Transcription
If you only watch one gold video this week or month, make it this one because I'm going to tell you everything you need to know in a short amount of time. What my expectations are for the next month or two and then the next few years. So, let's get right to it. Thank you for joining me.
I am Jordan Roy, a chartered market technician and a master of financial technical analysis. And I am going to share some charts you have already seen, but I promise there's going to be some new ones because I'm going to talk about sentiment in this video, which is a very important but often overlooked aspect of technical analysis.
So, first let's start with this chart, gold against the S&P 500. That ratio here we have right here. Here is gold. The I's mark intermediate term corrections. The C's mark cyclical bare markets. in the major peaks. We could put an S up here, but you probably already know that. So, secular peak here, secular peak here, secular peak here, secular peak here. So, what we want to avoid within this secular bull market are the C's. And that's why I have boxed them out here. And so, I've mentioned this in past videos. Now, leading up to a cyclical top, what you tend to get is a really strong move in gold against the stock market. Okay? We saw the same thing here in 2001 to 2008 where the cyclical peak was actually in the middle of that move. But I digress. And so a major component of secular bull markets in resources, gold and precious metals is capital moving out of the stock market and into gold. Look, we saw that here. We saw that here. Look, we even saw that here during the Great Depression. So here and now. We did have a significant breakout, but that has come back significantly. Okay. And so when you compare what has happened so far here to the other two secular bull markets, we're not close to a cyclical peak or a cyclical top. And that's because we have not seen enough of a shift of capital moving out of the stock market and into gold. I suspect that at some point we'll start to see that whether it happens in the next three months, year or 15 months, we will see that and that's what will lead to that first cyclical peak in the secular bull market. And my guess would be that's probably three years away, two and a half years away, somewhere in there. Okay, but I digress and move on.
So, moving on here. Okay, let's talk about the current correction and where we are. Now, if you do not know on this chart, I am comparing the current correction in gold to the ones in 1973 and 2006. Now, the reason I do that and the reason I make these analog charts is because it's important to compare points in history that are very, very similar. So, we're looking for very similar setups and then we compare them on the same chart. Okay? And so gold has made three major breakouts in its history. 1972, 2005, and then 2024. Now, this chart plots the first significant correction following the three breakouts on the scale of the current correction, which is in black. And this is where we are right here. Now, if you look at the other two corrections, you'll notice that they bottomed almost at the exact same point in time. Okay, 1973 was down here at 3,900 on the current scale at the end of June. Now, a week before was the 2006 bottom at a higher level. So this chart shows us what we can expect to play out over the next five weeks or so. So something like this. This chart doesn't tell us if it will bottom at 4,000, 4,200, 4350. But remember the time aspect is important. Okay. So I don't see gold taking off at the soonest until the very end of June.
Now moving on, let's get into sentiment. Now people, sentiment is very important because it tells us about the money that's in the market. Okay, technical analysis is this massive big tool. But it's not just looking at charts and moving averages and drawing lines and guessing about certain levels. It also includes intermarket analysis. It also includes history, which I show you with my analog charts. It also includes opinion polls, but it includes sentiment analysis that's based on real money data because a chart can look great, but if there's too much money in the market, that means everybody has already bought into that market. Whereas at the same time, maybe the chart looks like crap and it's telling you that the market's going to go lower. But if there's no money in that market and everybody has already sold, what does that tell you? So this is why sentiment is really important and you have to fuse that with basic technical analysis.
And so here we have three pieces of data for gold that can function as sentiment indicators. Now you've seen this before. This chart here, what this shows here is the amount of money in all the gold ETFs divided by the money in every ETF. So this is a real money indicator based on money in all the ETFs and money and gold ETFs. And this is where we are right now. Okay, this correction, look how we've come back here. But look at how much lower we are compared to 2008, 2011. This is even lower than 2019 in the start of 2016. So you look at this and the idea that there's tons of people in gold that still need to sell, it doesn't jive with the reality shown by this chart. And it's a bit similar here.
Now, this is based on real money. So this is from the Bank of America global fund manager survey. And so every month they survey global hedge fund managers and the managers respond and it's anonymous and they let the survey know how much gold do I own? Am I do I think it's overvalued? How much energy do I own? Commodities, am I overweight cash, etc. So this is the data that comes out every month for gold. And what we can see here is a net 16% of fund managers think that gold is overvalued right now. And here we can see the historical data here where the higher this is, the greater the net percentage of managers think that gold is overvalued. And mind you, keep in mind what happens during a secular bull market. Okay, this doesn't go back all the way in the 2000s, but we can see here this is a secular bull market here. And so a net 16% may still seem like a lot. However, when you blow up this image and eyeball it really closely like I did, this is actually the lowest reading in about 9 10 months. This would be lower right here. And I believe it's actually the second lowest reading in maybe 12 or 13 or 14 months or so. So we have already seen this come down significantly, okay, down here. So this doesn't necessarily have to come all the way down to zero before we get a major bottom in the sector. Remember, because we're in a secular bull market and this is an intermediate term correction. This is not a cyclical bare market like right here. Okay, so this is encouraging to me. Okay, now moving on.
