A Major New Bull Market in Gold Prices is Now Underway!

Just a quick note today (Sunday morning, October 29th, 2023).

The December Gold Futures Contract closed above $2,000/oz this past Friday.

Extremely rare Monthly Chart Buy Signals have now been triggered within my proprietary computer trading system in both the Major and the Junior Gold Mining Shares ETFs (GDX and GDXJ, respectively - see charts below).

While it's not hard to see why gold and precious metals mining shares are attracting attention right here given the current global state of affairs, I see this month's bullish price action in gold and related precious metals investments as more than a short-term tradable event.

I don't think it's a stretch right now to forecast gold at $3,000/oz and silver at $50/oz over the next 14 months (before the end of December 2024). Of course, if this forecast is right, precious metals mining shares could easily soar 500% or more over the next year!

Major Gold Mining Shares ETF (symbol GDX) Monthly Chart Buy Signal

Junior Gold Mining Shares ETF (symbol GDXJ) Monthly Chart Buy Signal

The Perfect Storm: Buy T-bonds, Buy Gold, Sell Stocks, Sell the Dollar

Just a quick note today regarding the next big wave in the U.S. Financial Markets.

Despite a 500 basis point hike in its Fed Funds interest rate over the last two years, the Federal Reserve continues to saber rattle on the hawkish side for its monetary policy. 

The yields on the 10-year Treasury Note and the 30-year Treasury Bond are both near 5% now, and U.S. 30-year mortgage rates are approaching 8% now.

And even though the U.S. domestic inflation rate has fallen from over 9% a year ago to near 3% now, the Fed remains hawkish with its rhetoric and with its monetary policy actions.

In the not so distance past, economists were generally in agreement that changes in monetary policy had at least a 6-month to 9-month lag in terms of its full impact on the economy. However, this Federal Reserve seems unwilling to wait 6 to 9 months for anything, and instead is dead set on breaking the back of inflation WITHOUT the obvious negative potential impact on the economy.

I see the current state of affairs as a perfect storm ahead of a major inflexion point.

U.S. stock prices have weakened recently, and I think they will continue to weaken over the next several quarters, at least.

U.S. Treasury yields are probably at or near their peak for this cycle, which means Treasury prices (especially on the long end) will probably soon begin a major bull market.

As the economy weakens, led by a dismal real estate market and a financially stressed consumer, foreign exchange traders will begin dumping U.S. dollars in full expectation of a reversal in Federal Reserve policy.

And when the U.S. economy crumbles (in direct response to its overly tight monetary policy), the Fed will "blink" and begin cutting interest rates in an attempt to avoid a full blown economic recession.

As the Federal Reserve signals a change in monetary policy, Gold and Silver prices will soar, with precious metals mining stocks poised to double and triple over the next six months.

For tracking purposes, here are the closing prices of the key ETFs and Indexes on the afternoon this post was written (October 4, 2023):

S&P 500 ETF (symbol SPY)    424.66    (Moderately Bearish is the Forecast)

U.S. Long Treasury Bond ETF (20+ Years - symbol TLT)    86.26  (Bullish is the Forecast)

Gold ETF (symbol GLD) 169.14     (Bullish is the Forecast)

Silver ETF (symbol SLV)     19.31    (Bullish is the Forecast)

U.S. Dollar Index (symbol DXY)    106.80    (Bearish is the Forecast)

Time to Exit U.S. Stocks and Gold, Too!

I consider myself lucky to have not lost any money on recent long-side trades in U.S. stocks and gold-related investments.

While I still think the U.S. Federal Reserve will "pause" in its current rate hike path, there appears to be more damage to the banking system than I previously thought, and a crisis of confidence could soon derail the overall economy and stock prices with it.

It's time to exit all stock positions, including gold-related investments, at today's close (Monday, March 20th) in favor of a sideline stance.

Could A Sustained Rally Now Be Underway in U.S. Stock Prices?

The #1 most reliable guide to winning in the stock market is "Don't Fight The Fed!". Since almost every Fed Governor and almost every Fed President are standing firmly in line behind Fed Chairman Powell's current hawkish stance on monetary policy, we should therefore be out of U.S. stocks now! RIGHT? 

WRONG!! 

It is my strong view right now that the Fed is about to "pause" in its self-proclaimed path to higher short term interest rates, and that except for the possibility of one last 1/4 point hike, the next multiple change in short term interest rates will be to the downside. 

BIG money in stocks is made when you can see the next major turn in Fed policy, especially if that change is "imminent" and not well discounted by investors. Imminent is defined as 6 months or less. 

The Fed is now looking for overwhelming evidence of "disinflation" before pausing in its path to higher rates. However, almost all the economic data that I am looking at right now reflects actual "deflation" year-over-year. 

If this is true, then U.S. Government's reported inflation indicators are actually lagging real world data and they will soon catch up! And when they do, U.S. stock prices will soar (in response to a major reversal in the Fed's monetary policy from hawkish to dovish)!!

Bottom line: It's time to jump on the Northbound train in U.S. stocks! And it's time to expand holdings of precious metals mining stocks!!