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Gold Market Update - Major Breakout Marks Start Of Rercord Breaking Bullmarket...
By: Clive Maund | March 11, 2024

It’s a very good time to review gold’s major breakout because, in addition to breaking above the key $2100 level that we had for some considerable time noted was key, it has broken above its intraday highs of early December at just above $2150. Gold is now on it’s way and nothing will stop it because it is simply rising to compensate for the exponentially growing ocean of dollars created by the Fed.
Some fear that gold will drop because the dollar index could continue to rise for a while due to countries and other dollar debtors struggling to redeem their dollar denominated debts by purchasing dollars, but with regard to this the crucial point to grasp is that new dollars are being created at such a fantastic rate by the Fed in order to backstop the failing Treasury market and to fund Israel and the Ukraine etc that gold has no choice but to go up to compensate. We are therefore likely to find ourselves in a situation for a while where the dollar and gold ascend in tandem. Eventually the debt market will blow to smithereens at which point gold and silver will go vertical and skyrocket.

On the 6-month chart for gold in dollars below you will observe that gold has now broken clear above the key resistance at $2100 which stopped it in its tracks early in December, and in addition to that it has in recent days pushed on above the residual resistance at its early December intraday highs at $2152.30 which confirms that the breakout is valid. You may recall that we were wary for a while because of the horrible deterioration of the Accumulation line in January, but that has now largely been made good by its strong recovery over the past couple of weeks mostly due to the persistent strong upside volume on this breakout drive. Although now short-term overbought because of its steep ascent this month which could result in its consolidating for a while or reacting back somewhat, any such reaction is unlikely to be more than trivial due to the picture now being so positive for gold both fundamentally and technically and to the extent that it occurs will be viewed as an opportunity to buy various PM stocks or add to positions.



We can clearly see why the $2100 level was so important for gold on its 5-year chart, for this level had turned the price back on several occasions since the mid-2020 peak. We can also see on this chart that the price and moving averages are in most favorable alignment and that it can get a lot more overbought on its MACD indicator than it currently is. Also shown at the top of this chart is GDX (Market Vectors Gold Miners ETF) which makes plain how PM stocks have grossly underperformed gold itself , especially over the past year. This is very bullish, because when investors are excessively pessimistic towards the sector they favor gold over stocks, reasoning that it is less risky. We can therefore expect this divergence to narrow and with gold going up, it means gold (and silver) stocks should go up more.



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