The triangle pattern in gold appears complete, and prices should continue to work their way lower and eventually break support surrounding $1900.

It may take another sharp selloff in the stock market to get a second round of stimulus through Congress. If my theory is correct, we could see a selloff in the stock market gain steam next week. Be prepared for increased volatility as politicians play chicken with the economy ahead of the November election.

Governments have committed to printing money, suppressing interest, and currency depreciation. This strategy is long-term bullish for stocks, commodities, and precious metals. The bull market in gold should last well into the decade.

Next week I’ll be watching the markets closely. If the stock market begins to sell off, it should trigger an upside breakout in the dollar, or at least that’s what should happen. A breakout in the dollar should pressure gold lower.

The Gold Cycle Indicator finished the week at 294. Currently, gold would have to drop to approximately $1800 to trigger a minimum bottoming reading below 100.

-US DOLLAR- The dollar has been grinding out a bottom for over 6-weeks. Prices need to close above the short-term blue trendline to confirm a breakout and trigger the breakdown in precious metals we’ve been expecting. If the dollar doesn’t break higher next week – then the bottoming process could drag on for another week or two. The dollar would have to close progressively below the 91.75 low to imply a failed intermediate rally.

-GOLD- Approximately every 6-months, gold drops into its intermediate low. Sometimes these cycles are cut short – other times, they extend. The cycle leading into the March low ($1450.90) was just four months in duration. The current cycle just surpassed the 6-month mark, and prices are yet to register a bottom (gold cycle reading below 100). This is not too uncommon as a short cycle is often followed by a slightly longer cycle to balance the span.

With that said, I’m not sure how much longer the current cycle will extend. I continue to expect a breakdown below $1900 in late September or early October, but it could be delayed.

In a nutshell, our analysis remains on track, but we need to be prepared for a cycle extension. Cycles surrounding a presidential election are often skewed. Either way, I won’t consider calling a bottom until the gold cycle indicator drops below 100.

-SILVER- Prices continue to consolidate. Our work supports a breakdown below $26.00. Initial support arrives at $22.50 and then $19.00.

-PLATINUM- A decline in platinum below $880 would trigger the intermediate decline. The initial target arrives around $800, but I see the potential for a retest of support near $700. I remain very bullish on platinum and believe it will play catch-up to gold and silver.

GDX- Prices formed a small bearish engulfing candle on Friday and finished near the week’s lows. We continue to look for a decline below $39.00 to trigger the breakdown into the next 6-month low.

-GDXJ- Juniors fared a little bit better on Friday. Our work continues to look for a breakdown below $54.00 in the coming days, but it could be delayed.

-SPY- Stocks closed below the 50-day EMA for the first time since May, and I see the potential for a sharp pullback. Initial support comes in at the 200-day MA (approx. 307). A piercing correction could fill the gap near 285. I feel politicians are playing chicken with the economy before the November election.

Have a wonderful weekend.