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Gold Price - Where is it heading?

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Gold Is Soaring... But Miners Are Struggling​



By Vic Lederman, editorial director, Chaikin Analytics​

Folks, it's finally happening...

Gold prices are soaring.

Now, if you're like me, you probably remember all the talk about gold during the peak of the COVID-19 pandemic. After all, it was obvious we were entering an inflationary period.

And just about everyone knows the refrain – "gold is an inflation hedge."

But gold prices stayed stubbornly range-bound. Or in more simple terms, gold traded mostly sideways.

Now, that's changing. Gold prices have been on a tear recently. And they just hit a new all-time high.

One ounce of gold is currently trading for about $2,160. That's roughly $100 more per ounce than the 2020 peak.

But this change in momentum hasn't made its way to gold miners. In fact, gold miners are down about 19% from their 2023 peak.

So today, let's take a closer look through the lens of the Power Gauge...

We'll start by looking at SPDR Gold Shares (GLD). It's an exchange-traded fund ("ETF") that first listed in 2004. And it has traded on the New York Stock Exchange since 2007.

Today, GLD is the largest physically backed gold ETF in the world. It currently holds more than 26 million ounces of gold bullion worth roughly $56 million.

Keep in mind that GLD doesn't earn a Power Gauge rating. But there's still a lot we can learn about the ETF in our system. Take a look at this chart...



First, notice the dashed line across the top. That's where gold prices peaked in 2020.

We can clearly see on the chart that the new high is a major change in momentum. But that doesn't mean that gold is outperforming other assets.

The red and green bar in the panel below the price chart shows us GLD's relative strength against the S&P 500 Index. And once again, it's clear – gold has unperformed stocks for the majority of the past five years.

That's true even when you take the recent big move up into account.

Now, you might think that the big upward move would translate into major gains for gold miners. But that's not the case.

This time, we can use the Power Gauge to take an even deeper look – using the VanEck Gold Miners Fund (GDX). This ETF holds a basket of companies involved in the gold mining industry.

Right now in the Power Gauge, the fund itself holds a "very bearish" rating." And out of its 29 holdings with ratings in our system, none of them earn a "bullish" or better ranking. Seventeen are "neutral" and 12 are "bearish" or worse.

As you would expect, that translates to terrible performance on the chart...



Once again, I've added a dashed line at the 2020 peak. It makes it easy to see the dramatic downturn that gold miners are experiencing. You can also see that the fund's relative strength versus the market is similarly abysmal.

So it's likely you will have seen stories in the news about soaring gold prices. And you might even consider picking up a gold mining stock or two.

Well, the Power Gauge is clear...

Things are looking a little better for gold prices. But this industry hasn't turned the corner yet.

Personally, I'll be watching gold miners closely for a turnaround. Soaring gold prices could signal a big move is in the making.

But today's "very bearish" Power Gauge rating for miners means that it's time to wait and see.

Good investing,

Vic Lederman
 

Thanks Dave @DaveTrade . That confirms via charts what my impression was of Gold v NASDAQ v Gold Miners. Very useful to see it happening in the global Gold mining markets.

I have been reluctant to jump in to a Gold miner here for that very reason. I guess we will all be late to the party should Gold shoot up further suddenly.

Oh and tell Vic should he wish to sell me 26 million ounces of Gold for $56 million as quoted in the article that I'll get my people to speak to his people to effect the transfer. I should find some ready folk to lend me $56 m. overnight at reasonable rates.

gg
 
depends on where the gold is ....

for instance the gold he might wish to sell , might still be sitting securely under the ground in a place like Afghanistan , in which the seller has no rights to extract that gold for you

or worse the gold may have been detected on the Moons or Mars ( and is just guessing on the quantity )

gold seems to bring out the worst in some people
 
Good evening
2178 ...
2200 threshold going once going twice .... yes we have a winner...



@Telamelo where are you bloke?? All this gold excitement and you is missing in action ??

Have a very nice weekend.
Gold day on the punt tomorrow

Kind regards
rcw1
 


Central Banks around the world have been replacing UST for gold. Gold already is and will continue to grow as the reserve asset.

To provide the physical that has been bought by the East, the West is now having to drain the GLD ETF to supply that physical. This has been playing out for a while.

The link between gold and interest rates has also been broken for some time. The absolute proof being when the Fed jack-knifed rates higher and gold went essentially nowhere. With rates postulated to fall in June, gold is off and running.

Interesting that retail buys BTC and CBs buy gold. LOL.

jog on
duc
 
What a great week for the gold bugs.

CB buying has been important and USD weakness helped a bit too.

Looking forward to this been converted into gold equity surge at some stage.....

Must be some consolidation at some point too.

 
Sean K said:
On the gold price v equities mismatch.

Click to expand...
if the miners are that bad at it ( in the majority ) it is a wonder that WES hasn't snapped up a brownfield project or two , they have some in-house skill-sets on processing ores and some capital to deploy
 
DannyB0000 said:
Maybe the reason why investors aren't buying gold mining stocks is because Bitcoin is reaching record highs as well. Investors think they can make quicker profits with Crypto, gold miners are boring.

