April 04 – The Golden Comeback

Gold started the session deep in the red as investors reacted to the jobless claims data that came in at 202K vs 216K forecasted. Gold and Gold Miners sold off prematurely just before bullish investors came back in after digesting the uncertain trade deal information. A Wall Street Journal article states that while it seems the negotiations are going well and a deal could be struck as soon as next week, there’s a lot of uncertainty regarding the quality of the deal. Given Trump’s previous claims that no deal is better than a bad deal, we could very well see further delays.

Today’s Summary:

  1. Yields and market remain flat amid trade uncertainty
  2. US dollar continue to trade in a small range while waiting for more economic catalysts. It’s still trading within the ascending triangle. It looks like it might make a last push towards resistance or get stuck at the current level and push down, please refer to chart below.
  3. Gold miners make an incredible comeback after a morning sell-off. Following my predicted path trend lines.

Current Position: 50% of full position in $NUGT at avg cost price of $19.02.

Trading Outlook: Will be looking to add another 20% of full position at $19.1-19.2 as I believe there will be a re-tracement after such a big upward move. The entry prices mentioned may change based on my observed price action throughout the next couple of days. You can find real-time updates regarding my next entry price on my most recent TradingView post.

Gold Miners made the move

Gold Miners initially sold off along with Gold, however it quickly recovered all its losses and finished the day with very strong upward momentum, with $NUGT had an intraday swing of 8+%. Today’s move completes the bottom portion of my predicted trade path and represents what I believe is the start of a move to at least above $23 on the $GDX. Please refer to my most recent TradingView post for updated positions and real-time profit targets.

What does a tighter labor market mean?

As we see lower and lower jobless claims, we can reasonably assume that companies will start feeling the inflationary wage pressures. There will be less and less high quality talent available for cheap, therefore causing companies to increase prices to maintain margins. This does not present a situation where the Fed will be able to easily lower rates to further inject growth into the economy. Remember that their first and foremost mandate is to keep inflation in check and unemployment low. While this is happening, we still have a global economic slowdown on our hands.

Brexit Update

As the hope of a successful exit from EU continue to diminish with each passing day, companies have been reported to be stockpiling every critical material they need to avoid any service disruptions. This kind of hoarding behavior has not been seen since the war era, according to WSJ. The most important issue concerning this kind of behavior is that companies are now holding more inventory than ever, which drastically lowers the amount of cash they have to put to work in other areas such as hiring and business development. In the end, an exit from the EU without a well thought-out plan and trade policies will inevitably put a dent in the already struggling European/global growth.

GDX Completes bottom pattern
Gold continues to consolidate
10 year yield waiting for more economic catalysts

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