Period of Consolidation

McAlvany Weekly Commentary

This week it’s more than just a weekly recap but also a bit of a look ahead. There’s been a lot of price action in the last week. So let’s take a look at where prices stand as of November 13: The price of gold is down about 3.9% or $85 from last week. It is down $211 or 7.6% from its high on October 30. The price of silver is down 2.7% or around $0.83 from a week earlier. It is down $4.50 or 12.9% from its pre-election price on October 29. Platinum is down about 5.3% or $52 from top to bottom over the week. It is sitting down 11% or $115 since it reached its peak. Palladium is down 5.3% or $105 from where it was last week. It is down $322 or 25.8% since October 29. The S&P 500 is up 40 points or 0.6%, sitting just under 6,000. It is up 264 points or 4.6% since the election. The Dow Transports are up 62 points or 0.3% since last week. And they’ve risen 1222 points or 7.5% since election day. The US dollar index is up 1.3 points or 1.3% since last week, at around $106.5. They’re up 2.8% since election day. Short-Term Prediction for Gold Looking at the 200-day moving average chart for gold, it appears that gold will likely drift down from its record high levels. It would likely land around the $2,400 per ounce level. This downward movement would likely happen within the next 4-6 weeks. However, this short-term dip will not last long. We are still in the midst of a multi-year bull market that will continue. You can see it when you zoom out a few years to when it started. Gold’s Stair-Stepping Bull Market Looking back, gold had hit a bottom around December 2015. Back then, it was trading just around $1,050 per ounce. Gold continued to trade sideways for the next couple of years, but the floor was slowly rising. And finally it had a breakout point in May 2019. That’s when it had clearly entered a bull market, and it was trading around $1,280. Gold then traded within its 200 day moving average. The only exception was at the start of the pandemic, when the uncertainty took over as no one knew what would happen when the world shut down. But since then, gold has been slowly stair-stepping higher and finding new floors. What we see happening throughout this period is gold has a breakout and reaches a new high, and then the exuberance wears off. There’s a natural selloff and recalibration. So for example, gold went from $1,200 to $2,000 in the beginning of the bull market. The emotional high wore off and gold dropped back down to around $1,700 — a more “reasonable” price. Now that the election has happened, gold has again rallied to a new record high, breaking out from its 200 day moving average. And with this most recent sell-off, we expect it again to drop down even further to sell off the exuberance of knowing who the next president will be in the White House. Build Your Nest Egg No matter what happens in the short term or long term, gold will continue to retain its value. That’s why it is the perfect asset to preserve your purchasing power and build a solid foundation for retirement. Gold’s average is almost 10% a year over time, regardless of the period of time. An ounce of gold will buy in 20 years, what that ounce of gold buys today. So for the sake of your retirement planning, it is smart to include gold in your portfolio. Gold is the guaranteed income when you need it. Buy Gold on The Dip How many ounces of gold can you accumulate on price dips to meet your objective of a secure retirement? It’s best to prepare in advance, because price dips are typically short lived. Speak with a McAlvany financial advisor to put together a strategy so you’ll be ready to buy on the dips. Reach us at 800-525-9556, Monday - Friday. Call or email us, and an advisor will get back to you shortly.