Rush To US Assets Could Lift Gold And US Dollar

I have conflicting views concerning the US economy. Many of the leading economic indicators I follow have been showing no signs of a potential recession until recently. It is hard to know how much of this data has to do with the prolonged government shutdown. Moreover, the first quarter has been traditionally weak over the last several years.

I’m waiting to see if things begin to rebound in Q2. The most recent non-farm payroll number of just 20,000 jobs is concerning, but it is accurate? Again, I’m not sure how much of that had to do with sentiment and the government shutdown.

Below is a chart depicting auto loans 90-days+ past due. As you can see over 7-million Americans are delinquent on their payments — more than the 2010 peak. If the economy continues to slow, we could have a real mess with auto loans.

All in all, I believe precious metals will be much higher in the coming years. I don’t know if gold will breakout this year or next year, but I’m confident it will at some point.

The premiums on graded numismatic gold coins are incredibly cheap. You can buy a graded PCGS (MS 62) gold coin that’s over 100 years old for the same price as a newly minted 2019 Gold Eagle. How is that possible? That tells me investor interest is incredibly depressed and demand is low, that usually signals a good time to accumulate.

There are some great bargains out there for long-term investors.

US DOLLAR WEEKLY

The weekly chart formed a bearish engulfing candle. Prices are rangebound and need a weekly close above 97.70 or below 94.60 for direction.

A breakout above 98.00 would target 100 -103. A sharp move above 105 in 2019 would imply a potential runaway move in the dollar to 120+.

A breakdown in the dollar below the January 94.64 low would presumably provide the fuel to propel gold above $1380.

GOLD

We have a brief flag type consolidation. Closing below $1290 will establish a C-wave decline to the $1240 – $1255 area by late March. Consecutive closes above $1320 would imply a different outcome.

SILVER

Closing below $15.10 would imply a C-wave target near $14.50.

XAU

The XAU is poised to close the 69.00 gap.

GDX

I’m looking for a decline in GDX to fill the $20.75 gap.

GDXJ

The gap near $30.00 in GDXJ seems to be the next logical target.

SPY

I have conflicting views of the stock market at the moment. On the one hand, I see slowing economic growth that supports a 2019/2020 recession and bear market in stocks.

On the other hand, I see the potential for higher, possibly much higher, stock prices if money flows to the US increase as emerging and European markets continue to weaken. Everyone else remains in easy money mode while the US increased rates 9 or 10 times since 2015.

A rush to US assets would presumably cause the Dollar to rise significantly. Gold would rally with the Dollar in that scenario.