Rabidly Bullish on Gold

Seems this was a rather non-eventful week in the markets. Perhaps everyone is frozen in fear or indecision awaiting the outcome of the elections. Regarding the elections, on the next page I share some research I did regarding all of the projects located in the U.S. that are held by companies covered in this letter. Of concern here is a likely Biden victory and the hostility toward the resource sector likely to be encountered from a Biden Administration especially if it is headed by Alexandria Ocasio-Cortez (AOC). 

Getting back to the market movers that I track every week displayed above, the only move of consequence was another decline in the T-Bond as per TLT. Note the chart above has risen fairly dramatically from a low of 51.5 basis points on August 4 to 84.1 basis points as of Friday. It’s true that stocks have risen during this period so money out of Treasuries to stocks would make sense. But I just have to wonder how much further rates can rise before the system comes tumbling down.

Gold has fallen from over $2,050 to $1,904 as of Thursday and that has caused many of our stocks to take a bigger percentage hit. But if you are sure, as I am—being a faithful follower of Michael Oliver—that the bull market is very much alive, then you see this as a great buying opportunity. With Michael’s emphasis on his momentum work (bottom chart) he believes the downtrend chart (top chart) will soon be broken. Why? Because of the strength of momentum relative to price. A gold price close in the October futures in the high $1920s would do the trick. From a fundamental point of view, I see no reason not to be rabidly bullish on gold as we head into 2021 no matter who wins the election.

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