Dave Erfle – Gold Has Several Key Factors Stacking Up For A Potential Breakout Higher
Dave Erfle, Founder and Editor of The Junior Miner Junky, joins us to discuss the continued move higher in the precious metals rally over the last few weeks, fueled by banking uncertainty and expectations that the Fed tightening cycle is nearing its end. Dave brings up a few key factors that are stacking up for a potential breakout higher in gold as we approach the month-end and quarter-end closes this Friday. Gold and some of the mining stocks are forming ascending symmetrical triangles, along with a 12 year and smaller 3 year cup and handles, with a propensity to break out higher out of those chart patterns. In addition there is a fairly bullish set up on the COT Commitment Of Traders reports. One more key factor is that recently silver and PM mining stocks have started to outperform gold again and are following in this continued leg higher in March.
We spend the latter part of the discussion pointing out how little generalist interest there still is in the sector as gold approaches a potential breakout, and what may cause an influx of new buyers to come in and push prices higher. Dave feels once the $2000 level is a solid floor in gold pricing, that more institutions and investors will start getting more interested. We also review that it may just be more generalists waking up to the outperformance of gold across the board over most other asset classes from stocks, to bonds, to energy, to commodities, to currencies, that causes more investors to get a small allocation to the precious metals sector.
Click here to visit the Junior Miner Junky website to follow along with Dave’s comments on PMs and the stocks he is buying or selling.
Cleveland Fed PCE nowcast for February is pointing to headline coming down pretty fast but core staying a bit sticky.
Cleveland Fed has been pretty good on their nowcasting– not perfect, but usually pretty reliable. So I think we might see this as dovish data depending on how the core works out.
I’m hunting for ways to express both gold momentum and some speculative fervor that might come from a dovish data point. Now I’m the guy posting about I-80 lol
Here’s my noisy chart of IAUX:
I also tend to try to snag a spike up to take profit on divergence after a big move up. When things get way extended above the five day EMA into previous highs/resistance.
I also use the 20 day to protect my capital. Couple daily closes under there. Each time I take profit I tend to keep more and more shares back. This might be too active of an approach for many though.
Financial Media Surprised by the Obvious – Ep 882
Peter Schiff – Mar 24, 2023
Gold has a beautiful pennant in play with a target of about $2,200. Watch for elevated breakout volume.
Wow, that bollinger band is so wide and expanded. Crazy. The pricing pattern of the candlesticks are different, but isn’t there also a risk of it making a similar top like in Feb of last year, when the bollinger bands were similarly stretched to the upside?
I see your annotation note that the B.B. has not curled down yet, and is pointing up, but it just looks similar to the run to the upside about a year ago.
I guess the difference being that pricing is consolidating sideways at present inside of the compression triangle pennant, so it could still break up higher, and make another surge higher before running into the B.B. again and then rolling over, and a move to $2,200 to a new all-time high would be awesome (and I’m definitely rooting for that outcome).
It’s just that it could also make a break lower, coming out of that pennant consolidation sideways, and if that happened it would be follow through lower from the initial touch of the upper BB 2-3 weeks back, and the B.B. would then start turning down.
I guess there is always a bull and bear case on any chart, and while there has been a lot of positive momentum in the PMs lately, it does seem like a more positive setup now than in Feb of last year on that big run higher, that was quickly reversed back down.
The probability is still a break to the upside as you noted, but after having the rug pulled out from almost every move higher for the last few years in the PMs, it is hard to shake the notion that this bullish leg higher may have already started running out of steam again. Again, rooting for the breakout scenario big time, but prepared for the breakdown scenario if we need to see gold regroup and gather more strength for the big breakout higher. Either way, gold is poised to eventually break to new all-time highs this year, so whether that happens in the next few weeks, or next few months, is really not long to wait either way.
I wouldn’t call the Bollinger Bands stretched because of the implication of that word in chart analysis (i.e., the end is near) but it is “wide and expanded” which is typical during strong moves.
If it tops here it would be unlike the top of February last year. That top happened with a 65-70 dollar spike above the BBs which was also $45 above the highest level reached by the upper BB. The current move has had no comparable spike above the BBs and the upper BB is now significantly higher than the price high reached last week. In addition, following last year’s top price went straight down for a 9 percent drop in 6 days. There was no pennant or even an attempt at a bullish consolidation. It just fell and was below the 20 dma as well as the KAMA in 5 days. Currently we are 6 days past the high yet gold is down just 2 percent (not 9 percent) and hasn’t even touched its 20 dma or KAMA. A MACD sell signal was obtained on the 6th day last time but this time the MACD is not close to selling and is even beginning to expand again.
This move simply has a lot more going for it and that will still be true even if the pennant fails to deliver.
Thanks for that response back Matthew. Good points on the differences in both the amount of the move higher above the upper BB last year, and the severity of the move back lower last year, in comparison to the pricing action we’ve seen since touching the BB recently on this move higher. Yes, this move is much more constructive than last year’s attempt and has a different tenor to it. Much appreciated.
Weekly Part 1: Hartnett Says Rate Cuts Coming and Inflation With Them
By: VBL – Tuesday, March 28, 2023
[What Hartnett is describing below] sounds awfully like calling what comes next “hyperinflation” without actually calling it hyperinflation, but that’s to be expected: nobody on Wall Street is allowed to call a spade a spade, and we respect Hartnett for at least coming close.]
Rate Cuts Are Likely Coming
Sell Stocks As Rates Top
Easing The Dollar to Death
YCC, Inflation, and Precious Metals
The Market Wants A Pivot
“Fixed” Banks Have No Money to Lend
No More Credit Cards to Rescue us
Summing It Up
Interesting interview with Charles Nenner MD.
Audio file (MP3): https://tinyurl.com/5n7d9ucm
Gold: Could it really be?
Freeport LNG news: https://finance.yahoo.com/news/1-us-natgas-flows-freeport-113902340.html
Nat Gas has lower new bottom nearly every week and I keep hoping for an entry LOL
Bought BOIL, first tranche, this morning.
Could go lower, but limited.
Brave soul. May just take the plunge on the bungee stock myself
Looks better than short covering, so far.
Still looks OK, but flat for now.
“Economic Headwinds Are Building” – Jeff Gundlach Warns Of Imminent Recession
Tuesday March 28, 2023
Bond King’ Jeff Gundlach warns of an imminent recession – within the next few months – as the yield-curve suddenly steepens…
“The economic headwinds are building, we’ve been talking about this for a while, and I think the recession is here in a few months,” Gundlach said Monday during an interview with CNBC.
“All we really need is the unemployment rate to go higher.”
In fact, the 5s10s spread actually uninverted last week… As Gundlach previously noted:
“In all the past recessions going back for decades, the yield curve starts de-inverting a few months before the recession,” adding that,
“I think it’s within four months at the most. Almost every indicator is flipped into high probability. The only one that hasn’t is the unemployment rate.”
“And with reference to that, Gundlach previously pointed out that at 3.6%, the unemployment rate just crossed back above its 12-month moving average…”