Even the most die-hard gold bulls have been discouraged by gold’s long price correction. And this level of skepticism is the perfect incubator for a new bull run.

April 21, 2021

Dear Fellow Investor,

I’ve been sweating out gold’s performance over the past couple of months — literally as I’ve been working out and simultaneously watching CNBC in the mornings.

Every now and then, I’ve gotten so discouraged and bored by the market news that I’ve switched to watching the Netflix documentary series on the Monty Python comedy troupe.

And in that documentary I came across the perfect metaphor for today’s gold market: Monty Python’s famous “Spanish Inquisition” comedy sketch.

This piece defies easy description, but the gist of it is that anytime someone happened to comment in conversation that, “Well, I didn’t expect the Spanish Inquisition!” three Spanish cardinals would burst into the scene exclaiming that “No one expects the Spanish Inquisition!”

You’ll have to trust me, this was hilarious in the ’70s.

So how does this relate to today’s gold market? Because like three Spanish cardinals leaping into your conversation…

Simply put, the level of skepticism in the bull market right now is the perfect environment for a big rebound in gold.

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No One’s Getting Excited

Gold suffered through a long, eight-month correction that dashed the hopes of both the generalists and the gold bugs.

Why such a harsh correction? Precisely because the fundamental story was so bullish for gold, with previously unimaginable levels of quantitative easy and fiscal spending, that it took a price correction of this degree and duration to wipe out the bulls and exhaust the selling pressure.

While the gold bugs I’ve been talking to haven’t sold out their positions, they certainly aren’t all rainbows and sunshine in their views toward gold. The most optimistic prediction I’ve gotten is an expectation that the metals will grind sideways for a while.

Again, no one is expecting a gold rally. And this is precisely why we may be getting one at this very moment.

Gold’s up strongly today, and put in a very good week last week. It’s been advancing as the U.S. dollar and 10-Year Treasury yields have fallen, reversing their trends over the past few months.

The charts show that gold put in a double bottom in March and has been rising in fairly steady fashion since then. If you look at it objectively, the outlook for gold is much better…even bullish.

Yet the gold bugs, perhaps not wanting to jinx it, aren’t getting excited yet.

History tells us that this is to be expected at turning points in the markets. And by the time they are excited, a lot of the gains will be behind us.

That would mean the time to act is now, when so few would agree.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference