Although the European Central Bank (ECB) meeting on Thursday disappointed gold investors looking for a larger stimulus boost, the ECB expanded its debt purchase program and agreed to provide banks with ever more ultra-cheap liquidity, as long as they keep passing the cash onto companies.

Precious metals set all-time price records in 2020, with gold exceeding the $2,000 mark and silver nearly touching the $30 level, but prices have been mired in a healthy consolidation of over-sized gains for the past four months. The correction that began in early August shaved as much as 15% off gold's peak into the end of November, toppling the precious metal from an all-time high of $2,089 all the way down to the $1,770 level on Monday.

News of a vaccine with a 90% success rate caused stocks to soar on Monday with the Dow and S&P 500 setting new records, while gold whipsawed $118 lower intraday. The largest single day gold move lower in over seven years nullified its breakout from a 3-month descending wedge last Friday, and since then has created a bearish flagging pattern on the daily chart.

With investors pricing in a likely Joe Biden presidency to the tune of buying most everything in sight, the Bank of England expanded its bond-buying program this week and the Federal Reserve lobbied for further monetary and fiscal support being required to keep the world’s largest economy from going into recession.

Now that the marketplace has officially been denied fiscal stimulus until after the U.S. election by President Donald Trump on Tuesday, along with multiple European governments announcing more COVID-19 related lockdowns, both equities and gold are being sold to build up cash.

The debate on central bank digital currencies (CBDC’s) has been heating up since the COVID-19 crisis began. The reference to a ‘digital dollar’ in an early draft of a U. S. legislation for the first $2 trillion financial stimulus package announced in March, along with the subsequent ‘Banking For All Act’ bill put forth by Senator Sherrod Brown (D-OH), has fueled this debate.

With the gold price having closed above $1800 over the past few quarters, M&A activity has been quiet despite miners generating billions of free cash flow. After a period of impairments, write-downs, and value destruction following the M&A frenzy of the last gold price boom that ended in 2011, global miners have shifted away from growth strategies to margin preservation.

Silver investors have been taken on a rollercoaster ride this year, as the highly volatile metal has recently corrected by almost $8, or 36% since peaking in early August. The drop to just below $22 after gaining over $19 from a spike low below $12 has brought the silver price back to less than half its all-time high.

Unprecedented global stimulus measures, negative real rates, and a weakening dollar pushed gold futures to a record high of $2,089 per ounce in early August. After printing a quarterly basis close above $1800 for the first time in its history in Q2 2020, the safe-haven metal blew past the former all-time high of $1920 seen back in 2011.

While the healthy consolidation of recent out-sized gains in the gold space continues, this is a great time to consider accumulating a basket of junior developers controlling large projects being de-risked into the finance stage. With the gold price likely in the process of creating a new floor above $1800, it’s only a matter of when, not if, global producers begin concentrating on replacing depleting reserves.

Gold prices came into the month of August with a full head of steam, setting a fresh all-time-high at $2089 on August 6th. But, that first week didn’t close with strength and produced a bearish engulfing candlestick after the sector was extreme overbought for 15 consecutive trading sessions.

Since my last column two weeks ago, gold for immediate delivery hit a high of $2,089 per troy ounce with silver peaking just below $30.00. Last Friday, the safe-haven metal hit a daily RSI above 90, then closed the week with an outside reversal to the downside, warning that a further decline this week was probable.

With gold futures ripping through its final resistance level at the $1921 all-time high earlier this week, everyone that has purchased an ounce of gold at any time in history is “in the money”, as the safe-haven metal is now trading in blue-sky territory. In overseas trading on Tuesday evening, December Gold nearly touched the $2000 per ounce mark in Hong Kong before reversing strongly from this psychologically important level.

Over the past few weeks, most precious metals sector analysts have been repeating ad nauseum that it was only a matter of time until the gold price reached all-time highs at the $1900 level first seen nearly nine years ago. Naturally, this mostly foregone conclusion had set up a proverbial “buy the news and sell the fact” situation in the mining sector.

With the gold price having closed above $1800 in Q2, the safe-haven metal is attempting to build a strong floor at this significant price point before resuming its climb to all-time highs. Former overhead resistance at $1800 was a strong multi-year ceiling and since we have not seen these gold prices in nine years, temporary consolidation around this important level is to be expected. 

Over the past few weeks, most precious metals sector analysts have been repeating ad nauseum that it was only a matter of time until the gold price reached all-time highs at the $1900 level first seen nearly nine years ago. Naturally, this mostly foregone conclusion had set up a proverbial “buy the news and sell the fact” situation in the mining sector.

With the gold price having closed above $1800 in Q2, the safe-haven metal is attempting to build a strong floor at this significant price point before resuming its climb to all-time highs. Former overhead resistance at $1800 was a strong multi-year ceiling and since we have not seen these gold prices in nine years, temporary consolidation around this important level is to be expected. 

In my last column of H1 2020, I was expecting a Gold Futures Q2 close above $1800. Although just barely, Mr. Market delivered as August Gold closed at $1800.50 on June 30th. In fact, gold saw its highest quarterly basis close in history and best quarterly performance in more than four years.

After trading sideways since early April, gold appears ready to break out above multi-year resistance at $1800 on a quarterly basis next week. The safe-haven metal closed at an 8-year high on Tuesday and could make a run to test its all-time highs as early as this summer. 

As the 10-week sideways consolidation continues to build a floor in the gold price just below multi-year resistance at $1800, Chinese global gold miners are making all-cash offers for small-cap juniors at large premiums. This recent wave of Chinese deals for junior firms has come while government lock-downs are systematically being lifted in select mining jurisdictions.

The term "stagflation" was first used in the United Kingdom by politician Iain Macleod in the 1960’s, while he was speaking in the House of Commons. At the time, MacLeod was talking about inflation on one side and stagnation on the other, calling it a "stagnation situation."

As I type this missive, August Gold is being sold down towards support at $1675 after the U.S. Non-Farms Payrolls (NFP) report released this morning showed 2.5 million jobs were created in May. According to consensus forecasts, the data significantly beat expectations as economists were expecting to see job losses of around 7.75 million workers.

After reaching a high of $1788 in early April, the gold price has been consolidating recent gains while attempting to build a new floor above $1675 per ounce. Although the safe-haven metal will likely close the month above $1700 later today, gold futures have been trading within a $100 range between $1675 and $1775 for the past eight weeks.

When I first began to invest in the stock market over 20 years ago, I was determined to become the best investor possible. I watched CNBC daily, read Barron’s and countless other mainstream paraphernalia…….and promptly lost over 50% of my investment capital in just two years.

With the gold price breaking out of its month-long symmetrical triangle this week, silver has decided to join the gold party. As mentioned in this column last week, silver equities had been telegraphing this move for the past month and the metal finally received the message this week.

When I stumbled upon the precious metals sector in 2003, silver was stuck in a trading range below $5.00 per ounce, while the gold space was zooming higher. The incredible gains in gold stocks, which began just after the turn of the century, had caught my eye and I became fascinated with the mining sector.

Shares of the global gold miner fund GDX rallied 40% in April as the coronavirus crisis rocked global markets and investors raced to buy safe-haven assets. While investors debate whether the lasting effect of the Covid-19 virus will be deflationary or inflationary, gold has emerged as the safe asset of choice after the dash to cash subsided in mid-March.

As mentioned likely in this column last week, the GDX has broken out of a multi-year base, while the price of gold continues to rise and is nearing another seven-year high. Once the “bear trap” set last month quickly forced most players out of the precious metals complex, the global miner ETF has broken the 7-year Maginot Line of

Heading into 2020, as the price of gold was seemingly in the process of creating a new floor at $1550, I was expecting a break-out in the GDX above the $31-$32 level from a nearly 7-year base. Both the miners and silver were leading the safe-haven metal into the new year.

Now that the global government response to the COVID-19 pandemic has been to shut down the global economy, the central bank of the world’s reserve currency has dived head first into the ocean of Modern Monetary Theory (MMT) to solve all our financial problems. This economic theory is the same old incantation on how to prosper with other people’s money.