Gold: An Alternate View

JC Parets
April 30, 2021

It's been well documented that Gold is the biggest loser of the Commodity space. Every single commodity is doing well in this environment except for Gold.

Perhaps this proves what many people have been telling me my whole career, "Gold is a currency JC, not a commodity!"

And maybe that's true. Who am I to judge?

But if you do consider it a currency, it's still one of the ones no wants this year:

And if you look back a full year, it's the same story.

Gross.

So, Buy when there's blood on the streets, right?

Buy new 6 month lows in long-term uptrends, is how I learned it.

So do we buy Gold?

The Gold Miners trade from last month has been working.

But what about the metal itself?

For me, there are two ways to look at this.

The first one, is simply taking those former all-time highs from 2011 and pointing to that as resistance, or "Overhead Supply".

This means that there was more supply than demand at those levels, and therefore we need to respect that:

The bet here above as that the move in Gold last summer was a failed breakout, and therefore the overhead supply near 1920 is still in place.

That had been our target for a long time, so last summer we decided to now avoid the Gold market altogether. The strength in Silver and Platinum has kept us from shorting Gold, but this was all certainly enough to keep us out.

The market is a funny thing though. It doesn't care what we think might be resistance. It's going to do what it wants.

And you know, if you squint your eyes a bit, you'll notice how many times back in 2011 - 2012 Gold bounced and ran into this 1800 level.

What if....

and hear me out....

What if the overhead supply is NOT 1920, but actually 1800, and that final parabolic move in 2011 was the whipsaw? And those ensuing bounces throughout 2011-2012 proved that?

What if it's like this?

And what if this last move down for Gold in the first quarter was the bear trap to really get this Gold party started?

Is that why Silver and Platinum have been so resilient?

Is that why the US Dollar got crushed this month?

I have more questions than answers, but these are the things on my mind.

What if we buy Gold if it's above 1800? What's the harm in that?

What's the risk in that scenario? Almost none right?

It's something I'm considering, and an alternative viewpoint we've discussed both internally and on our Monthly Conference Calls.

But it's setting up.

And I think Gold is worth monitoring much more than at any point since last summer.

JC

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