For the last 15 months, gold has been on a tear, with spot prices running up just north of 60% against the dollar since March 2024 and after moving out of a decade-long digestion starting way back in 2011. As in May and November 2024, the run is currently taking a breather, with prices hovering between 3,100$ to 3,500$ per ounce.
A host of voices keep currently emphasizing that the recent pullback is signaling an imminent top in gold, citing “overbought” conditions. When looking at history though, the degree of this pullback (about 10% max off the highs) is relatively contained and well within expected range of previous medium-term consolidations … plus selling has not been steep or violent. Neither has the upwards price trajectory been too turbulent recently, both suggesting absence of exuberant speculation and permanent profit-taking.
All the while, macro factors (which, compared to equities, really do matter here) underpinning the move in this commodity have not abated. Any possible end to this move would be triggered by a change in supply and demand of this perceived safe haven – but fear, uncertainty, chaos, financial stress, political shifts, and geopolitical crises are more pressing than ever across the globe. We’re looking at stressed bond markets in the US and Japan, trade wars, physical wars, waves of re-armament, political extremes rising across the board, and unrest brewing in the mid-east and the orient.
Looking at gold-exposed equities, we equally see nothing but strong trends. In fact, I’d go so far to say that the strong recovery in Australian and Canadian markets have largely been propelled by strength in and spillover of enthusiasm from gold miners (though not exclusively).
Take a peek at just a handful of long-term charts of miners from Australia, Canada, or Hong-Kong below … there is no more bullish sign than an all-time High made in price:
In order: Wanguo Gold, Lingbao Gold, Lundin Gold, Montage Gold, Catalyst Metals
Forecasting the market is a futile attempt to make money when navigating the markets, and only failed-traders-turned-newsletter writers do so. Thus, we should always look at what’s happening right now. I will not try to predict what will happen down the line, but the constellation that is aligning at the moment sure suggests that the odds of being long gold options, futures or equities have higher odds of making us money than not.
So long,
TGS