Gold is dropping into the next 6-month low. If everything continues on schedule, we should have a bottom in the first half of October. 


A Multitude of Outcomes

Several variables, from the stimulus negotiations, to the elections, and now the President’s health, could alter gold’s near-term trajectory. Not to mention the potential for a second wave of COVID and another economic shutdown. That means we need to be flexible in our expectations and not get married to a particular outcome. 

The bulk of the above circumstances support higher gold prices, but not all. A decisive Trump victory, combined with a successful vaccine, could thrust gold into a more prolonged pullback that may not bottom until December. 


Right Prediction Wrong Reaction

In 2016, I felt the cycles supported a Trump victory. Assuming that if he won, the resulting shock would be bad for stocks and great for gold. Trump won, and the opposite happened – stocks exploded higher, and gold tanked. If he gets reelected, can we expect the same?

Also, I see the potential for notable civil unrest following the elections. If the race is close…neither side will concede. The losing party will undoubtedly feel cheated, and that could turn into violence and rioting. Ultimately, the Supreme Court may choose the victor, and that could take months. 

Longer-term, metals and miners are going much higher – of that, I have little doubt. But the events of the next 1 to 3-months is most challenging to predict. As always, I’ll do my best to keep members informed. 


The Gold Cycle Indicator finished at 219, and we remain well above the minimum bottoming reading of 100. 

-US DOLLAR- The dollar broke out from its bottoming pattern in late September. Prices just pulled back and tested the previous trendline. As long as prices stay above 93.50, I think we can expect a rebound to the 200-day MA (97.00), and that should force gold prices into our preferred cycle target. 

-GOLD- The rebounds in gold have been lasting between 4 and 6-trading days. I believe Friday marked day six, and the recent rally should be ending. The current rebound also served as a backtest of the prior breakdown area near $1920. Provided we don’t get any shocking news – gold should turn lower one last time and descend into our preferred target box. The week of October 12th could host the next low. 

-SILVER- Silver collapsed below $26.00, and prices appear to be forming a small bear flag. Our work supports one more breakdown towards our ideal target area by mid-October. 

-PLATINUM- The 4 to 6-day rebound in platinum appears to be ending. I’m looking for one more decline to our preferred target area surrounding $750. I’m bullish on platinum long-term and expect a breakout above $1050 in 2021. 

-GDX- Miners rebounded to where the 20-day EMA is crossing bearishly below the 50-day (the ideal spot for a reversal lower). I also see a potential bear flag. Barring any significant news events, GDX should break lower towards our ideal target box surrounding $34.00. 

-GDXJ- Juniors are presenting the potential for a breakdown next week to our preferred target box surrounding $46.00. 

-SPY- After a brief bounce, I think the stock market is ready to continue its descent towards the 200-day MA (currently 308.05). With all the uncertainty surrounding President Trump and the elections, I don’t see how prices can rally before the elections. 

These are some trying times indeed. Expect increased volatility into year-end. I’ll continue to post frequent, intra-day updates to Premium members.

Have a safe and pleasant weekend.