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Gold Powers Towards Record High, NEM Closed Last Gap, What’s Ahead?

March 6, 2022

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2:15 pm

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32 comments

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Economics

Gold chart courtesy of StockCharts.Com annotations by Mish

Gold has been on a tear. No, it’s not due to Russia. It’s best thought of as a measure of faith in central banks, especially the Fed.

Technically speaking, gold broke out of a nearly two-year correction. The price of gold in US dollars is now higher than it’s been except for about 10 days in August of 2020.

Newmont Mining at Record High

*Newmont Mining (NEM) chart courtesy of StockCharts.Com annotations by Mish*

Newmont Mining closed the last two of its unfilled gaps then powered to a new record high, blasting through resistance at the peak.

Gaps occur when a stock opens below the lowest point of the preceding day or above the highest point of the previous day, then stays there for the day.

I expected those gaps on NEM to close and now it’s what many consider “blue skies”, that is no above resistance.

AEM Two Open Gaps

Agnico Eagle (AEM) chart courtesy of StockCharts.Com annotations by Mish

AEM another major tier mining company has two unfilled gaps. If gold continues higher, those gaps will fill.

GDXJ Junior Miners Two Open Gaps

*GDXJ junior miners chart courtesy of StockCharts.Com annotations by Mish*

Junior miners have lagged Newmont and the price of gold. They offer a higher risk-reward profile than a company like NEM.

However, if gold continues higher, those gaps will fill too.

What About the Dollar?

It’s an old wives tale, widely believe but false, that gold follows the US dollar. In the very short term, gold frequently does. However, the idea is noticeably wrong on a long-term basis.

More About Gaps

Feb 7, 2022: Newmont Mining Looks Poised to Close Two Open Gaps
Feb 17, 2022: Newmont Mining Corporation, One Gap Left to Fill, And it Will.

This post originated at MishTalk.Com

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32 Comments

Newest

Oldest Most Voted

Bhakta

4 years ago

Glad I have never sold my gold or silver. They cannot print these or create them on a screen. Thank you Mish. Hope you have your clients in gold and silver.

Roadrunner12

4 years ago

“Do you believe we would have negative or zero interest rates in a free market?”

Seems very simplified but those that understand the above question and understand the distortions involved answer NO and buy Gold.

Those that dont understand the question or answer Yes are miffed as to why those that answer NO buy Gold.

goldguy

4 years ago

Mish, also, back in 1979 when Russia went into Afghanistan, gold doubled. So, I think war does affect the price of gold.

goldguy

4 years ago

gold is currently up about 20.00 premarket…

Eddie_T

4 years ago

Still in NEM, SBSW, RIO, and BHP.. Cut Jr miners to pivot more to high torque Canadian O&G names and Uranium names for the moment.

Great DD on the gaps. I will be back into pm miners more heavily soon, I expect.

Doug78

4 years ago

People are funny. Here we are with the world faced with the largest war in 75 years with a real potentional of becominig nuclear and all we think about is how to make a buck out of it. Do you really think that it matters if your portfolio is up or down 5% this week or the next? You should be thinking about what really matters for you and what to do about keeping it. The Fed doesn’t matter. The stock market matters even less. What really matters to you?

Scooot

4 years ago

Reply to Doug78

I must confess I have been feeling a bit helpless in this regard. Living about 30 miles from London, which I guess would be a target, isn’t particularly comforting. I’m spending a couple of nights away next week and I’ve found myself thinking “ well that’s another 80 miles away”. In reality I don’t suppose it would help much.

Best just to stay positive, and if discussing the market helps take my mind off it, we’ll so be it.

Doug78

4 years ago

Reply to Scooot

Yes. It’s
entertainment and nothing else. My father who is 99 years old said today on
skype that he has seen it before, the same type of unbelief and avoidant
behavoir but more sooner than later a consensus crystalizes into a hard knot of
conviction. I myself desperately do no what to believe what is happening but I cannot.

Scooot

4 years ago

Reply to Doug78

This isn’t too far from me. Hopefully they’d extend their opening hours. 🙂

https://secretnuclearbunker.com/

Captain Ahab

4 years ago

Reply to Doug78

There isn’t much any of us can do to stop WW3. Or change how the Fed does business. Or affect the movement of the stock market. That said, survival has always been a function of planning and preparation.

To be crass,

the probability of the event x your expected loss from the event = your insurance premium (how much you pay to prepare/avoid the event)

Doug78

4 years ago

Reply to Captain Ahab

Our world is going to change as radically as it did during WW II. All our previous assumptions will no longer work. We can look for new ones but that just comes back to avoidant behavior. I suggest, for those who have the inclination, to explore black markets goods and services if their only reason for living is to make money. For the others, you know what to do.

