSI oscillator down to at least the 50 area, with Stochastics near the 20 zone.
The last time that occurred was in the $1810 area… and of course the rally from there was spectacular… most notably for supreme money gold.
Successful investing in all major markets requires substantial investor patience. That patience gets put to the test when the news changes dramatically and the daily chart action gets wild.
The daily close chart for gold. The $2450-$2300 buy zone of significance is clear.
It’s important for investors to have fiat cash placed with a metals dealer or broker in advance of a price sale into a zone to buy more gold. The same applies to silver and the miners.
Open orders for precise purchases can be placed with brokers and some physical metal dealers accept them too.
The news is always much more negative in a buy zone than during a phenomenal rally. If the investor fails to prepare for that change in the news ahead of time, their intestinal fortitude can falter when it actually occurs.
They get left behind, emotionally demoralized, predicting lower prices, and failing to buy… while the major banks and most citizens of China and India eagerly gobble up all the gold.
What about fundamentals like Trump’s treasury pick, and ceasefires in Gaza and Ukraine? Are these things negative for the price of gold?
Well, most global de-dollarization has been about the weaponization of the dollar and that’s unlikely to end. Also, the Chinese economy and stock market are likely to stay weak in the medium, creating additional citizen interest there in gold.
In India, the import duty has been chopped dramatically and the nation’s GDP growth is strong. The current gold price sale will be bought aggressively by millions of citizens there, who I long ago dubbed the world’s mightiest “Titans of Ton”.
Depending on what inflation is doing, falling US rates can be either a tailwind or a headwind for gold. Currently, inflation has been fading and rates look set to fall away from the neckline of a loose but large H&S top pattern.
That’s likely going to see real rates decline, which is going to make fear traders in the West buy more gold.
A daily focus on the big picture is critical for investors as inflation, recession, the 2021-2025 war cycle, a wildly overvalued stock market, debt ceiling horror, and empire transition dominate the investing landscape.
The long-term dollar versus gold chart. I’ve been suggesting a bear flag for the dollar could form and it might be doing so now.
If it fully forms, it would likely be completed near the key $2450-$2300 buy zone for gold.
What about the miners? The GDX (NYSE:) weekly chart. A move to $2450-$2300 for gold would be in perfect sync with handle formation on this huge C&H price pattern.
Note the Stochastics (14,5,5) oscillator action at the bottom of the chart. It’s getting closer to the oversold zone and GDX is a bit ahead of gold in that regard.
The BPGDM sentiment index chart. Key buy zones for the miners tend to feature sentiment indexes like the BPGDM moving down to at least the “midships” 50 area, but I prefer to see them in the sub30 area before I suggest investors buy with size.
The BPGDM has worked off its frothy overbought situation though, which is positive.
How best to sum up the current state of the metals market today? Well, from here, gold likely has the same odds of going back to the $2790 highs as it does of going down to $2450-$2300, but it’s only that key lower zone that gold stock investors of the world should be most prepared for… and eager to buy with size.
