Are We On The Cusp Of An Epic Gold Market Surge?

| August 27, 2015 | 0 Comments

goldLooming Gold Market Surge?

This week is one for the record books…

As I’m sure you’re aware, equity markets are experiencing some history making volatility.  From Monday’s hair raising 1,000 point nosedive in the DOW to yesterday’s 600 point rally, stocks are literally all over the map.

Of course, most of the recent uncertainty stems from China…

With the Shanghai Composite down just over 40% from mid-June, it’s fair to say Chinese stocks are crashing.  The remarkable downturn has everyone on Wall Street wondering if China’s economy is about to go in the tank.

Since it’s the world’s second largest economy, a nasty Chinese economic downturn would cause plenty of damage on the global scene.

Now before you sell everything and head for your backyard bunker, you must realize Chinese officials are taking massive action to avoid a crisis.  In fact, the People’s Bank of China (PBOC) recently released multiple stimulus measures that may halt the downturn and restore market sanity.

Will it work?

I don’t know.   As a matter of fact, no one on Wall Street knows either.  All we can do is monitor incoming Chinese economic data to see if economic activity picks back up.

But here’s the question we really want to answer today…

Is there a looming gold market surge due to the economic events unfolding right now?

In case you’re unaware, the yellow metal is typically a flight to safety asset in times of extreme economic uncertainty.  True to form, gold rallied sharply from August 6th to the 21st.

Take a look…

Gold Market Surge, a chart of gold

As you can see, gold rallied just over $70 an ounce in early August as investors fled the equity markets.

But the past few days haven’t been so kind…

Despite Monday’s jaw dropping 1,000 point DOW downturn, gold traded in a tight intraday range around $1,160 an ounce before closing lower on the day.  And even though there was still massive equity market uncertainty Tuesday and Wednesday, the yellow metal succumbed to heavy selling to close at $1,125 yesterday.

Judging by gold’s performance this week, it appears investors are not yet ready to fully embrace its “safe haven” status.

Can the metal trade higher in coming weeks?

It might- but I believe we’ll have to witness something remarkably worrisome in the near future to make it happen.

That’s not all…

Even though gold is trading higher since early August, the same can’t be said for its brethren- silver, platinum, and palladium.  In fact, silver and palladium plummeted to new yearly lows the past three days.

The extremely poor performance from silver and palladium further confirms ‘gold fever’ isn’t quite ready to catch on.

Bottom line…

Despite the remarkable happenings in the marketplace the past week, gold does not appear ready for massive upside breakout.

However, past performance does not guarantee future results.  If the other shoe really drops in China in coming weeks, and another market panic ensues, gold could finally see the bullish push it needs to really bring in the big money.

A technical break above $1,175, and then $1,250 an ounce, on heavy volume is the first sign I need to really get excited about big upside in gold. 

How do you capitalize on gold market swings?

One of the easiest ways to capture gold market profits is through commodity ETFs.  This article explains the best ways to capitalize on potential upside in the commodity.

But since the chances of additional downside in gold are still quite strong, you better keep an eye on the bearish ETFs presented here.

Until Next Time,

Justin Bennett

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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Category: Precious Metals

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.