What’s With Gold, Silver, the Dow?

New York (Aug 3)  Investors want my head again. Gold, silver, and mining companies are refusing to fall per the forecast of my artificial intelligence, neural net models.

So what gives? In this column, I’ll lay out what I think is happening and also give you my line in the sand.

Fundamentally, what I believe is happening is that the rise in geopolitical troubles here in the U.S. and abroad, the rise of the war cycles that I’ve written about before, is stronger than I had expected. This is causing the precious metals and mining sector to be stronger than expected as well.

However, the line in the sand remains a weekly close above $1,363.50 in gold. If that were to occur, it would indicate an extended rally to somewhere between $1,450 and $1,500 by October. Mining companies of course would follow suit as would platinum and palladium.

Let’s hope we don’t see that. The reason is because when a market undergoes two cycle inversions in a row, without a pullback — that market is actually more bearish than bullish intermediate-term.

If we were to get a second cycle inversion and a move up to the $1,450 to $1,500 region in gold by October, then we would likely see the precious metals crash and burn, along with mining companies into early 2017 — and to new record lows.

The far more constructive, bullish pattern would be for gold and silver to follow the current forecast and decline into early October. So if you’re a long-term bull, you want to be rooting for a decline into October.

I’m telling you like it is. I’m not talking out of both sides of my mouth. I’m giving you the two scenarios for the precious metals and miners. And I’m giving you the line in the sand that separates the two scenarios.

As testament to how accurate my numbers can be, just consider the Dow Jones Industrials. For over a year and a half, I told you that major resistance for the Dow Industrials was at 18,500. I also told you that the next leg up in the Dow Industrials would not begin until we got a monthly close above 18,500.

Source: Money&Markets