- During the month of November, we have seen the gold market plunge a couple of times, but quite frankly it continues to find plenty of buyers, and I think that is something that you need to pay attention to.
- After all, when the market simply won’t die, that’s a good sign that you should not be short of it. With that being said, I don’t necessarily think that gold takes off in December to reach the atmosphere, rather I think it remains more of a grind higher.
- After all, there are a whole litany of reasons for gold to go higher over the next several weeks, if not months, and therefore it’s a difficult market to bet against.
One of the biggest concerns though would be the fact that the market was strong all year, and therefore sooner or later exhaustion sets in. In fact, that might be what we had seen during the month of November. Because of this, I think you still have a “buy on the dip mentality” out there, but I also would not be surprised at all to see December somewhat sideways for gold.
This isn’t to say that you can’t buy short-term dips, but as a longer-term “buy-and-hold” asset, it may underperform.
Longer term, I love gold. I don’t see anything stopping gold from going to the $3000, especially as we still have a hot war in Ukraine that only seems to be getting more and more dangerous.
While hoarding gold during the nuclear war seems to be a bit absurd, hoarding gold during conflict is something that the markets do. Whether or not the Ukraine war expands remains to be seen, but it certainly is starting to become a more and more dangerous situation. France and the United Kingdom both are starting to talk about sending troops into Ukraine if the United States were to exit NATO, something that Trump has threatened to do more than once. Russia would probably make both those countries pay one way or the other, so I cannot imagine a situation where any of this leads to something good.
That being said, it was interesting to watch the reaction of gold after it was announced that Israel and Lebanon had agreed to a potential cease-fire. Gold fell really hard almost immediately, so I think that there is still a significant geopolitical aspect gold right now. If Trump can get some type of peace deal going, that could be the end of the trend for a while. It would then come down to profligate spending and using gold as a bit of a hedge against inflation, which does seem to be very sticky in various places around the world. However, as things stand right now, we have to assume that buyers will continue to jump into the market and lift gold every time it drops. I see the floor as being the $2500 level.
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