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A Golden Pause in the Precious Metals Rally

08.06.20 05:00 ET

What I am about to say is not going to get me a lot of kisses, love, or flowers from the goldbug community.

But the rally to “new all time highs” is now officially on hold. Hell, we’ll be lucky if we hold on to this year’s gains based on recent action and what makes it worse is that some people still believe in technical analysis to prove their points when Fed analysis is all one needs.

Gold is Toast (for now)

(courtesy of Investing.com)

If gold does not have the hutspa to hold $1575, which I do not believe it does at the 200 day moving average, then a roll over down to $1450 is quite possible. The structure to move higher has been broken not by technical factors but a desire by central banks on a global scale to push investors out of “safe havens” and into domestic currencies like the Euro, Dollar, etc.

This crazy idea might work for several months during the seasonal gold slump during the summer, but with political instability on the rise on a global scale and the risk of a new totally progressive government in Washington after the 2020 elections, gold will resume its break to new all time highs provided the central banksters openly promote the idea of unlimited monetary support regardless of the pandemic, 2nd wave, or political outcomes.

Silver is the Spread for the Toast

(courtesy of Investing.com)

Of course silver breaks lower after I received delivery of my latest order because that’s how I roll. In reality, silver prices are probably heading back down to the $16 per ounce area to retest the 50 day moving average before either bouncing or retesting the magic $15 mark. Should it break below the $15 mark, back up the Brinks truck and buy with both fists. In the mean time, remember the painful gyrations of 2008 before one panics as it is a store of value, not a casino chip.

This pause shall pass. In the interim, enjoy the monetary circus and summer riot parade. In the end, if neither metal breaks to new all time highs this autumn or winter it means deflation is winning the day.

And we do not want to review what that means all over again now, do we….