As legendary trader Jesse Livermore once said, “There is nothing new on Wall Street. It can’t be because speculation is as old as the hills. Everything that is happening on the stock market today has already happened and will happen again. “
There could not be a more specific statement than the one above and I believe that a pattern that I have seen before is taking place in the gold market right now.
I had to extract my old working notes at Lind-Waldock and analyze some of the rare developments around 2008-2009 which are quite similar to today. Many will say that at the time it was a financial crisis and that we are facing a virus today, but I have noticed very similar technical coincidences that could help us to try to predict the future price of l ‘gold.
The graph below represents the gold futures from the first month of mid-2008 to the peak of August 2011. Now the three arrows in the bottom right are what I want you to focus on . The first blue arrow UP was the day Lehman Brothers filed for bankruptcy. By that date, September gold had bottomed out at $ 739 and the flight to safety began. At this point, I thought that the coast was clear and that the navigation towards more fluid gold prices, but what really happened less than a month later (the blue arrow DOWN) is that a key reversal occurred with a peak of $ 936 in October. 10th and we closed that day at $ 859.
Indeed, margin calls have fully hit the stock market and traders have sold something of value in their portfolios, just like we saw on March 9, 2020, when gold recently peaked at 1707 $ and sold for eight consecutive days, bringing it down to $ 1,453. margin liquidations.
Once this liquidation of the “fire sale” was completed, stabilization began to occur (the green arrow up) when the Federal Reserve intervened and provided unprecedented levels of liquidity and monetary stimulus as we see today. From that moment, the stage was ready for a multi-year rally, that’s what we could see from here
From a business perspective, we have used several strategies to try to take advantage of the long-term expected price appreciation in the precious metal markets. We also believe that silver will benefit and the Gold / Silver ratio will start in the fall due to a faster increase in the price of silver. If you would like to know more, please register below.
Remember that many factors can affect the direction of the metal markets, so be sure to stay up to date on developments by signing up for a two-week free trial of Blue Line Futures Morning Express research reports by clicking on the link here: Blue Line Express two week free trial
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has done everything possible to guarantee the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept guilt for loss and / or damage resulting from the use of this publication.