Hold On! The Gold Branches Are Shaking

Get ready for additional volatility in the precious metals space… [Morning Reckoning] April 16, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Hold On! The Gold Branches Are Shaking Baltimore, Maryland April 16, 2024 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, Gold is once again dashing to new all-time highs. Investors are finally starting to notice what we’ve been talking about for months: A new bull run for precious metals is upon us. And if you pay close attention, you have the opportunity to ride the early rallies as gold, silver, and other metals take the market by storm. We’ve closely followed gold’s breakout potential since late last year when the yellow metal finally posted its first monthly close above $2,000 — and subsequently took its sweet time consolidating before extending this breakout move in early March. But most market watchers haven’t paid close attention to precious metals. In fact, up until just a few weeks ago, you would’ve been hard-pressed to find any talking heads mentioning gold on the financial news networks. Too many other distractions clogged the airwaves, from Magnificent Seven stock stories to the amazing parabolic rallies sprinkled throughout the popular semiconductor names. Fast forward to this week and you’ll notice that the semis have gone nowhere since early March — right about the same time a spark was lit under precious metals. Now, we’re seeing the first signs of mainstream investors and analysts buying into the new golden bull. Precious metals are getting their due on the financial news as strong rallies lift gold to gains every week. Silver is also snapping back following months of ugly underperformance. Platinum and palladium are catching bids. Base metals like copper are extending their respective breakout moves. Everywhere we look, we’re finding bullish charts. So it’s no surprise to see the big boys adjusting their year-end price targets. [100% Accurate for Decades]( The world’s most accurate crash indicator is flashing its most critical warning in decades. I call it "The Black Pattern". [And it is the only one that is 100% accurate at predicting a market crash.]( Ever since the 1950s… Whenever this Black Pattern has appeared, stocks have crashed – sometimes by 50% or more. And now… It’s telling us that 2024 could be the worst year you and I have ever seen for the stock market. For full details, [click inside.]( [LEARN MORE]( Goldman Sees $2,700 Gold by Year-End Goldman Sachs is the latest firm to grab the tail of the stampeding gold bull. It just lifted its year-end price target on gold to $2,700 after spot prices hit a new record high above $2,370, calling the new gold bull unshakable. “Despite the market pricing progressively fewer Fed cuts, stronger growth trends and record equity markets, gold has rallied 20% over the past two months,” reads the note, via Investing.com. “The traditional fair value of gold would connect the usual catalysts – real rates, growth expectations and the dollar — to flows and the price. None of those traditional factors adequately explain the velocity and scale of the gold price move so far this year.” You might be tempted to dunk on the folks at Goldman for being late to the party when it comes to the precious metals rally. But I think it’s silly to take these “target adjustments” seriously. First of all, these ideas are for the media and the public’s consumption. I do not believe it reflects the firm’s investment strategy. We don’t know what they’re buying or selling at any given moment, but I seriously doubt they’re following these targets as their primary research. Next, it’s important to understand that this is how the game is played. Any analyst target is a moving goalpost. If gold were to crater back below $2,000 (which I don’t think will happen) another updated target would magically appear that fits with the new trend. Now, the main bone I have to pick with the fresh Goldman target is how it claims that this new gold rally is unshakable– because it would not surprise me to see more shakeouts and intraday volatility as new traders and investors pile into metals and miners. We’re already seeing just that… Remember, gold’s decade-long bear market forced just about everyone out of the metals trades until recently. Gold mining stocks, for example, have been dead money for years. No one wanted to own these names when gold was going nowhere. Naturally, these trades are beginning to come back to life as gold futures extend their historic breakout. As