Categories: General Market Commentary
Topics: General Market Commentary- DPC

Gold and Silver Just Sent a Loud Signal - Here's What History Says Comes Next

Last week I told you that:

“The hardest thing to do during a correction is watch it. Know what you own, know why you own it, know if the trend is in your favor, and let the market catch up. 

Expect volatility. Expect $100-$200 daily moves in the gold space and $3-$5 moves in the silver space. That’s the new norm. 

Pullbacks from record highs are completely normal and healthy. All the recent ones have been short-lived. Do with that what you will.”

We’ve now seen gold surge $260 in the past two trading sessions to $4,800/oz, silver is back flirting with the $76/oz level, and the dollar index (DXY) is back below the 100 level. 

This comes as the daily news outlets report every word uttered by anyone close to the people that will decide when the war with Iran will end.

I don’t know when this war ends. We just sent another 50,000 troops to the Middle East, which doesn’t give me the warm fuzzies that peace is around the corner.

What I do know is that the recent pullback in the precious metals space combined with a slowing economy and persistent inflation sure looks a lot like the 1970s. 

I had the good fortune of speaking with Rick Rule who went over why the recent consolidation is a healthy one within the broader metals bull market. He cited the 1970s when gold surged from the $35 level to over $850 with the gold equities outperforming the metal.

He also explained that during the 70s, the gold price corrected 25% or more at least four different times. In 1975, the gold price fell by 55%, and many investors missed the subsequent run from $100/oz to $850/oz.

I’m not a geopolitical expert, but one clear outcome from this war is the strengthening of alliances that are unlikely to be friendly to us.

The war has also highlighted vulnerabilities that already existed, which include an unsustainable deficit and a reliance on foreign governments for our critical metals. 

That’s not going to change, and neither is the deficit. And that’s where I see the opportunity.

Let’s get it!

Gerardo Del Real
Editor, Daily Profit Cycle