Step By Step

Gold is tracing out the kind of bull-market pattern that we want to see.

It’s also the kind of pattern that can signal buying opportunities — which is what it’s doing right now.

August 24, 2020

Dear Fellow Investor,

I’ve been telling you to ignore the short-term fluctuations in gold and silver, and to instead maintain your focus on the powerful, irreversible factors arguing for much higher prices over the long term.

Now I’m going to split the difference and explain a powerful intermediate trading pattern that you can take advantage of.

Although I’d been talking about this for months, the importance of this pattern was reinforced when my friend Peter Boockvar mentioned it as we talked during a Gold Newsletter Podcast last week.

Peter is the Chief Investment Officer of Bleakley Advisory Group, but I like to refer to him as the resident contrarian on CNBC. In our discussion last week, he mentioned that gold’s been tracing out precisely the kind of pattern that you want to see in a bull market.

In short, gold has been advancing in a clear stair-step pattern. The big moves so far have not gone parabolic or suffered from big corrections.

Instead, gold surges higher, then establishes a new price plateau and consolidates those new levels, before advancing once again.

It’s these kinds of bull markets — in which over-bought conditions are worked off via time and not a price correction — that last the longest and give us the most opportunities to profit.

What does this mean in a practical fashion? Let’s take a look….

A New Meaning To “No Yield”

Mainstream analysts have disparaged gold for decades because it provides no yield.

There are a lot of ways to refute this, including the fact that in an era where bonds provide negative yields, gold’s zero yield actually makes it the high-yielding option.

But from another standpoint entirely, gold has absolutely refused to “yield” during this pandemic-spawned bull run.

Consider the chart above. As you can see, from the depths of the initial, panic-driven sell-off in early March, gold quickly took off on a furious rally. It soared nearly $300 from trough to peak over just a few weeks!

But then it traded in a sideways-range from mid-April to late June. During that period of consolidation, it refused to allow a severe price correction.

So by trading in a range over a couple of months, and not dropping below that range, it worked off that over-bought condition through time instead of price.

And having gathered strength over that time frame, it was able to mount another massive rally. After breaking through the top side of that range in late June, gold soared another $300 over just a few weeks.

It’s very early in the process, but it looks like the metal is repeating the stair-step pattern and attempting to digest that last rally through time spent in a trading range.

Now, anything can happen in investing, and especially in 2020. (A point driven home as I write, with no less than two hurricanes barreling down on me!)

But my best guess is that we’re in store for another month or two of sideways action in gold, before it mounts its next big move higher.

So what does this mean for you?

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Another Opportunity

In short, this respite in the gold bull market represents another prime opportunity to get onboard a move that seems likely to last years…and to take gold and silver up multiples of today’s levels.

We’ve already seen the gold and silver mining stocks, from the senior producers down to the junior explorers, give back some of their gains. There’ll be more profit-taking to come, and some prime opportunities will emerge.

I suggest that investors take advantage of the best of these opportunities.

I’ve already identified a few that are already ripe for picking, and I’m unveiling them in the September edition of Gold Newsletter, which is scheduled to be released on Thursday (if the hurricanes cooperate).

If you’re not already a Gold Newsletter subscriber, I strongly urge you to CLICK HERE to join up now.

I’m very excited about these new recommendations, and confident that they’ll pay for a subscription many times over when gold resumes its march higher.

All the best,

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