Gold/USD | Gold always follows stocks initially | 31 October, 2020


Gold Price Forecast relative to
Long Term Monthly (LT-M) – Medium Term Weekly (MT-W) – Short Term Daily (ST-D) – and Hourly (not shown) data.

GOLD FORECAST

(Previous week in brackets)


Gold/USD LT-M MT-W ST-D
1876 (1900)
Au Trend ↓ (↓) ↓ (↓) ↓ (↓)
Au % Risk
Weight
80 (80) 35 (42) 22 (61)
PM Distribution
Total allocation 50% (50%)
Au:35% Ag:45% Pt:20%

Gold/USD live price


Gold always follows stocks initially

31 October:: History tells us that negative turmoil in equity markets after a strong advance (inflation) initially drags gold down as investors need to remove more portfolio risk as well as requiring the cash to compensate for margin calls etc. Nothing special about that. In the technical space nothing has changed in terms what should be expected looking at 100 years of market history, which is for Gold (and Silver and Platinum) to finish the uptrend showing at least strong bearish higher price to lower risk divergence in both the Medium and Long term time frames. Hence no worry and no change.

23 October:: Whilst all risk weight time frames are still down, the 5 week consolidation around 1900 is building upward momentum again for a next medium term move upward. Such a move can either result in a flat correction against the all time high recorded in August 2020 or a more serious advance with a longer term channel objective above 2400. We expect the latter. 4 months price hovering around the 2011 high is a signal for further strength. No change to both a technical and fundamentally must hold of Gold and other precious metals against fiat currency depreciation.
As for the question of replacing fiat currency? This is not very likely and investors may be faced with an attempt to get them to sell directly to appointed central bank agents during a short window of opportunity sometime in the future. The fact that Central banks are holding the vast majority of above ground physical gold means it is the ONLY hard asset to compensate for the enormous debt mountain that now exists around the globe. Western and Eastern nations having more substantial gold reserves will be the voices to determine the policy and nature for a monetary realignment.

Gold/Euro live price

31 October:: The Gold Euro picture is only different in the sense that smaller weekly readjustements of the EUR/USD exchange rate impact on the gold price versus Euro. Gold prices against all major currencies are building, not yet realized, shorter versus longer bullish divergence. This technical position is visible across the gold price spectrum and encourages looking at the first Fibonacci objective of 2097 Gold/Euro.

23 October:: As for Gold against Euro a very similar bullish technical picture develops. Short term price fluctuations are mainly currency exchange rate driven. No Change to hold gold against any fiat currency.


Gold/British Pound live price

31 October:: Gold/GBP is no different than Gold/EUR or Gold/USD in this wider perpective, even though Gold/GBP has shown some negative divergence this year, but not to an extreme extend that increases likelyhood of a major top having been made or being in the making. No Change for GBP tax based investors in Gold.

23 October:: Short and medium term risk weight is indicating a relatively weaker pound. Given the UK’s like poorer average economic performance in years to come, a larger debt burden without much of a gold reserve to balance, the gold price against sterling could begin to show a virtual return to the string of GBP devaluations seen between 1970 and 1990. Sterling based investors simply must hold and protect at least 10% of their free assets in physical Gold and for larger investors and tax purpose this may need to be in Royal mint coins and sovereigns which are legal tender in Britain and therefore fully exempt from capital gains tax.




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