the FOMO brews, we’re starting to see some volatile sessions stack up in futures and precious metals stocks. Friday’s trading action is a great standalone example of what we’ll continue to see in the precious metals space as these momentum moves accelerate. Gold futures exploded higher toward $2,450 in the early morning hours, yet peaked around 11 a.m. before proceeding to shed almost $90 into settlement. Gold mining stocks endured a similar reversal, with the VanEck Vectors Gold Miner ETF (GDX) flipping a 3.5% morning gain into a 2% loss by the closing bell. Again, we haven’t seen this type of high-volume chasing in these stocks until recently because no one wanted to be involved in these trades. I still believe we’re in the early innings of a bigger, secular metals rally. But it won’t move higher in a straight line. The branches of these trees will shake — sometimes violently — as more investors pile in. A Solid (Gold) Trading Plan A major component of any sound trading plan involves understanding the current market environment. Over the past several weeks, we’ve discussed how traders can capitalize on shorter-term moves in gold via the futures market, mining stocks, or gold funds as the environment improves throughout the sector. This also means that we have the opportunity to attempt to profit from breakout strategies as individual mining stocks heat up. Knowing your desired time frame is critical when attempting to place your buys and sells as the gold trade heats up. It might seem obvious that longer-term-minded investors will be best served if they patiently buy dips, while shorter-term traders can attempt to ride momentum moves and breakouts. Yet it’s important to remember to have your time frame in mind and execute your plan accordingly. It’s all too easy to tear up your plans and just close your eyes and buy when you see your desired stock or ETF explode higher. Panic buying is real — and can be dangerous! As for price targets, don’t get too caught up in being right or hitting a magical level like gold $2,700 by the end of December. For the record, I tossed out a $2,600 target way back in mid-December 2023. It’s a decent roadmap. But we’ll need to hone in and adjust the route along the way. We’re already witnessing some wild action in precious metals and stocks this week as the tensions between Iran and Israel evolve. Don’t be afraid to take a step back from the charts as additional volatility barges into the markets… Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Elon Musk’s NEXT Billion-Dollar IPO Revealed by the end of 2024?]( [Click here to learn more]( First, Paypal’s IPO made him a multi-millionaire… Then Tesla’s IPO made him a billionaire… Now, his NEXT big IPO could make him a TRILLIONAIRE. And for anyone who knows how to follow Musk as he potentially takes this new company public… The gains could be life-changing. [Click here to find out how](. [LEARN MORE]( In Case You Missed It… Powell’s Pickle Sean Ring, Editor [Sean Ring] SEAN RING Good morning Reader, As soon as Greg Ip wrote his asinine “[What’s Wrong With the Economy? It’s You, Not the Data]( piece in The Wall Street Journal last week, I had a funny feeling Karma was about to bite The Establishment in the ass. Well, Karma acted like a real Karen yesterday when the inflation numbers came out. In a showing that surely made Joke Biden take a deep sniff, the CPI rose 3.5% in March. Core prices, which exclude volatile food and energy costs, rose by an even greater 3.8%. Credit: [The Wall Street Journal]( You see, Biden looks increasingly desperate at the polls and would like a little help from his Federal Reserve Chairman. But cutting rates into higher inflation is a big ask. And it’d look like the Fed isn’t independent, as we all know it is. As the kids say… Whatever. Meanwhile, at the Eccles Building, Jay Powell wonders if it’s possible to remain Fed Chairman without getting a new boss. But I’ll get to Biden and Powell in a bit. First, let’s look at what Ip said: In The Wall Street Journal’s latest poll of swing states, 74% of respondents said inflation has moved in the wrong direction in the past year. This assessment, which holds across all seven states, is startling, sobering—and simply not true. I’m not stating an opinion. This isn’t something on which reasonable people can disagree. If hard economic data count for anything, we can say unambiguously that inflation has moved in the right direction in the past year. In the 12 months through February, inflation, according to the century-old