March Gold Close

The average gold price for March closed at $1,231.09, which exceeds the 20-month average of $1,227.39. The closing price for gold in New York at the end of this week was $1,249.20, which is just a whisker under the 40-month average of $1,250.66. An April average price rise above the 40-month average may very well confirm the birth of a major new bull market in gold.  Certainly, judging by Michael Oliver’s structural momentum work, there seems to be very little downside risk from this point on, given the major breakthrough to the upside last year for gold. Yet at this time there is a great deal of skepticism for gold, even as all evidence points toward a major tectonic break downward for stocks and bonds and very strong prospects for a break higher for precious metals, commodities, and non dollar currencies. In my view, this may be one of the best times in many years to take a more aggressive bullish posture toward gold and gold shares.

Meanwhile, our IDW rose a bit this week, suggesting that our illicit sleight-of-hand fractional reserve banking system is succeeding in generating wealth out of nothing. Clearly this measure of “inflation” has taken on a very bullish hue since the Trump election, as the IDW has risen decidedly above both the three-year and five-year averages.

Looking at Michael’s work on Dr. Copper this week, he shows clearly that the recent pullback is simply a significant correction in a new bull market for the red metal. In his March 28 discussion on copper, Michael concluded the following:  “Copper entered a long-term bull trend last November at the price of 224. The current corrective situation in copper must be taken in that larger trend context. It’s a corrective pullback only, and there is a decent chance that before it’s completed that copper will see itself in the 240’s.

Michael also had a very interesting discussion this week regarding the similarity of the T-Bond and equity markets just prior to the stock and bond market crash of 1987 and now. “In the comparison of action in 1987 to the current markets, we noted that T-Bonds produced a massive initial drop in 1987 which the S&P500 ignored. Then in August 1987, T-Bonds punched through a price floor they’d built on the way down. It was then that the S&P500 topped. The index produced a sharp wobble off its high and then spent much of the next two months groveling around, up and down, but below the highs it had made. Only in late October, two months after its price peak, did the S&P500 pay off on the downside. While we now see long-term technical potentials to take the S&P500 back down in a deep and serious way, neither in that report nor here do we expect the same sort of results. Break quarterly momentum and 200-wk. momentum structures sometime in Q2, and then we’ll expect a bear trend out of the S&P500. But there’s no particular reason to expect a crash event.

Since our IDW is comprised of both stocks and commodities, it will be interesting to see if a major decline in equities can pull the IDW down into a deflationary move once again or whether massive money printing and a Trump Stimulus of massive money printed transfers to the working classes leads to a massive increase in velocity and a huge break toward an upside hyperinflationary event.