Eddie_T

4 years ago

Reply to Doug78

Of course the existential threat is real, but most of us have lived with the threat of nuclear war for our entire lives. To me it makes a certain amount of sense to go on with our lives like nothing is happening, with regards to nukes.

I do keep potassium iodide on hand and somewhere I do have a Geiger counter. I have food and water. I should buy batteries, I suppose. Check the GC. I have lots of N95 masks. lol.

StukiMoi

4 years ago

Reply to Doug78

“..the largest war in 75 years .”

By what measure?

The UN still, 12 days in, claims 350-odd civilian deaths…. That’s 30 a day. The LA Crips fight wars that “large…”

Almost NO aerial bombardment…

Russian military actions have killed, maimed and destroyed almost uncountably more lives in Syria, Chechnya, Afghanistan etc. than in Ukraine. US ones as well, in seemingly every second country around the world by now. Even the war the Hutus waged on the Tutsis, was an awful lot larger than this, if measured by civilian deaths.

While this one, while still an aggression and hence not “justified”, in comparison to most seem to be a real calm, quiet and carefully conducted one, by both sides, based on actual reported numbers of real atrocities. In a sign of our times: An awful lot of loudmouthed look-at-me; thiiings-are-diiiferent-thiis-tiiiime, we’re special snowflakes now; grandstanding, hyperbole, hysteria and trashtalk. But precious little in the way or real, universally measured atrocity. Which I suppose, within the narrow sphere of conducting wars, may be a good thing….

It would seem to me, that the killing of non combatants, would be the most relevant, universal, measure for the size of a war. Perhaps augmented by some measure of destruction of life supporting infrastructure. Where Ukranian cities; whether “taken” like Kherson, or not, like Kyiv; look an awful lot less affected than Kabul, Aleppo, Grozny….. Or Gaza. Perhaps, or perhaps not, even Los Angeles in ’92.

Total energy of ordnance dropped would be another somewhat stable measure, I suppose. Although doing so may count the “war” on the poor guys who used to live on Bikini but had to flee in the name of progressives’ progress, as the biggest one ever…..

I suppose this one _may_ be one of the larger, if measured narrowly in number of tanks crossing an international border to participate. Or perhaps even by number of soldiers. But hardly larger than any given night’s LAPD helicopter involvement over South Central, if counted in aircraft participation…. Not to mention naval involvement…..

It’s a “large” one, if one measures the number of nuclear warheads the invading party has in its possession. But no more so than all the other ones that the US and Russia has been engaged in prior. Which are quite a few by now. Most lasting an awful lot longer than 12 days. And killing an awful lot more people.

vanderlyn

4 years ago

if memory serves, in jim rickards “currency war” book, one of the opening moves of the US wargames, was rickards team, representing russia, said russia goes to a gold backed ruble standard, with gold available for exchange in moscow and some other safe foreign location. might have been UK or swiss. but today that might be HK or Singapore…………………if memory is correct, i believe the nsa/us military team representing usa, said that wasn’t fair. ha ha ha. please correct me if i’m mistaken. smells like we are literally pushing russia to do this.

Mish

4 years ago

Reply to vanderlyn

I pay no attention to Rickards, a hyperinflationist who repetitively posts exaggerated world will end now and buy my report to see what you can do about it stories. Do a google search for MishTalk Jim Rickards

vanderlyn

4 years ago

Reply to Mish

i remember your take on rickards. i really don’t look for heroes. i also don’t mind getting one or two nuggets of wisdom or ideas from scammers. doesn’t matter to me that rickards is pumping his paid reports. his book currency wars was fantastic. i learned a few things. i’ve gained nuggets of insight and wisdom from machiavelli, the prince. and AH, mein kampf even. lots of insightful sociology in that sick twisted book. i learned from napolean hill think and grow rich. he was a complete fraud. i’m sticking to the idea that if the russians offer gold exchange for rubles, it would be close to a check mate to pax amerika petro dollar protection racket. which reminds me, i learned a ton from reading kissengers book diplomacy and soros books, too. 2 very vile humans who are 100x worse than little jim rickards. this man needs no heroes. and will try and learn no matter the source. keep up the good work, mish. you are a rare corner of financial pros intertubes blogs that are worth a damn.

Rbm

4 years ago

Reply to Mish

Mish slightly off topic question. Your comments every stock there is a buyer and seller got me pondering. With All the cash the us and other government print. Does it bounce around in the economy permanently raising prices of goods until bankruptcy( nation)or is there a mechanism to pull back out of the economy.

Would have asked on ask mish but its not around anymore. Thanks.

