Reference yesterday’s pre-market update on USD and the precious metals.
While DXY continues to hold intact to its potential for a bounce…
…Gold is gulping down another another $43/oz. of upside. Cue Old Turkey: “It’s a bull market, you know”. The darn thing worked off daily overbought RSI and looks like it wants to bust the correction sooner, not later. From yesterday’s update:
If it were to clear the 3350 level we’d have to start thinking ‘correction over’ or ‘correction part of a larger topping process’.
It’s at 3379 this morning and ‘correction over’ is quite viable. Secondarily, if gold were to test the highs and start a larger top-making process that would be worse than a routine correction that the recent pullback had looked like until yesterday. But it’s important to note that the larger topping situation is pure conjecture at this time and the bulls have the ball right now. Make no mistake about that.
This is the second time I got caught looking for a deeper pullback in the PM complex. But… Old Turkey. It’s what real bull markets do. I’ll have to really think about whether I’ll hold onto the hedge today, barring a collapse of the signaling in pre-market. I have used it as cover to add second positions in AGI and AEM (increased yesterday) on this thus far moderate correction. So on the plus side, this bull market illustrates why there is no way I’m going to try to pick tops to sell. In that regard, hedging is (to me) a necessary evil, generally on certain occasions.
After deciding to use short/bear positions as much for profit taking as hedging, I got greedy here looking for more downside; logical downside. Like, just gimme the 50 day average, could ya??
No, it couldn’t. If this morning is not a fake out. What looks like a bull flag downward correction for GDX is indicated to get busted to the upside this morning with a pre-market price of 49.58. This is similar to the point ‘2’ situation that did not drop as far as I expected then either (did not fill the gap or touch either of the moving averages). “Bull market, you know.”
Silver is back above the SMA 50. A sloppy chart, but two moving averages trending upward with the price above both.
To review, the US dollar is still at a potential to bounce. But it is and has been bearish. So prove it, Uncle Buck. Trump wants a weaker dollar. That is all too obvious with his rate cut demands on Powell.
The Gold/Silver ratio is still bullish. But the 2001-2004 macro analog says that is just fine for gold stocks on a fundamentally sound cycle like this one.
And finally, “It’s a bull market, you know” and they tend to do bullish things.
Complicating matters, it just happens to be FOMC week. With Trump badgering for rate cuts as the Fed is projected to hold. The machines have started their engines and the week could get volatile, both ways. I don’t know that I will steadily hold the hedge through it all when cash is a calmer buffer paying income.
Finally, the Gold/Oil ratio implied good things for the Q1 gold miner reporting season. Well, those good things are so far continuing over a third of the way through Q2.
