Metals And Miners Consolidate

The last few weeks have been challenging as metals and miners consolidate. When prices are on the verge of a breakdown – they stop and suddenly reverse higher. That happened several times around the $1920 level in gold. Eventually, the $1920 level in gold should break and trigger a speedy decline to $1750 – $1800, and perhaps the next six-month low.

The next two months could be volatile as markets begin to factor in the November election. I think a Trump victory would be good for the stock market. However, much would depend on who controls the House and the Senate. A Biden win would be bad for stocks as he would eventually raise taxes. Gold will benefit from either candidate but could sell off during another “all-out” liquidation.

SUPPLY SHORTAGES

I think supply shortages are here to stay. I see the potential for hoarding industrial metals like silver, platinum, and palladium as manufacturers aim to secure resources. Consequently, finding quality “investment grade bullion” could become problematic. I think premiums on one-ounce Gold, Silver, and Platinum Eagles could go for double their spot price or higher during this decade.

Currently, the gold cycle indicator is at 281. It should drop below 100 before indicating the 6-month low.

US DOLLAR

The dollar dipped briefly below the 92.00 level on Tuesday but quickly recovered. Prices continue to grind out an intermediate low. The dollar should rise into the elections as investors step to the sidelines awaiting the results.

GOLD

Gold has tested the $1920 area several times, and each time prices bounced. The rebounds are getting weaker, and eventually, prices should drop below $1900. Typically, prices break hard once a support level finally yields. A sudden collapse to $1750 – $1800 is possible in this scenario.

GOLD 2016

We had a similar pattern in gold before the 2016 presidential election. Prices tested the $1310 level several times, with each bounce getting smaller. Eventually, prices broke and broke hard.

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