Stocks Crash, Gold And Bitcoin Surge Higher

This won’t be the last time that you read this headline.

The stock market is crashing again to start the last trading week before Christmas. The Dow and S&P 500 both declined by 2.1% today, while the Nasdaq is down 2.3%. The major drivers of this market decline are slowing growth projections, an escalating trade war between the United States and China, as well as rising interest rates.

Investors aren’t finding many places to hide during this correction. It has hit not only the equity market, but the bond market and real estate market are showing signs of weakness as well. Even defensive stocks that typically do well during market corrections are in the red today. The decline is broad-based, not an isolated event driven by a particular sector. This should be very concerning for investors that are not properly hedged.

Could this be the bursting of the everything bubble that our central planners inflated over the past decade? Are there any safe havens or sectors offering value during this market panic?

One sector that has not been inflated to all-time highs is the precious metals market. The gold price at $1,250 per ounce is down roughly $700 or 35% from the 2011 highs. But it has been rising lately in the face of this overall market correction.

Gold is up another $10 today to $1,249. It is bullish to see gold bounce back above $1,240, which is a key technical price level on the charts. We would ideally like to see this prior resistance level turn into support.

New bullish trend channel developing on gold chart.

The gold chart has turned from bearish during most of the year to bullish in the past few months. We are seeing the development of a new bullish trend channel on the price chart, characterized by a series of higher lows and higher highs. We have also seen the break above $1,240 and an RSI momentum indicator that suggests the potential for more upside before it becomes overbought. 

The next major technical milestone would be for gold to rise above multi-year resistance at $1,375. I believe such a price move would confirm the next bull cycle is underway and set the stage for a move to new highs above $2,000 per ounce.

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Lastly, we believe that gold and bitcoin are offering very attractive entry points and will be top performers in 2019, after a rough year in 2018. To view our top picks in these sectors, plus the ...

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