Gold Has Only One Resistance Point Left: The All-Time High

Mish

On a monthly chart, the last resistance point for gold is the $1923 peak in 2011.

Why Gold?

Tensions of all sorts are on the rise in the US , EU, and globally: Covid, employment, fiscal stimulus China (military and economic), and massive increases in money supply by the central banks, especially the Fed. 

Cup and Handle

The Cup and Handle is a technical formation. A handle is formed on a pullback before the pattern blasts higher.

Of course, there may be no handle. Gold may just blast higher (or collapse) but fundamentals suggest higher, perhaps after some consolidation.

Gold vs Faith in Central Banks

Gold vs Faith in Central Banks 2020-01-01 PNG

Gold does worst when faith in central banks is the highest. Greenspan's great moderation is the best example. Greenspan was considered the great "Maestro" who could do no wrong.

That theory crashed to earth in the DotCom bust. We have now had 3 major economic bubbles in 20 years.

If you currently have any faith that Central Banks have things under control, then please explain where you got that notion.

It should be obvious that the Fed is boosting financial assets but that is not going to create jobs or cure covid. 

In short, the Fed is blowing bubbles, many believe on purpose, and gold has responded to the stress. 

I do not see a reversal in Fed policy. Do you?

Mish

Comments (46)
No. 1-17
UrbanDigs
UrbanDigs

Global fiat will be printed like crazy when the next shoe drops. Quick rip here, But after that gold may be dragged lower on a selloff if it gets as deep as I think it may later in year. Then it will really fly after that. Inflation will be an issue for first time in 40 years mid decade

Tony Bennett
Tony Bennett

"I do not see a reversal in Fed policy. Do you?"

...

When all you have is a hammer ...

Anyways, when was the last time a politician / public official in public comments say ... "uh, there is nothing more we can do ... we did our best ..."

The public demands DO SOMETHING.

And "something" they'll do ... hammering away with more QE ... and NIRP.

C136
C136

A good rally so far, though gold bugs showing up in the media and headlines about the rally have me guessing we will see a pullback soon. In order for gold to take out $2,000 it will need a push, like the Fed ramping up its balance sheet and/or hostilities w China and Russia heating up. Overall, I think the next 5-10 years will be favorable for the metals. Negative real rates for the foreseeable future, more asset managers recommending exposure and T$ deficit spending long term (especially when DC starts bailing out the private and public pension funds).

Roadrunner12
Roadrunner12

"Gold Has Only One Resistance Point Left: The All-Time High"

Gold is at all time highs in every currency except the US dollar. Hard not to believe new All-Time Highs for the US dollar not far away.

"I do not see a reversal in Fed policy. Do you?"

With respect to interest policy, Im tempted to use a quote someone said with a twist. Instead of saying "not a financial crisis in our lifetimes", Im wondering if "not an interest rate increase in our lifetimes" is the reality.

US debt currently federal debt is $26 trillion, probably 35-40 trillion by 2025. Every country in the world is awash in debt and climbing. Not sure what the end game is here but wondering if interest rates will increase in my lifetime??

Casual_Observer
Casual_Observer

And after Covid-19 ends gold is going back to place it started. Gold is not a flight to quality but a flight to safety.

michiganmoon
michiganmoon

Mish and others, 2 questions. (1) If gold will do well, do you think gold miners will continue to do well as well. In theory they should make more profit off of their activities making their stock more attractive. (2) Silver has a lot of industrial use, but a lot of people still see it as a monetary metal and the average Joe can see themselves buying a bigger amount than they can of gold. Should silver see benefits from this as well?

TimeToTest
TimeToTest

My big question is- if the market pulls back substantially will it suck gold and silver with it?

Corvinus
Corvinus

All time high? Wasn't it around $2246 in 1980? Inflation adjusted that would be $7,026.85 today.

Scooot
Scooot

At some point in the future I expect to be informed by my bank they’ll be charging me interest on positive balances. Some are already doing it for Euros. I wonder what Gold will cost when they start doing it for Sterling & Dollars.

AWC
AWC

So, buy high, with the intention of selling higher,,,,or even holding?

I prefer to purchase my insurance policies at a discount, thanks.

Get back to me when it gets to “Deal of a Lifetime “ 2001 prices again. Or at least back to the cost of extraction?

tokidoki
tokidoki

The stock market is a better indicator of the market's faith in Central Banks.

Mish wants to have it both ways.

Mish
Mish

Editor

Hui generally acting well but not today
When miners underperform the metal - generally not a good sign.

MATHGAME
MATHGAME

I am very far from an economics expert, and terminology is tricky, but I thought gold is money, not currency?

"Gold is money, everything else is credit"

"Good money is gold, bad money is currency"

Or is it that "Money can be currency but currency is not money"

anoop
anoop

bradw2k
bradw2k

Lots of bubbles around, at some point there will be a bubble in gold too, no doubt about it. Just may not be this year as many are expecting and hoping.

The "bubbles" are packs of rats scrambling on the decks of the Titanic to be higher than everybody else, as we sink into the icy waves of the anti-roaring, positively-sucking 20's. (Mixed too many metaphors?)

Dodge Demon
Dodge Demon

Mish, I remember a frequent poster you had about 11-12 years ago, back in your js-kit days, going by the name Gaudia Ray. He called the 2008 collapse with enough timing to seem like he had a crystal ball. He also was big on silver, but bigger on gold. He said he would need all of the space to in his Suburban to carry $1,000,000 in silver, but only a briefcase to carry $1,000,000 in gold. He also said something that seemed very strange at the time - he had a business manufacturing certain specialty woven fabrics and expected to make a huge amount of money off of it via government contracts.


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