After years in pain, Gold seems to be breaking out. Almost surreal for me. I expected this for so long but it didn’t happen…. Until now (maybe???). This time the rally looks real. Let’s look at the gold bug narratives:

FED is printing. Hyperinflation coming. Buy gold.

Everything will collapse. Gold will hold. Buy gold.

Fiat is doomed. The cycle is about to turn. Buy gold.

Not that these narratives are wrong. They are valid but price does not care. It lives its own life. I think this time we are after something. Let’s see some charts.

Gold

Gold weekly

GDX

GDX weekly

GDXJ

GDXJ weekly

Excluding March’s liquidity event, trend is up.

Q3 is historically good for gold. Throw in current situation with COVID-19 and everyone being defensive and you have something brewing. A common saying is:

First, you get a liquidity event. Then comes the insolvency.

Let me elaborate. When a crisis hits, everyone panics and scrambles for cash. Dollar goes up, everything else goes down. People are selling whatever they find, stocks, gold, bitcoin. Then things settle, the reality kicks in and the companies start to go bankrupt. That’s when usually defensive plays as gold catch a bid. This is a narrative and might be wrong but price action is playing along this time.

What is interesting in such environment, are miners. Some of them tend to 2X, 3X, even 10X with rising gold prices. They are leveraged to price.

I am playing this game with $SAND and $EQX. Both very high quality companies with excellent charts.

SAND

SAND daily

I bought on 19th and 22nd of June. Still holding. High volume. Good green candles. Breaking out. Context of gold. That is the WHY.

Stop is ~ $9 and will move up when appropriate.

EQX

EQX daily

Same WHYs as SAND. Bought on 15th of June. Still holding.

Stop is ~ $10 and will move up when appropriate.

I am also watching one company from the junior space. Orezone Gold. That is a very high quality company in bad jurisdiction (Africa). It prints good chart lately. Will be looking for a position in the coming days.

ORE.V

OREZONE daily

What a beauty. Hope on a ~80-82 cents entry with 78 cents stop loss. If the story plays out, this is 2X-3X.

On silver: Honestly, I don’t know. This market can not be analysed. If gold pops, silver pops higher but when and how is the hard stuff. I am avoiding this market unless a very eye catching trade comes up.