Smoke on the Launch Pad -

While we may have called the bottom for gold in late June, it’s important to remember that a bottom is usually a process — and the next few weeks will likely be the premier buying opportunity of the year.
If you’re a long-time reader, you’ve seen me say this nearly every year about this time. That’s because in my long experience in this market, I’ve seen gold typically bottom anywhere from mid-July to mid-August.
My qualitative experience is backed up by the cold, hard quantitative data.
If you’ve been on financial social media recently, you may have seen a number of analysts quoting posts from the respected Seasonax service showing the 10-year and even 50-year seasonal trends for gold:
<img class="mx-auto p-3 md-shadow rounded border-2 border-black" src="https://www.moneymetals.com/uploads/content/seasonax-tweet-about-gold-712×570.jpg" alt="Seasonax | Gold has a 90% hit rate in this swasonal window over the last 10 years. Early July to early August. Average Gain: 3.02%. Some Years: above 5%. The drivers dont change much year to year: Central Bank Buying, Geopolitical uncertainty, Softer USD plus falling real yields, and Indian wedding season demand building. Seasonally, the path of least resistance is higher. – tweet" width="712" height="570" loading="lazy" />
It’s important to note that seasonality doesn’t work every year for gold. Sometimes other fundamental factors completely override the natural strengthening for the metal’s price.
But when it works, it’s one of the easiest ways to get a jump on the market — especially in junior mining stocks.
That’s because, along with the factors that work to turn gold itself higher, there’s a lack of attention in junior miners as investors, traders, brokers and everyone else is distracted by summertime vacations.
Interestingly, this also coincides with the exploration season in northern latitudes and a flood of drill results coming into a market where fewer people are paying attention.
Again, when it works…it’s the premier buying opportunity of the year.
And it looks like it’s working right now.
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Calling the Bottom?
<img class="mx-auto md-shadow rounded border-2 border-black" src="https://www.moneymetals.com/uploads/content/gold-spot-vs-us-dollar-chart-788×476.jpg" width="788" height="476" alt="Gold spot vs US dollar Chart" loading="lazy" /></div>
A couple of weeks ago, gold plummeted over $100 after new Fed head Kevin Warsh concluded his first FOMC meeting with a surprisingly hawkish tone.
The markets immediately began pricing in two rate hikes this year — a far cry from the two rate cuts that had been expected at the beginning of the year.
Gold not only fell through the key $4,000 level on that day, it also completed a classic “death cross,” where the 50-day moving average falls through the 200-day MA.
It was a dour day for gold bugs…and it seemed to me that we had suddenly reached peak pessimism for the market. The next day I issued a Gold Newsletter Alert to our subscribers, saying:
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“I’ve seen this movie before, many times. And while I can’t call a bottom yet, and would be foolish to try…it sure felt like one yesterday.”
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Did I call the bottom that day? Granted, I threw in enough caveats to make it essentially useless as a market call, but it did seem like we had reached the point of capitulation for this correction.
Regardless, a market bottom is usually a process rather than a one-session event. And even if June 24th was the precise bottom, we’re seeing some smoke on the launch pad…and the next few weeks to months should represent the best buying opportunity of the year.
From a fundamental standpoint, the market’s sudden fixation on a hawkish Fed was misplaced from the beginning in my view. As I noted to my Gold Newsletter readers, the simple math behind the spiraling federal debt and deficit in the U.S. alone will pressure the Fed toward easier monetary policy.
But then we got a nonfarm payrolls number last Thursday that came in at just 57,000 jobs — about half the expectation — and quickly threw cold water on rate hike expectations.
Gold leaped on the news, and has now put about $150 between the price and the $4,000 level. We have some upward momentum now, adding some urgency to those looking to get positioned.
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