Here's another one. This is the amount of gold that is in the gold ETFs. And we can see, and this is from March, by the way, we can see that the level of gold in all of the gold ETFs is actually right about where it was at the 2020 peak. So, the gold price since then has made a huge move higher, but the gold in the ETFs is still fairly low. So the reality people, the sentiment on gold based on real money, it's kind of lukewarm at this point. It was really hot three, four, five months ago, the end of last year, but we've had this correction. It's definitely past its halfway point. Sentiment has come down quite a bit. And so my view is that should we see gold move down like this to a final bottom that will impact these sentiment indicators even more. We'll see this come down a little bit more. We'll see this we'll see this come down a little bit more. And at that level sentiment indicators will tell you this thing is probably sold out in really really close to a significant bottom. Okay.
Now plowing ahead, let's get to some big picture thoughts. Now before I look at this chart here, let's focus on this. So this is my gold major breakout analog chart. Now I constructed this chart by looking at the other two major breakouts in gold's history. The black is the current major breakout. Okay? There's only two others. That's 1972 and 2005. Now, there's more similarities to the early 1970s this time around than the 2000s. And so, this breakout is lagging 1972 as it should because that was the greatest breakout of all time in the history of capital markets. But weeks ago, I was trying to come up with the best fit because the average of the other two breakouts wasn't quite good enough. But I came up with something. And this average line here is 75% of the 1972 breakout and the 2005 breakout which is not shown on this chart. So again, this average is 7525. And I've talked about in past videos how the current breakout here in black actually looks very similar to that new average line, but it's delayed by six and a half months. So you know what I did today? I made a new analog here. And so this light blue is the 7525, but it's delayed by six months. So I started it here instead of right here. So I started the data right here. This is 6 and a half months actually. And what do you know? Look how similar it looks to the current moving goal all the way down to the current correction. I mean, look, we're even dribbling lower the way it did before one little sell-off down to about $4,000 an ounce bottom. And so, if gold were to continue to follow this analog, that would take it to $8,000 an ounce in about 16 months or so.
Now, people, that this is only a projection. This is not to tell you to make reckless investments and load up on out of the money call options and make a big bet. Instead, this gives us perspective. It allows us to anticipate what is possible based on history. And again, we aren't just comparing things randomly. We look at the setup and the structure of the current move in gold and then we compare that to the past that best fits. And so this is where we are. And since I like to be conservative, I will tell you $8,000 an ounce. Let's put that at no, not at the end of 2027. Let's call it early 2028. So that's the big picture view. And to get to this point, we will need to see gold and precious metals outperform the stock market. We will have to see more capital move out of the stock market and equity investments, tech stocks, as I've talked about in past videos, and into gold and precious metals. And it will happen. The only question is timing. And again, if you look at the sentiment indicators, there's plenty of room for gold to move much, much higher.
And speaking of those sentiment indicators, here's one for the gold stocks. This is also from gold topdown charts.com. Callum Thomasdowncharts on Twitter. Great follow. And so this is the data for all the money in gold miner ETFs divided by the money in all ETFs. And this is where we are. This is probably like close to 0.35% right now. This is way below the 2020 peak, the 2016 peak as well and of course way below the 2010 2011 peaks. And that's why I'm so excited about the work we are doing in the daily gold premium. I cover and analyze the companies that I'm personally investing in. And so I'm looking for a combination of juniors that are of high quality, but at the same time that have 3x to 5x upside potential over the next two to three years. And so we are looking for good companies with good assets that we can buy at good prices and then we will let the bull market do the work for us because when you own quality companies at good values, you won't be deterred by corrections like the one we're having right now. I'm not worried because I know where the market is going and I know our companies are going to be able to add significant value over the next few years. And if we happen to get a move to 100 silver dollar or $9,000 gold, these three and five bagger stocks, they can be seven and 10 baggers. And if you own individual companies and would like some expertise and guidance in your stock selection, this is a service for you. Head on over to the daily.com/premium. We'd love to have you. And those of you that have subscribed, thank you. I appreciate you and your business.
And so, let's wrap this up and talk about GDXJ and what I see moving forward here. So, we can see here we have the daily candles here. And down here, these are important indicators. I've discussed them before, but these are custom indicators, but these are custom breadth indicators for GDXJ. So this data here plots the percentage of GDXJ stocks that closed above their 20-day moving average. This is the same for their 50-day moving average. This is the same for their 200 day moving average. Now the data here for the 20 and 50-day moving averages that functions as a short-term indicator because we can see here down here what happened. This came down to zero zero. Here it happened again right here. These were down to 0 0. But when you are in an intermediate term correction as we are, this indicator becomes far more important when you're trying to pick that significant bottom. And again, this is the percentage of GDXJ stocks that closed above the 200 day moving average. Now, when the sector had a very mild intermediate term correction at the end of 2024 and made that bottom just at the tail end of 2024, this data came down to about 40%. And I do have data courtesy of Sentiment Trader for GVX going back almost 30 years or so. And so looking at intermediate term corrections in the miners and what this breath data tells us is that at intermediate term lows, if it's very mild, you tend to see the bottom around 40%. Now the other corrections that are not so mild like the current one, you tend to see this around 10 or 15%. So with where we are here and now, this date is at 62%. