Although we have seen a few wild swings in the stock market so far this week, not much has happened with gold. When the DOW dumped on Monday gold barely dropped at all. Gold is actually trading less volatile now than the stock market. However, the drop gold had in June is making it so few people are paying attention to it. It is things that move a lot up and down, such as Bitcoin, that fascinate the masses that make up the bulk of new traders using such things as the Robinhood App.
However, this month gold appears to be putting in a nice entry point as it it is going through a sideways stabilization period much like it did last March.
As you can see in March, gold traded in a range of $1670-$1750 until it turned up in April. Now it is trading in a one hundred point range drifting between $1850 and $1750.
At the same time, the overall commodity complex has now firmed up, after making a peak in early May.
As you can see, the broad based GCC commodity ETF had an incredible run until it lost momentum at the start of May. It didn’t collapse, but instead drifted in a range, forming a new support above $21.00.
Both the May and June weakness in commodities and gold coincided with the rise in US Treasury bond yields. Everyone was talking about that a few weeks ago. Now no one is, because it ended.
TLT trades opposite to the ten-year Treasury bond and as you can see its rally in May and June coincided with the drop in commodities and gold.
As you can TLT, peaked this week and dumped yesterday.
What does this mean?
You don’t need to worry about rising rates hurting commodities and gold anymore. In fact, if anything the opposite will happen.
This is one reason why I remain invested in gold, silver, and mining stocks. It may also be why my top stock pick of the month is up for the month while many fad stocks got smashed this Monday. For info on it go check out the update I did on it yesterday here.
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-Mike
