From the Desk of Ian Culley @IanCulley

Investors love a good gold debate.

“Is it a commodity, or is it a currency?”

I’d argue it’s both.

But, today, I want to focus on gold as a currency in light of a series of new all-time highs versus fiat overseas.

Gold priced in euro terms closed last week at its highest level in history.

The new all-time highs follow a breakout from an 18-month consolidation within an ongoing uptrend – an uptrend that commenced in March 2020.

I expect another leg higher for gold priced in the euro and the British pound. 

Check out gold versus the pound:

Gold priced in GBP resembles the gold/EUR chart, just not as clean.

Gold completed a decade-long base versus the pound in the spring of 2020. And like gold priced in US dollars, it consolidated for over two years.

The main difference: Gold priced in USD continues to contend with overhead supply while the path of least resistance leads higher for gold priced in British pounds.

It’s the same story for the Japanese yen.

Before you start throwing tomatoes, here’s what’s not making new highs versus...

Gold and silver are pushing higher after posting potential failed breakdowns earlier this month.

If the October lows mark a critical inflection point – and it’s still a big “if” – the following three names will be ripping above our risk levels…

First up is a $5B gold mining company headquartered in Toronto, Canada.

This is Alamos Gold $AGI:

AGI provided profits in the spring, launching it to “fan-favorite” status.

I like betting on past winners, bullish momentum, and strength. Alamos Gold checks all those boxes. 

I’m buying a break above 13, targeting 20 in the coming 3-6 months.

I also like buying strength in Kinross Gold $KGC, a $6.5B gold mining company also operating out of Toronto:

KGC recently posted a new 52-week high. Few gold mining stocks can tout comparable strength as many names sunk to fresh multi-year lows during the first week of October. 

The absolute and relative strength has my full attention.

I’m long KGC above 5.75, targeting 11.50 in the coming 4-6 months.

The third name isn’t as strong as the first two. But momentum is improving, and our risk is well-defined. If we’re...

Buyers drove home their precious metals stance for a second week.

Gold and silver posted wide-bodied bars, rocketing higher on the open and closing near the day’s peaks. 

Bullish momentum thrusts like these tend to spark sustained rallies.

That’s right!

It could be off to the races for these shiny rocks, especially given the crucial levels recovered last Friday…

Gold futures ripped higher, gaining more than 3% Friday while reclaiming a critical area of former support at approximately 1,910:

Buyers stepped in, answering the call to adventure and promptly repairing the damage.

The path of least resistance now leads toward former all-time highs.

Are we witnessing a classic failed breakdown in gold?

Can it be that simple?

Absolutely.

I’m tracking a swift move in the opposite direction (higher), much like the dollar’s bounce this summer, to indicate a legitimate bullish reversal.

The former 2011 high – marking gold’s previous commodity supercycle peak – represents my line in the sand.

Gold and other precious metals deserve the benefit of the doubt as long as gold holds above those former...

From the Desk of Ian Culley @IanCulley

One day of buying pressure doesn’t change the situation with precious metals. 

Gold bugs were out in full force Friday, driving gold and silver to impressive gains that would excite even the least devout among them.

But don’t get your hopes up… 

Precious metals stopped falling at a logical level of support.

Good, old-fashioned price memory triggered a standard response – nothing magical.

More importantly, nothing bullish.

Check out a custom index equally weighting gold, silver, and platinum:

The index is clinging to the lower bounds of a multi-year range as it retests its year-to-date lows, creating a logical place for buyers to support price across multiple timeframes.  

Beneath the surface: Platinum hit a fresh 52-week low, while gold and silver fell roughly 1% and 3% last week, respectively.

It’s not upbeat data, failing to entice a long position at these levels. 

Gold futures also hit the brakes at a potential support zone last week:

Gold slid into a critical retracement level, registering its lowest 14-day RSI...

From the Desk of Ian Culley @IanCulley

Precious metals no longer deserve the benefit of the doubt.

They no longer represent an opportunity cost, either.

No, gold and crew carry downside risk – nothing else!

What changed since last week? 

Gold futures undercut a critical level of interest…

That’s the former commodity supercycle peak marked by the 2011 high.

Check out the monthly candlestick chart of gold futures:

The impressive resilience that’s defined gold and precious metals for most of this year has given way to overwhelming weakness.

Sellers have cracked the 1,923 level and any bullish conviction for these shiny rocks.

We can’t own gold, gold mining stocks, or precious metals more broadly – at least not now.

Gold and silver triggered sell signals last week. I’ve highlighted critical areas of former and potential support.

Those levels stand. Review the chartbook below and today’s Gold Rush video for updates. 

It’s not all doom and gloom for the gold bugs, though. In fact, gold is likely carving out a multi-year base with a bullish bias:

Nevertheless, if that...

From the Desk of Ian Culley @IanCulley

The US Dollar Index $DXY has posted its tenth week consecutive in the green. 

And with the dollar off to a solid start Monday morning, an eleventh looks promising.

This is excellent news for dollar bulls.

But it’s a gloomy prospect for risk assets, especially precious metals…

Check out the performance chart anchored from DXY’s July 13 bottom:

US stocks ($SPY), international stocks ($EFA), emerging market stocks ($EEM), gold ($GLD), silver ($SLV), and even US T-bonds ($TLT) are falling under a rising dollar. (Crude oil $USO has 99 problems, but the dollar ain’t one.)

