Major Catalysts Building for Gold
Although precious metals have rebounded, some consternation remains that they could be headed much lower before a major bottom.
As we've written and mentioned in video commentaries, a close below the 40-month moving average following a lengthy uptrend signals the start of a new secular bear market. Gold and gold stocks began to outperform the stock market several weeks ago when the S&P 500 lost its 40-month moving average.The first real catalyst is obvious. That’s when the Fed stops hiking rates.
In the last nine Fed rate hike cycles, the average and median time from the last rate hike to the first cut was five months. However, from 1966 to 1989, which was mostly an inflationary period, the time between the last rate hike to the first cut in four of the five Fed cycles was only one to two months.Circling back to the present, I want to note the positive technical developments in the gold stocks. They are showing important positive divergences.
These catalysts are imminent from a medium to intermediate-term standpoint but not imminent with respect to the short term.
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