The Week Ahead in Gold
The gold market saw some further selling on Monday as chart-based sellers appear to be increasingly emboldened. Although the U.S. Government was closed on Monday in observance of the Veteran’s Day Holiday, stock markets were open. Action was not predetermined in either direction, however, as the benchmark S&P 500 finished the day slightly higher while the Dow Jones Industrial Average and Nasdaq lost ground on the session.
U.S. stocks are not far from recent and fresh all-time highs, and the likelihood of another test higher could potentially be keeping a lid on inflows into gold and other hard asset classes. This could remain the case until stocks, or gold, show a significant breakdown in price.
There was no fresh news on the ongoing U.S./China trade war over the long weekend. President Trump suggested on Friday that he was not willing to roll back tariffs on Chinese goods in good faith, and that sentiment still seemed to be present on Monday. Although Trump further suggested that talks were going very well, it could still be some time before any long-term agreement is reached between the globe’s first and second-largest economies. Various delays could keep market volatility on the rise, and the potential for a significant sell-off still exists. This could, in turn, keep gold and other alternative asset classes from declining too far too fast.
The gold market needs to take out the psychologically key $1500 level again, and soon, in order to inspire more confidence. For the time being, however, the market may be content with simply holding ground and not seeing additional declines. The gold market has a lot to potentially look forward to and 2020 could see heightened stock market volatility alongside rising gold prices. Given the current economic and geopolitical backdrop, the powers that be may simply look to stay long the yellow metal until the next major, bearish issue for stocks unfolds, or until the gold market starts moving higher again.
Either way, the market appears to be in the process of building higher lows, and that is a process that can take some time to develop. The long-term path for gold could be sharply higher from recent levels. Stay focused on the long-term and forget the short-term. Who cares? Just as it makes no difference to your long-term portfolio success if one of your stocks goes sharply higher tomorrow, it also makes no significant difference if the price of gold rises by $10, $20, or even $50 per-ounce. In fact, a gain of $50 per-ounce, while respectable, would still be very small potatoes compared to what the market could potentially add on in the years ahead (hundreds or even thousands more per-ounce).
The time to be buying, and to keep buying, is now. Right now. Doing so has never, ever been easier and arguably never more important. All you have to do is pick up the phone. You will likely be quite glad that you did in the years ahead.