The Recent Rally is Just Beginning!

It has been 25 days ago since I last published a post on Silver Gold Stackers. This time, instead of revisiting my old trading blog, I decided to start afresh by updating myself with what’s going on in the gold market. Before, I used to observe five names a day or two before I trade in our local stock market: XAUUSD, DXY, GLD, GDX, and GDXJ.

I missed that gold stock action that started in the second week of September. After a five-month downtrend, from 18 April to 12 September, GDX started to rally 40.47% and is about to cross its 200-day Moving Average. If this will take place, this is usually interpreted as a long-term trend reversal. Between 2015 to 2021 July, I would never miss such an opportunity.

However, since the day I shifted my interest to the crypto market, it feels like everything is foreign to me again when it comes to the gold market.

To keep myself abreast with what’s going on in the gold sector, I intend to review one of the most recent articles published by Adam Hamilton on gold stocks. This gold analyst of zealllc.com is one of the experts in the sector that I have been following since 2015 and I want to start with the article he published last 09 December, Gold Stocks Surging Back.

Hamilton reports that the sentiment in the gold mining stocks is changing. Despite its 40.47% rally, the surge is just beginning. It has been abandoned for so long after the price crashed due to panic selling. There was no fundamental reason for the sector to visit the pandemic low in early September. It was actually the gold-futures selling that caused such a decline.

Now that the firepower of gold-futures speculators has already been exhausted and the trend is shifting, Hamilton thinks that the current rally in gold stocks will continue in months to come.

The gold analyst also reflects on the ability of the Fed to shock the market. For him, the institution has nothing left to surprise the market in terms of quantitative tightening.

Considering the demand side, he interpreted them as bullish for the sector. He described the details as follows:

• From January to September, “total global demand climbed 3.0% year-over-year to 3,553 metric tons.”

• Jewelry demand increased 5.2% YoY to 1,589 tons.

• Investment demand grew 26.4% YoY to 889 tons.

• Central bank buying exploded 61.9% YoY to 673 tons.

Monetary inflation released by the FED is also bullish for the gold sector. Hamilton is basing his outlook on the track record of gold as “the ultimate inflation hedge during currency debasements.”

For our gold expert, the mid-2022 panic selling has no fundamental basis. The gains we are witnessing in gold mining stocks that started in September are just a tiny piece of what we are about to see in the coming months. With the change in sentiment, gold-futures speculators will start to cover their shorts which will drive the prices even higher.

Grace and peace!