Gold Shoulder Build & Stk Mkt Collapse

  1. The US stock market is once again in imminent danger of a major collapse.  Please click here now.  Double-click to enlarge this disturbing daily chart of the Dow.
  2. A rally towards resistance has taken the shape of a bear wedge.  The rally failed to even reach that resistance zone, and now there’s an ominous breakout to the downside.
  3. The US government has embraced socialism for almost every sector of the economy, except medical care for the nation’s elderly and most vulnerable citizens… during a major virus crisis!
  4. The most socialized sector in America is the stock market.  Horrifically, even with relentless government propaganda, endless central bank money printing, and rate cut welfare, the stock market can’t do anything except gasp higher in a failed bear wedge pattern.
  5. America would not have an economic crisis today if the government had a savings mentality instead of a debt mentality.  The government never saved for a rainy day, let alone for a crisis, and it never encouraged citizens to save.  Given that America has been the world’s lead empire for about a hundred years, that’s totally outrageous.
  6. Now, the government is in danger of collapse if it doesn’t get income tax extortion payments from the citizens, and the citizens are in danger of running out of food if the government doesn’t order the central bank to print money and hand it to the citizens.
  7. Incredibly, the government has yet to take any responsibility for the horrifying failure to save.  It seems more interested in sending “bully boats” to Iran with even more borrowed money than it does in preparing itself and US citizens to handle a real crisis.
  8. Please click here now.  Double-click to enlarge.  The oil market is the most recent recipient of “corporate socialism” support from the government.  I predicted that support would fail miserably, and it did.
  9. While most amateur investors have been envisioning a “V bottom” for oil, I’ve predicted a horrifying gulag… a gulag that could end with hyperinflation rather than economic growth.
  10. The US “petrodollar” is the pillar of America’s debt-based society.  It makes sense that Saudi Arabia’s dictators are revered by the US government, because they are the lynchpin for the petrodollar.
  11. The collapse in the oil price puts the Saudi dictatorship at risk, and if it collapses, so could the petrodollar. 
  12. Gamblers can buy a bit of oil for a “price pop”, but serious long-term investors need to focus on the gold market.
  13. That’s because as any empire collapses, gold becomes the asset class that comforts investors and provides financial safety for their families.
  14. Please click here now. Double-click to enlarge this important big picture gold chart.
  15. In a nutshell, the long-term technical charts look fabulous, but in the short-term, investors should expect substantial volatility as the build-out of the right shoulder on that chart gets underway.
  16. On that note, please click here now. Double-click to enlarge this daily gold chart.
  17. In the short-term, gold has broken down from a bear wedge pattern, and that fits with the start of right shoulder “assembly” on the weekly chart.
  18. Please click here now.  Double-click to enlarge this short-term gold chart.
  19. The technical action is clearly negative, but a decline to about $1600 would offer investors close to a $200/ounce price sale.  The Corona crisis (perhaps better termed a “failure to save” crisis) has increased gold market volatility.
  20. In the past, I suggested passive gold investors buy gold and related items on $100/ounce price sales.  Now the number that fits with current volatility is probably closer to $200/ounce.
  21. Please click here now. Double-click to enlarge this GDX chart.
  22. Until the US government begins promoting gold rather than itself as the main key to managing a crisis, gold stocks will continue to suffer during major stock market meltdowns.
  23. The good news is that a pullback would make the charts of GDX and many individual miners look even more bullish than they already look right now.
  24. There’s a small descending triangle in play on the GDX chart.  A small dip below the base of that pattern would create a high right shoulder of a nice inverted H&S bottom pattern.  The frustrating wait for a break over the key $32 resistance zone continues, but now the countdown to “rocket launch over $32” can probably be measured in just months or weeks of time!

By Stewart Thomson

Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.

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