Yes, US T-bonds remain a risk asset from a price perspective. A strengthening dollar will accompany declining bond prices if the US dollar and interest rates continue to climb together.

Global risk assets and precious metals do not perform well when investors flock to the US dollar.

Bonds are skidding lower. US stock indexes are breaking down. And precious metals? Well, it could be worse.

GLD is outperforming global equities, including the S&P 500, over the trailing two months.

Last week,...

From the Desk of Ian Culley @IanCulley

Precious metals represent an opportunity cost.

The entire complex – gold, silver, platinum, and palladium – has gone nowhere for the past few years.

Yet I can’t overlook the resilience of gold and silver as interest rates and the US dollar rise – two significant headwinds for these shiny rocks. 

Perhaps they deserve the benefit of the doubt.  

I believe they do.

But extending these lackluster metals with a favorable outlook does not equate to taking a long position.

It’s far from it.

Price must prove buying precious metals offers a rewarding proposition.

The following two intermarket ratios will undoubtedly rise if and when it does.

I covered these ratio charts in late July as they neared key inflection points or critical former support levels.

Fast-forward to today, and both are bouncing higher after posting fresh lows.

Check out the Gold Miners ETF $GDX versus the S&P 500 ETF $SPY:

Now is the time, and the shelf of former lows marks the place for gold miners to assume a leadership role.

That was the...

From the Desk of Ian Culley @IanCulley

Precious metals deserve the benefit of the doubt.

These shiny rocks are in the early stages of their next secular bull run. But I won’t let my bullish bias detract from the obvious: Gold has seen brighter days.

Overhead supply dominates the charts while risk appetite cools and prices fall toward critical support levels.

Is it time to buy the dip? 

No, especially as investors focus on more attractive investments…

The strongest trending assets outperform their alternatives. (Buy the strongest, sell the weakest.)

And every asset group has its strong man leading the way. For precious metals, it’s silver.

Gold and the gang benefit when their “strongest performing asset” is their crazy cousin – silver.

Silver often spearheads a proper risk-on rally in precious metals as it surpasses gold.

But that’s not what’s happening right now:

Instead, silver is lagging in the near term after failing to post a higher high in June.

Buyers are growing weary of gold’s sideways action. It not only shows in a falling silver-gold ratio but also in silver mining stocks...

From the Desk of Ian Culley @IanCulley

It was do or die for the yellow metal a couple of weeks ago.

Gold chose “do.”

Buyers sprang into action, defending a critical former support level while driving prices higher. 

That valiant effort may have only prolonged the inevitable: a period of sustained weakness.

Don’t get me wrong. I’m not playing the role of a Debbie Downer this week.

I still believe gold is in the early innings of a new secular bull run.

Why?

It’s pretty simple. All we have to do is switch the denominator to any other global currency.

Gold has already broken out versus every currency in the world – except the US dollar. 

And that, folks, is the crux of the problem.

The US dollar!

Yes, overhead supply remains intact for these shiny rocks and their associated stocks. 

Demand for gold must absorb supply before we witness new all-time highs, no question.

I just can’t envision that happening if the dollar continues to rise – which it is.

Check out the overlay chart of gold futures and the US Dollar Index $DXY inverted:

I flip the DXY chart to...

From the Desk of Ian Culley @IanCulley

I’ve had the pleasure of driving cross country multiple times, covering every inch of I-10. 

I made so many memorable moments on those drives …

I pushed through white-out conditions in Kansas. (My brother had an appointment with the State Department in Washington D.C., and we couldn’t stop.)

I “accidentally” crossed into Juarez, Mexico, which turned into one helluva time!

And I picked up more than one speeding ticket on the reservation (highway patrol doesn’t play in Navajo country).

I somehow made it coast to coast every time.

While many details of those treks slip away with the years, I’ll always remember the Alamo.

I know, it’s funny. I didn’t even go inside.

To be clear, my memory of the Alamo has nothing to do with the historic battle or the revisionist histories that have been written and rewritten since.

Instead, I picture a meager fort in the twilight – nothing more. A truly humble beacon of strength.

The understated image resurfaces in my mind’s eye this week as I plan and plot the best way to trade gold.

As gold meets increased selling pressure...

From the Desk of Ian Culley @IanCulley

Gold is hanging on for dear life.

Rising interest rates and a strengthening dollar create formidable headwinds for the shiny yellow rock.

I remain optimistic for the entire precious metals space, but hope is not a viable trading strategy – especially if gold undercuts its 2011 highs.

Some gold bugs may find it difficult to accept, but gold’s a short if and when it decisively closes below its prior commodity supercycle peak.

And it’s trading back at those former highs today…

Let’s review the levels.

Check out the monthly candlestick chart of gold futures:

I understand the August candle is incomplete. It doesn’t bother me. 

I’m not analyzing the current month’s candlestick. Instead, the prior-cycle peak from 2011 holds my focus. 

The monthly chart simply provides the most precise depiction of that crucial level.

Notice gold has managed to hang tough – five months and counting –  since it reclaimed those critical former highs last March.

It retested those highs in May, June, and August, three of the last four months.

Bullish bias aside...