4:50 am Pacific

(Exclusive to BMR subscribers – Not for Distribution or Posting on any Board).

Gold Update

Gold is trying to rally out of temporarily oversold conditions, up $32 an ounce at $2,594 as of 4:50 am Pacific.

Below is what we posted November 3, ahead of the U.S. elections, and our views haven’t changed since then. We saw an intermediate top in Gold just below $2,800 (~$3,900 CDN) in late October. The factors that drove bullion under Biden-Harris (growth of government and increasing deficits, inflation, global conflict, a weakening dollar) are not going to apply under the new Trump administration, or at least not nearly to the same degree.

The potential for lower interest rates, lower energy costs and robust equity markets are factors that would provide support for Gold stocks.

November 3 – Gold and Index Updates

Bracing For A Breakdown In Bullion

We’re nervous about Gold because the metal has hit John’s target on his highly reliable 5-year weekly Gold in Canadian Dollars chart.

That chart from John has been our Bible for Bullion going back more than a decade, with so many correct calls over the years.

We need to be disciplined and go with what it’s telling us.

Measured Fib. Resistance (161.8%) on the 5-Year Weekly

is $3,956 (CDN)

That’s a target we’ve been eyeing for a few years now.

Last week, Gold touched $3,900 (CDN) and is currently trading at $3,813. One cannot rule out a sudden run that briefly overshoots the $3,956 target, but if you’re within 5% of a high it’s smart to get out while you can.

We’re sticking to our guns on the view that a significant correction in Gold is likely to occur very soon. This is a good time to be looking at other opportunities in the market. Once a correction runs its course, it’ll be time to pile back in. The risk-reward right now just isn’t favorable.

We recognize this is not the mainstream view (lots of bullishness out there) but you don’t make the big money by following the crowd.

Nov. 17 Update – TSX Gold Index 2-Year Chart 

Over the past couple of months we’ve been encouraging subscribers to take profits on the winning Gold producer trade we got behind in late 2022. The TSX Gold Index nearly doubled from then to last month’s multi-year high of 417 (Oct. 22).

After a correction that started in 2023 and concluded at the end of February this year when the Index landed at 240, Gold producers climbed steadily over the next 8 months from March 2024 into October 2024 with a gain of 74%.

After a consistent uptrend over 8 months to new multi-year highs, the Gold producer trade was “long in the tooth” and faced a high risk of a sharp pullback, especially if Democrats got defeated by Republicans November 5 which is exactly what occurred.

Harris would have been hugely bullish for Gold and Gold stocks. Long-term, exposure to Gold and Gold stocks will remain a key component of a smart portfolio, but there are some immediate challenges under a Trump/Republican scenario (not unlike the situation in 2016).

The 7-month rally in 2016 ended as soon as the Gold Index couldn’t hold support at its EMA-50. That’s where the Index landed just ahead of Nov. 5, and it broke down on the Trump/Republican victory.

Lots of money was made in these producers this year and in the most advanced juniors – hence it was a great time to “CASH UP” and deploy those dollars somewhere else in situations with more attractive immediate/near-term upside potential.

After landing at the EMA-200 last week, a nearly 20% decline in less than a month, it could be time for the Gold Index to rally back up toward the now-declining EMA-50 (currently 370).

However, the Gold Index correction is likely not over – ultimately, a test of the 300–290 area has to be considered a distinct possibility.