Bank Crisis, Gold’s Rally, and Profits

Between 2020 and now, quite a lot happened, quite a lot of money was printed, and we saw a war breaking out in Europe. Yet gold failed to rally to new highs.

In fact, gold is once again trading well below its 2011 high, which tells you a lot about the strength of this market. It’s almost absent.

There’s a war in Europe, and billions of dollars were printed, and gold is below its 2011 highs – in nominal terms! Adjusted for inflation, it’s much lower. And silver and gold stocks’ performance compared to their 2011 highs? Come on…

Truth be told, what we see in gold is quite in tune with what we saw after the 2011 top, and in particular, shortly after the 2012 top. We can also spot similarities between now and 2008. The long-term gold price chart below provides details.

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Gold moved sharply higher this week – including today’s pre-market upswing, it’s a rally that’s bigger than $70 (and yet, miners just closed below our entry point, which only emphasizes how weak they are). The volume that we saw this week so far has been huge – the biggest weekly volume this year and the second-biggest even when taking also 2022 into account.

And… this is the case after just four out of five trading days! This means that this week’s volume is going to be even higher, and the huge-volume signal is definitely going to be flashed. Well, it’s kind of already here, which means that we can already take it into account, even though the trading week is not over yet.

Please take a look at the green arrows on the above chart. They mark situations when the weekly volume was huge during an upswing.

The most recent case is from 2022, when gold topped.

The same happened in early 2018.

That’s how gold topped in 2011.

Most importantly – that’s exactly what we saw at the final pre-slide top in 2008.

Please note that the rapid rally that we saw in 2008 before the slide was even bigger than what we saw so far (note: green rectangles), so today’s pre-market upswing is IN TUNE with this very bearish analogy, it’s not a bullish game-changer.

Stay tuned!

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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief