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Although gold seems to have made it its specialty to stumble and fall persistently during the past eleven months. I haven’t lost faith that the little fellow will eventually wake up to the fact that the trillions of dollars of toilet paper flying around are not as nice to own as the ancient precious metal.
From a chart perspective, it honestly just needs to do one thing: get above that price gap.
I have long held that gold would be driven by USD/JPY, and at the start of this calendar year, it was looking very promising for gold, because the US dollar (one kind of toilet paper) was becoming more worthless than the Japanese Yen (another kind of toilet paper). I’ve marked this point with a green arrow. However, the US toilet paper has appreciated handsomely against the Japanese variety, so much so that a bullish breakout has transpired (green circle).
When gold stock bulls complain about a “smack down”, a “hit” or a “smash” against the poor gold stock sector what they should be thinking about is what a relatively small market the gold stock universe is compared to the multitude of galaxies populated by cyclical and risk on stocks and commodities and the massive bond market. The gold stock sector’s noise to trading volume ratio must be far and away the biggest bull market on the planet (I know because I am part of it :-)).
And once in a while the sector actually warrants all that noise. Like in 2001 when markets were beginning a bear phase and economies were faltering. Like in Q4, 2008 when gold stocks were crashing to unwind previous inflationary excesses, leading stocks and commodities into a terrible crash and rebounding first. Like in March of 2020 when the miners crashed and ‘V’ bottomed to lead what is to this day an ongoing economic recovery born of the inflation that gold and gold stocks first sniffed out.
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