When the U.S. labor market data was released in early August, a sudden panic sell-off in gold ensued. One would think that with the recent devastating inflation data, investors should have developed a strong love for gold that would last at least for the medium term. Those feelings don’t seem to have been genuine. Instead, they prefer to mourn their familiar but destructive relationship with sloppy paper money in the long run. I was worried we would never see a signal for gold prices.
Anyway, the sudden shift from gold to paper money is a mystery to me. In the end, however, short-term market reactions are rarely rational anyway. This leads us to an important consideration:
Ignore Short-Term Fluctuations in Gold
I like to take advantage of such stupidity from mindless investors to continue building my long-term physical gold holdings. Because gold is an excellent protection against the ever-escalating inflation. Short-term fluctuations do not change this reality. The gold price is based on the real interest rate in the medium and long term.
And with inflation continuing to rise and central banks inactive or at best sluggish, the environment for gold remains ideal as the real interest rate continues to fall. But now, things are about to get exciting again for short-term traders.
Because the consistent waiting for a good technical buy signal may have paid off, in any case, the gold price has provided a good foundation for this in the past week. Thus, with a little consistency, we see in the coming weeks the completion of a significant bottom pattern along with a subsequent, massive gold price rally.
Finally – a signal for gold prices! We’re looking for the 20-day moving average of SPDR Gold Shares (NYSE:GLD) to tick back above the 50-day and act as a catalyst for more buying.
I’ll circle back on cybersecurity over the weekend. I think you’ll be pleased by this latest watchlist.