Gold Shorts/Manipulators get even
Struthers Report V29 # 13.5
Yesterday I commented how rare it was for gold to be pushed higher in thin Sunday trading, well the shorts or the Managers of Economic data (Fed) did not waste the opportunity either, as they pushed gold back down late Sunday and into the wee hours of Monday morning, before the Comex gold contract normally has more liquidity during North American trading (more bids).
Gold hit a high of $2130, late Sunday evening and by 1:30 AM Monday they had the price back to $2065. By 9AM they had the price back to where it opened on Friday morning around $2030. This is the February Comex contract, now the most active.
There has mostly been ETF outflows this year but, investors rushed back into the popular SPDR Gold Shares ETF GLD with net inflows of more than $1B in November, as gold prices rallied. Lets see if this continues. Thus far we have mostly short covering and a central bank driven rally.
There will be much more volatility in 2024 but a lot to the upside. What most market followers fail to realize is how important making gold a tier one asset has been 2023. This is the main reason central banks were buying in record amounts. It is the only tier one asset on a banks balance sheet that cannot be printed. Banks have taken a bath holding US treasuries or Euros, whatever currency because the quickest rise in interest rates in history devalued their price.
Central Banks can now value gold higher, that some refer to as a reset and it will help offset the value lost holding fiat currencies through the rate increase. The banks know dam well that rates will not come down enough, if they do at all, to bring back whole their fiat treasury holdings. I expect rates could come down to maybe 4%, but that would be about it in 2024.
Again I want to stress that I don't really predict prices and times, but price targets or levels I am watching and time frames. There was a lot of hype Monday about gold making new highs, but this meant little to me and really not to the market either.
I am watching $2150 and believe we have to see a solid close above this to break the physiological barrier to pave the way to new highs. Monday morning or Sunday evening price action is not what I am looking for, nor was it that important, other than maybe like a warning shot across the bow!
Watch out, I am coming and going a lot higher.
As you can see, gold stocks did not give much notice about the new high, because they did not get that physiological break out. As you can see on this chart of the HUI gold bugs index, the stocks did not even get close to their 285 May high of this year and a long way below the 2020 peak of 375 when gold hot a fresh all time high of $2063 back then.
Most interesting is a long term wedge pattern that I expect will result to a break to the upside in 2024.
This next chart compares gold (GLD etf) to the Gold bugs HUI index. I used a long term chart to show some previous increases in the gold price. Normally the gold stocks out perform gold as you can see in the previous three up moves shown by the blue line. However, the last move in gold in late 2022 to the 2023 highs, gold stocks lagged. Note that we have a very large gap or lag in the gold stocks, the black line on far right. This indicates how out of favour gold stock are. The negative sentiment has been at extremes this year. To me that is a clear signal to buy, when most are afraid and negative. The gains in gold stock in 2024 is going to be amazing and I expect we will see triple digit % increases, like some previous bull moves.
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