For the record I prefer shares instead
Click to expand...
i have resisted cryptos , but am also resisting buying (extra ) gold stocks as most of them are at poor valuations

i buy using a 'income on investment ' basis as a key metric ( rather than hope for capital gains in the future )

BTW i get adequate excitement looking for ( gold ) stocks in which to invest my cash , even if i need abundant patience
 

Welcome to the beginning of a precious metals bull market.​

Gold bulls have had it tough.​


After surging to a record high in August 2020, the price of gold has traded sideways between $2028 and $1643 (basis gold futures).

But now, gold has surpassed the old high and is doing so in a meaningful way.

And the background couldn’t be any better to create a sustainable move higher…

Sentiment is in the toilet, which means that gold and gold-related stocks are under-owned.

Miners are completely distressed as overall capital spending is at unprecedented low levels. The mining industry has been in a capital-starved depression for more than a decade as technology investing has dominated risk capital flows.

Yet, at the same time, central banks are accumulating the metal at a record pace as overwhelming levels of debt increase worldwide, marginal new gold discoveries are being made, and the quality of existing reserves is deteriorating.



And the opportunity is not going unnoticed.

Big smart money investors like Stan Druckenmiller and Paul Elliot Singer are now just starting to make their moves into gold equities. The markets could turn quickly as these are the types of leaders that other smart money, and ultimately the crowds, tend to follow.

Per the Duquesne Family Office’s recent 13F filing, Druckenmiller completely sold off his mega-cap tech holdings in Alphabet, T-Mobile, Broadcom, Alibaba, and Amazon last quarter. He also sold 29% of his Nvidia and established new positions in Newmont Mining, Barrick, and Freeport McMoran.

Meanwhile, the Financial Times just reported that Elliott Management, one of the largest and most successful activist hedge funds is “setting up a company to hunt for global mining assets in the range of at least $1bn as it seeks to take advantage of the depressed valuation of groups operating in the sector.”

Gold is showing the way, but silver and miners should take the leadership.

Let’s start with the weekly gold chart (SPDR Gold Trust, GLD) shown below. The price of gold is breaking higher out of a multi-year consolidation.



At a minimum, a price objective near $230 is obtained by adding to the breakout level of $191, the high-low of the consolidation period.

Another factor benefiting gold is that gold and the U.S. Dollar have an intuitive inverse relationship: When the value of the dollar rises, gold drops, and vice versa.

Currently, the U.S. dollar is falling.



The next chart shows the Gold to U.S. Dollar ratio. As the dollar weakens it makes gold more valuable. You can see that it too has broken out of a multi-year consolidation.



Weakness in the U.S. Dollar is being caused by dollar debasement.

As the U.S. debt continues to accelerate, the U.S. is forced to monetize the debt, thus increasing the supply of money and lowering its value. Note that this is also inflationary.

The U.S. national debt is rising $1 trillion every 100 days, according to Bank of America.

This is unsustainable. Something has to give. And it further strengthens the argument to own gold.

Silver​

After three prolonged years, the consolidation phase in silver prices appears to be approaching an end.

No other asset has frustrated investors more than the ongoing expectation of the metal reclaiming its prior peak levels.

While timing this precisely is nearly impossible, the prevailing pessimism toward silver suggests that a historical breakout could be imminent.

Keep in mind that “cup and handle” formations often result in drastic price movements, and given silver’s inherent volatility, this pattern seems particularly apt for the metal.



Fundamentally, silver production from Mexico and Peru, the world’s two largest producers, is at its lowest point in 14 years.



The combined output is now down 25% from its 2016 peak levels.

As gold breaks out to record levels, igniting a new bull market for precious metals, a major supply and demand mismatch is poised to drive silver prices significantly higher.

For investors interested in rotating out of the crowded overvalued large-cap growth/tech stocks, this may be the perfect time to catch this industry group before the idea becomes more mainstream.

In addition to ETFs such as GLD (SPDR Gold Trust) and SLV (iShares Silver Trust), investors may want to also consider GDX (VanEck Gold Miners) and GDXJ (VanEck Junior Gold Miners).

The chart below of GDX will form a bullish breakout on a price move above $31.



More aggressive investors coming in now could use a stop at $26 or slightly below to protect capital in case the idea does not work as expected.

 
DaveTrade said:
which means that gold and gold-related stocks are under-owned.
Click to expand...
well i am a bit of a contrarian

i hold BHP ( increased copper/gold exposure via the OZL take-over ) . NST , RMS , RRL , X64 ( although that is probably heading for liquidation ) ZIM ( not as much gold in the mix as some but does sell a few ounces ) , ATM ( mines an assortment of stuff but sells the gold it mines , to retail folks via jewelry stores and vending machines ) AIS ( more of a copper miner currently ) , EVN , GOR , RND ( doesn't actually mine any gold but has a minority interest in some profitable mines and looks for the next viable gold discovery ), and WGX , i think i got them all spotted

also i hold a few mining services stocks ( like IMD , XRF , WOR , MIN and SXE who do some work for the gold miners )

but will any of them start making stellar profits anytime soon ? ( the actual miners that is , the services companies are doing fine )
 

Maybe you should just own IOZ and GDX?
 
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