consumer-price index, was 3.2%, compared with 6% a year earlier. Use a slightly different time horizon, or a slightly different measure (such as the index the Federal Reserve prefers) and you get similar results. Take out food and energy—or for that matter look only at food and energy—and inflation is still down. Yes, some individuals faced higher inflation (someone who bought a house, for instance) but, for the average person, inflation went down. Yet the average person thinks it went up. First, define “hard” economic data. Everyone, and I mean everyone, knows the numbers are massaged whenever they need to be. But that’s nothing. The fundamental error is how Ip thinks about economic numbers versus the unimpeachable evidence of a person’s increasingly light wallet. Ip is examining the change in inflation from year to year. The “century-old” CPI was 6% and then 3.2%. According to Ip, if you think inflation went up, you’re a bonehead. Here’s what Ip’s missing. If an item cost $1 two years ago, last year it would’ve cost $1.06 ($1 x 1.06). This year, it costs $1.09 ($1.06 x 1.032). That’s a 9% price increase in aggregate. And members of the “Intelligentsia” wonder why you’re not grateful that your President reduced inflation! How very dare you, you ingrate! Another problem with his “logic” is this: who’s the average person? Hint: nobody. Let me use dice to make the point. Take a die (one-half of a pair of dice). It’s got six sides. You can roll a 1, 2, 3, 4, 5, or 6. What’s the average, or, as mathematicians would say, the expected value of a roll of that die? It’s 3.5 [(1 + 2 + 3 + 4 + 5 + 6) / 6 = 3.5]. Can you roll a 3.5? No! That’s why casinos use a pair of dice, where the expected value (3.5 x 2 = 7) is a possible outcome. So Ip expected an “average” answer from someone who doesn’t exist. Some reporting! As Zero Hedge posted on X: Credit: [@zerohedge]( The upshot is you’re not crazy. It’s them, not you. Now, let’s get to Biden and Powell. Meet the New Boss, Same as the Old Boss With Roger Daltrey screaming those lyrics in his ear, Powell knows, ceteris paribus as his PhDs say, his old boss, one Donald J. Trump, may very well be elected his new boss this November. How can this be? Powell must ask himself this every day. After all, Trump was the man who initially shut down the country during the pandemic-inspired government-mandated private-sector shutdown. Trump ran up the national debt to previously unheard-of levels. (One of his successor's few “successes” is beating Trump deficit-wise.) Finally, Trump let Jerome Powell cut rates to practically nothing to save the stock market from tanking in late 2018. “How can Trump even be in this race?” It’s about as likely as Joe Biden finding the phantom corners in his Oval Office. And yet, here we are. Here’s Powell’s Pickle: how can he get Biden back into the Oval Office while not sacrificing the Fed’s alleged independence and his legacy? It already looks like [Biden is pulling a Nixon to Powell’s Burns]( Credit: [@QTRResearch]( Credit: [@zerohedge]( But here’s the thing: the Fed really only acts when the stock market is in danger. According to Bob Byrne, one of James Altucher’s deputies and Paradigm’s Dealmaker-in-Chief, that will be the catalyst for a cut. Strategic Intelligence contributor and the most complex working man in the newsletter business, Dan Amoss, agrees. “If we see a 5-10% quick correction, I wouldn’t put it past him to do a 50 bps cut!” But if this weren’t an election year, would we even discuss a possible rate cut? In Another World… Pictured taking a deep breath of relief after the President pardoned him on Thanksgiving, Larry Summers posted this on X: Credit: [@LHSummers]( Oh, Larry. Larry, Larry, Larry. Don’t you know this is Clown World? Or, as pols call it, an “election year.” All the rules, including raising rates to fight high inflation, go out the window. At all costs and against all odds, the Democrats must return Joke Biden, or his skinsuit, to the White House. If they don’t, The Donald will return with a vengeance. Wrap Up So that’s the plan. Get Biden in. But how? They’ve got to get the Fed to buy in. Or, just go over the Chair’s head to get the cuts done. The cuts will temporarily goose the stock market, and Biden rides the wave back into 1600 Pennsylvania Avenue. And Jay Powell’s legacy? Who cares! One man sacrificed for the greater good. I’ll say this about Powell’s Pickle: it ain’t no gherkin! All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. 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