Captain Ahab

4 years ago

Reply to vanderlyn

Rickards’ motivation aside, there is some logic to using Russia’s gold to backstop the ruble. That said, there are far better uses for gold. Such as putting pressure on the US dollar, for example, by requiring payment in physical gold from countries buying its oil, and making payment for foreign purchases–both unlikely unless a country steps up as intermediary.

Casual_Observer2020

4 years ago

What happen to gold thesis in the 1980s ? Even after the great recession, gold deflated along with other asset classes. The same will happen this time around if there truly is a deflationary recession.

Mish

4 years ago

Reply to Casual_Observer2020

Gold does poorly in a disinflationary environment, when faith in central banks is highest. It is not an inflation hedge. Talked about this many times.

yooj

4 years ago

What effect if Putin can and does sell gold? Seems like the potential huge increase in global supply presents substantial short term or midterm downside risk for gold.

Gaps and waves and Nostradamus aside, gold is priced the same as any asset, on supply and demand. The whole demand curve would shift up if faith in central banks erodes. But if faith in central banks remains more or less the same, then even with increased demand for gold, any supply increase would have to be factored.

Or does the supply of gold, upon which price depends, depend on how much is available for trade, I.e., has been mined, as opposed to how much is for sale?There is only so much gold that has ever been mined. Is that amount the determinative supply? If Putin launched his gold into outer space, gold prices would go up even without any transaction. But it seems that the amount on the market, the amount for sale must bear on the price, even given a constant amount in existence.

Mish

4 years ago

Reply to yooj

Th last thing Putin would want to do is sell gold.

yooj

4 years ago

Reply to Mish

The ruble is crashing. Selling gold for rubles would cushion the crash, no? What’s the point of holding foreign or gold reserves if not to support the local currency? Maybe he wants his government to trade in gold instead of rubles? Maybe the ruble is secondary importance to him to purchasing power to sustain the war?

goldguy

4 years ago

Good post Mish. I liked the surge at the end of the day closing above 1967 (some resistance there), should get some follow through this week. The big boys are leading the charge, tells me the little guy is not in yet, lots more to come IMO. This week should be interesting.

Dr. Odyssey

4 years ago

More unintended consequences?

From Asia Times:

China is looking for alternatives to the US dollar as a reserve currency after Western nations froze the foreign assets of Russia’s central bank last week, former IMF chief economist Kenneth Rogoff told media on March 1.

“The seizure of sovereign assets has no precedent in postwar history.”

“It’s an absolutely radical measure to try to freeze assets at a major central bank. It’s a break-the-glass moment,” said Rogoff, now a professor at Harvard University.

“It’s a major thing,” Rogoff added. “I mean, if you want to look at the long-run picture of dollar dominance in the global economy, believe me, China’s looking at this. They have, I don’t know, US$3 trillion in dollar reserves.

https://asiatimes.com/2022/03/gold-will-soar-as-china-seeks-us-dollar-alternatives/

Captain Ahab

4 years ago

Reply to Dr. Odyssey

That the west could do this, even limited in scope, sends a clear message to other nations. ‘Don’t play by our rules, you are kicked out of the club.’

Therein lies the Information effect. Go through the other nations and list the countries that are ‘friends’ of the USA, and those that would like to see the US knocked down a few notches.

vanderlyn

4 years ago

awesome post. this is the stuff i enjoy. how do avoid losing dough, and how to make some. hat tip mish.

FromBrussels

4 years ago

What the fck is your blinkin mfr Blinken doin in Moldavia ??? Even more warmonging and arms deals ?? Thank you US of A , ain t it fn great to have a crumblin empire as a fn ally ? ! My gold investments have almost doubled in value in recent years….but that s not what I want …..I want to live in a free world, definitely NOT dominated by a criminal nation like the US of A !

Zardoz

4 years ago

Reply to FromBrussels

I’m curious… are you a paid Russian asset, or just a Pooty poot psycophant?

It’s embarrassing to watch you stick up for that raggedy dictatorship.

FromBrussels

4 years ago

Reply to Zardoz

‘raggedy dictatorship’ …..like the fn US of A ?!

Carl_R

4 years ago

Reply to FromBrussels

Perhaps you missed the picture of the leader of Belarus standing in front of a map showing invasion plans for Ukraine and Moldova? Even if you aren’t concerned, Moldova apparently was.

FromBrussels

4 years ago

Reply to Carl_R

LET THEM HAVE IT ….WHY the fck NOT ?! ….oh yeah sure, lets ‘democratise’ them fn nations ! SANCTIMONIOUS BAS TARDS !

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Gold Powers Towards Record High, NEM Closed Last Gap, What’s Ahead?

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