Gold In 2021: Will It Be Fun?

1. Gold stock enthusiasts who bought metals and miners at my key $1788 buy zone for gold are looking very good.
2. Click to enlarge this weekly gold chart:
3. The $1767 low is also now a buying area.  On the sell side, $1966-$2089 is a good spot to do some profit booking.  The bottom line:
4. Investors who followed the Edwards and Magee support and resistance weekly chart rules did well in 2020, and it should be another great year in 2021!
5. For a daily chart look at the price action, please click here now. Double-click to enlarge.  Gold is likely to pause at the first thin line of resistance that I highlight in red on the chart.
6. The good news is that $1851 area lows may support any pullback, but a second dip towards $1788 and a test of the $1767 lows should not be ruled out.
7. It is unfortunate that a bit of a stone age mentality about gold exists in the west.  In China and India, good news like the Corona vaccine is celebrated by the citizens with enthusiastic purchases of gold.
8. In contrast, western investors tend to sell gold when there is good economic news.  This is a deranged approach to the world’s greatest asset, but there are substantial liquidity flows from these “fiat-obsessed cavemen” and that does affect the price.
9. Many bank and stock market analysts feel that success with vaccines will create substantial global economic growth by the second half of 2021.
10. The growth is likely to happen, but a Biden administration will almost certainly raise taxes and wages, especially if growth accelerates. 
11. That is inflationary, and given the government’s obvious addiction to debt, the inflation could be a lot higher than anticipated.
12. Most analysts failed to anticipate the 2020 virus cycle.  Will they fail again in 2021 with inflation?  I think so. 
13. In the 1970s, the Fed raised rates to cut off inflation, but the debt to GDP ratio was only about 40% when Jimmy Carter was in office.  It could be 200% in 2021.  With debt in the stratosphere, the Fed will be very reluctant to raise rates even in the face of strongly rising inflation. 
14. That’s great news for gold!
15. Please click here now. Double-click to enlarge this daily silver chart.  Silver can probably climb back to the $30 area highs by March or April, just based on the Chinese New Year and US government stimulus price drivers.
16. Gold could rise to $2100-$2400 in that scenario, but from there a substantial price reaction is likely, taking gold back down towards my key support numbers of $1788, $1704, or $1666.
17. To push gold towards $3000 in a good growth environment, Western hedge funds and money managers who trade on the COMEX would need to see not just projections of inflation… but get a blast of it right in the face.
18. The bottom line is that the next few months look very good for gold, but in 2021 H2 some patience will likely be required.
19. There are some black swans that could change this outlook and a potential 2021-2025 US war cycle is one of the more ominous swans. 
20. Throughout history, the world’s empires have a displayed a nasty habit of meddling in other nations, murdering and starving citizens in the name of “great regime change”, using debt to fund their mayhem, brainwashing the citizens into applauding the madness, and the current American empire is no different than the empires of the past. 
21. Clearly, history does rhyme.
22. Please click here now. Double-click to enlarge.  If the 2021-2025 war cycle comes to life, the potential cup and handle pattern on the weekly gold chart is likely to activate, and gold could surge to $5000 or higher.
23. What about the miners?  For a look at some daily chart action, please click here now. Double-click to enlarge this GDX chart.  There is a small inverse head and shoulders pattern in play and that’s positive action.
24. As the price of gold arrived at my $1788 buy zone, GDX traded at about $34. Traders can book some profit.  Long-term investors should be happy with the core positions they added to their portfolios.  For the world’s gold community, the month of December is beginning on a golden note!

Thanks!    

Cheers

St