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AG Thorson
gold

As I mentioned in our previous article, gold is following the 2016 post-election price pattern. Breaking below support at $1850 established a near-term breakdown, and prices could decline even further in December. Gold could dip below $1700 before finally securing a bottom.

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GOLD DAILY CHART

The breakdown below $1850 is underway. Prices are likely to pause near the 200-day MA as bulls attempt to build a bottom. If gold continues to slide below $1800, then it could proceed towards $1750 and perhaps even $1670 before bottoming in December.

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Why Is Gold Declining

Multiple pharmaceutical companies have announced positive vaccine results. Investors and institutions are becoming optimistic and are starting to see life beyond COVID-19. They are taking profits on precious metal positions and rotating into extremely undervalued sectors like energy. I became aggressively bullish on energy in October, and the XLE is up over 40% since the recent low.

Bullish Factors Supporting Gold

Gold (precious metals) will not stay low for long, in my opinion. With lockdowns resuming, unemployment claims are sure to rise. A double-dip recession is a near certainty without more stimulus. When more stimulus becomes apparent, gold will respond accordingly (rally sharply). I expect much higher gold prices in 2021 and throughout this decade. Any decline now should be considered a gift and a long-term buying opportunity.

Note- Our educational portfolio began selective buying of precious metal assets on Monday.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

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