The other day I did a pretty long video going over long-term charts for gold, silver, bonds, and the stock market. In my view gold and silver right now are the best investments to make for the coming years with the best entry point. I’m bullish on commodities and energy, but they have already gone up so much that I can’t say they have a great entry point a this moment. At the same time I’m bearish on bonds and see the US stock market as dead money too, with most stocks inside the NYSE already trading below their 200-day moving averages in bear markets of their own.
If you missed the video you can watch it here.
On Friday and Monday we saw gold make a jump right back up to it’s long-term resistance zone in the $1880-$1900 area and then yesterday it fell down off of it as you can see from this chart.
I showed you the long-term chart in the video, but this chart gives a closer look as it is just going back a year. This $1880-$1900 area is the point of its upper 200-day Bollinger Band and its highs of November and last May.
I believe the next real gold bull run through this resistance zone and beyond is going to be due to inflation and people shifting money out of bonds, which some are already doing with bonds falling. However, gold also has a tendency to make short-term moves due to geopolitical tensions and then dump.
Yesterday, the stock market rallied on supposed Russia/Ukraine peace news and gold fell. In my view Russia was unlikely to ever invade Ukraine in the first place, but the tensions over Ukraine are likely to continue for years. The war inside the county has been going on for seven years now and there is no reason that Russian can pull some of its troops and then do this again to squeeze them more or move into one of the separatist regions in it. I’m not trying to predict it how this is going to play out, just to say this is going to remain a hot spot in the world for years and has already been one for awhile.
The important thing is I think the gold drop yesterday actually isn’t that bad so far and sets it up so that this dip could actually end up being the last one off of resistance. In a bear cycle for gold it would have fallen more than it did Tuesday on peace talk. We’ll have to see what happens here in the next few days.
At the same time, at this point, silver may have actual upside potential for the risk than gold does. Silver isn’t that much further away from its lows of December than gold is and would have more upside to it in a gold/silver bull run – something to think about.
One final thought for today on gold. Since New Years it has begun to outperform stock market. Look at the GLD/SPY ratio on the bottom of this chart.
The ratio surged in March of 2020, but gold didn’t actually go up that month when the stock market crashed – it simply fell much less than the stock market did, which to me is a demonstration of why it is less volatile than the stock market and at this point less risky from an investment standpoint.
This time this ratio is also starting to go up while the market is weakening, it looks like the makings of an upward trend that will last for a long time.
-Mike
