Gold Miners ETF (GDX)

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»» Gold for the Close of Feb 2020 ««
By: Marty Armstrong | March 10, 2020

The gold is up about 10% this year and of course, they are calling for testing its record high of $1,900, set in 2011. Naturally, they goldbugs claim that the bullion is the anti-Christ to stocks, as investors around the world gravitate toward a sector for safe harbor. They always tout that “gold is responding to systemic financial risk” which they are now redefining as no longer inflation and quantitative easing, but more simply as financial risk, geopolitical, and the impact of Covid-19. As always, they just make up excuses to fit the movement.  What they never address is the fact that during the Great Depression that they rely upon to make claims that gold rose when stocks declined, what they are oblivious to is the fact was gold was MONEY (CASH) back then because we were on a gold standard. If that reasoning were correct, then silver should have risen as well. However, silver decline from 1919 into 1932, because it was a commodity and cash, was king - or at that time gold.

It is important to understand the real reasons and not nonsense. Far too many people buy the nonsense and then lose their shirt. We are no longer on a gold standard so gold will respond like silver did during the Great Depression since it is no longer cash.  The rally into yesterday touched the top of the Breakout Channel which stood at 1703.12 and the market peaked at 1704.30.

Gold was above two of our Monthly Bullish Reversals in February and then crashed for the close to avoid both. We still see that the market can test the mid-1750 level perhaps in May. But a sustained breakout would have been indicated by electing the two Monthly Bullish Reversals in February after exceeding them intraday.

We have a Directional Change this week and then the next key turning point should arrive the week of 03/23. As long as gold holds the 1445 level on a monthly closing basis, then we may yet see new highs in the May period. Keep in mind that 1699 will remain as important monthly closing resistance.

The ultimate sustainability for gold long-term is not as the anti-Christ to equities. Because we are NOT on a gold standard, we should expect gold to rise with equities as capital flees government debt on a global scale. That is when we will see gold really take off. This has nothing to do with the coronavirus or the decline in equities. Those are NOT things that will make a sustainable bull market in gold.

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