September 7th 2020 Gold: After a bounce into September 15th a new Wave three of selling is expected into the second half of September followed by a bounce into early October. Exact dates reserved for gold members.
We expect the stock market to make a short term bottom this coming week and another top in the weeks ahead, dates reserved for gold members.
Metals have potential to complete a bear trap into late September/early October. There is intense pressure to deliver physical silver and gold from recent paper market purchases. Look for bullion banks to strike back with the blessing from the White House and Federal Reserve. Larry Kudlow, President Trump's top economic advisor is often quoted as saying "if gold were allowed to rise on a consistent basis it would be a reflection of deep rising problems in the world". Investors have been lulled to complaceny thinking the bullion banks are done containing, attacking, and profiting from gold supression. We feel strongly we have another waterfall price decline coming into the second half of September and we have bottoming dates to go long metals for our gold members in the weeks ahead. Gold should strike $2300 futures prior to year end. We are long term metals bulls.
When any asset class begins a vertical climb, emotions cause people to think 'this time is different' and price can’t go back down. It’s almost never different, and the further metals rise, the more violently they will correct. People erroneously assume that because the rally is so strong, the correction will be mild. That is not how markets work. The one exception would be if metals were entering the final bubble stage like 1980, which saw gold increase 400% in a year. Pull up any monthly chart on Bitcoin 2017, Gold 1980, Silver 2011, or Oil 2007. The bottom line, when price goes parabolic you always have a reversion of price to the mean.
The only time this principle changes is in the final bubble phase of an asset, shown above. In gold and silver's case this lies ahead of us. To expect price to keep climbing so far stretched above moving averages at this stage is unrealistic. After a sling shot effect takes place and price has a violent sharp 4-6 week pullback into the early fall, a sustained advance above $2000 in gold will ensue. Intermediate tops can be complex, so expect price to drop, bounce, then crash. The dip buyer will buoy price initially after a mini-parabolic rise like this.
Sentiment will need to cycle down below the green dotted line into our buy zone .
Miners will often turn down first in the metal’s complex. An early warning signal.
Although silver is undervalued compared to the gold price, it will not be spared during a violent correction. Now if one is holding longterm, you can buy tomorrow at the bell and weather a 300-400 point pullback in gold and be in great shape in years to come. Years from now, it will be just a blip on the chart, but in real time that is not a fun experience. We do not recommend shorting any asset that is in a bull market for the average investor. Large C wave declines we will attempt to short at HFZ. Shorting emotionally is much tougher than a long trade. The bulk of the return comes in a period of a few days while most of the time you sit even or at a loss until the damm breaks - the exact opposite of trading the long side. Most asset prices rise like escalators and drop like elevators. HFZ
General Market Snap shot
Stocks -The FED has stated it intends to keep interest near zero into 2022. This is highly bullish for stocks. We expect slightly higher prices into late October before risk enters the stock market .
Precious metals and miners- A correction is occuring in the metals complex and likely to bottom this fall. Are you prepared ?
Crude- is likely to stay range bound near term, $36-$48. We will harvest profits in this trading range.
Natural gas- expect a strong rally into the fourth quarter.
Bitcoin- has broken out and is in a new trading range, reserved for members. Higher prices are projected into the fourth quarter.
Volatility- should rise into the fourth quarter.
For detailed turn dates and support and resistance levels on many markets visit us for a free 14 day trial or free membership to receive our weekly briefing at www.hedgefund-z.com
Long trending trades will be difficult to find but we have several of them in our trading queue in different asset classes, ready to be executed over the coming weeks. We have executed several new positions, which we see advancing into the fourth quarter. Sign up for a free trial to find out more.
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