From the Desk of Ian Culley @IanCulley
The NYSE might be closed today, but futures markets are open.
And while the volume remains low during US trading hours, it hasn’t stopped Gold futures from revisiting a critical level.
Gold currently challenges a price level engrained in goldbugs’ minds worldwide…
The prior commodity supercycle peak!
Check out the chart of Gold futures:
It’s back at the scene of the crime – the 2011 high at approximately 1,924. Those former highs mark the height of the prior commodity supercycle (as far as Gold’s concerned) and the ideal level to have exited long positions. Not many sold the top, of course, reinforcing its psychological significance.
Twice bulls have managed to push price above that critical level. And twice, those rallies failed to produce sustained uptrends.
This is a logical level for Gold to pause and digest its recent gains. Especially when we consider gold has risen more than 18% off its November lows. Nevertheless, gold mining stocks are catching a bid.
First, the PHLX Gold Index $XAU reclaimed a crucial shelf of former highs, hinting at a new markup phase to come. The Gold Miners ETF $GDX did the same last week.
We think the MSCI Global Gold Miners ETF $RING follows the same path higher. Check out the weekly RING chart:
It looks almost identical to GDX and XAU with one exception – it’s still stuck beneath supply marked by the 2013 and 2016 highs. When markets reopen tomorrow, we’ll monitor how this ETF reacts at those former highs.
Just because Gold futures are running into a logical level of overhead supply doesn’t mean gold mining stocks, and RING, can’t rip higher.
If and when, and we think it’s more a matter of when, it breaks above 26, we like it long toward an initial target of 35 and a secondary objective of 50.
Have you noticed how many of our trade ideas for individual miners and mining ETFs have multiple targets? That’s information!
We’re likely in the early innings of a prolonged bull run for precious metals, including Gold, Silver, Platinum, and even Uranium and other metals on the periphery. And We’re not talking over the coming weeks and months.
Instead, we’re thinking in quarters and years. During that time, there will be plenty of opportunities. But those opportunities and the strategies we will deploy will differ as the secular bull market matures. Sometimes we’ll lean more toward the futures market, and other times we’ll want to express our thesis via mining stocks. So buckle up!
It’s time to hit the road as we lay out the roadmap to profit from an epic rally in Gold!
Stay tuned.
Thanks for reading! As always, please let us know what you think.
Click here to watch this week’s Gold Rush Video:
And be sure to download this week’s Precious Metals Report below!
Allstarcharts Team
