Gold may produce bigger gains than the stock market under this one condition

I have never been afraid to make bold predictions for the stock, commodities, bond and currency markets when supported by rigorous analysis.

Recently I made a prediction that gold is on its way to $3,000 an ounce unless there is a vaccine and money printing stops. In some ways, this is similar to my call for the Dow Jones Industrial Average DJIA, -0.36% reaching 30,000 points when it was trading around 16,000. (Please see “Here’s the case for Dow 30,000 in Trump’s first term.”)

Let’s examine gold with the help of a chart.

Please click here for an annotated chart of SPDR Gold Shares GLD, +0.70%, an exchange traded fund.

Note the following:

• This is a monthly chart, giving a long-term perspective.

• The chart shows that The Arora Report gave a signal to back up the truck and buy gold when it was in the $600 range.

• Long-term readers may remember that in 2011 The Arora Report gave a sell signal on gold when it was trading at $1,904 — exactly on the day when gold topped out before falling to about $1,000.

• The chart shows that gold has traced a long base. This is very bullish.

• The chart shows Arora’s very long-term rating as positive.

• The chart shows that gold has broken out.

• The chart shows that gold was added to our model portfolio in March 2020 right before the present run-up started.

• The chart shows that RSI (relative strength index) has traced a very bullish long-term pattern.

• The chart shows that in the short-term gold is very overbought. When a commodity gets overbought, it is vulnerable to a pullback.

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