Notes From the Rabbit Hole

Gold’s Vulnerability Remains…

The problem is that most people – and that includes many powerful hedge funds (who most people wrongly label “smart money”) – think that global strife like the US/North Korea nuke standoff is a fundamental consideration for gold. It is not. Gold is a safe haven sure, but not from war and human extermination.

What, are you going to hike over from your little uni-bomber shack and give me some fraction of an ounce for my goat milk and eggs? I’ll be down at whatever local saloon is still standing drinking away my collateral.

Gold is a safe haven from the fallout of monetary shenanigans. But insofar as the mainstream media continue to beat this drum and even intelligent sounding analysts, and the likes of Goldman Sachs beat the drum, then gold is vulnerable to the time when the world does not end, which by my watch could be any time now.

The ‘Sum of All Fears’ Fuels Gold Rally –Bloomberg

Actually, to Bloomy’s credit they list a credible reason for the gold rally first…

The “sum of all fears” has restored investors’ faith in gold.

Money is piling into gold amid concerns over the U.S. economy that could slow the Federal Reserve’s plans to raise interest rates. Adding fuel to the rally are growing U.S.-North Korea tensions. Last week, investors poured $1 billion into the largest exchange-traded fund backed by bullion, the most since mid-2016. That helped gold close above $1,300 an ounce for the first time this year.

But to the extent that North Korea is in the bullion price it is vulnerable. And there has been a lot of hype about that over the last few weeks.

Now, I am doing very well with this precious metals rally. I have all the positions I want and will be looking to take some profits or at least hedge (we have an upside target on HUI and key support as well, since I think any coming pullback is likely to be a buying opportunity).

Don’t get the point of this post wrong, gold is bullish. Here’s my simplest chart (a monthly) to make that point. Gold broke a trend line that is the top of a wedge-like consolidation. What’s more, the noted resistance area is the line of demarcation between gold’s potential and an actual break into a confirmed bull market (a higher high is key). But until then, it is resistance.

I don’t want this to be a place that adds to the noise in your head. I want it to be a place of relative calm, and of rational expectations.

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