E Gold Makes A Pit Stop At $1,500. What's Next?

Ever since gold found its bottom at the $1,150 level, its price action against the U.S. dollar has been interesting, to say the least. I don't want to sound like a conspiracy theorist, but isn't is interesting how gold has moved in such an orderly, stepwise fashion?

Courtesy: Barchart.com

First, it moved to the $1,300 level, and then consolidated for a while... then to the $1,400 level, and then consolidated... and then to $1,500, and it's consolidating again. I'm not saying that the next level should be $1,600, but it would be foolish to ignore the pattern here.

Beyond the technicals, there's no shortage of catalysts to push the gold price higher:

  • Trade-war brinksmanship
  • A hard Brexit
  • The potential for demonstrations in Hong Kong to spiral out of control
  • The slowing global economy
  • The sovereign-debt bubble (approaching $23 trillion in the U.S.)
  • A Federal Reserve that will - because at this point, it must - slash government-bond yields
  • Multiple yield-curve inversions
  • Russia, China, and other nations accumulating gold (China, for instance, added 99 metrics tons of gold to its reserves as of the end of August, bringing China’s total gold holdings 2,141 metric tons)
  • A currency debasement war in which both the American and Chinese presidents want cheap (and therefore more attractive) fiat money

There are more catalysts, but that's all I could come up with off the top of my head. In any case, Frank Holmes' price target of $10,000 for gold is, in my estimation, bold, unpopular, and entirely warranted.

Disclosure: David Moadel is not a licensed or registered investment advisor, and has no position in any securities listed herein.

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Beating Buffett 5 days ago Member's comment

Nice.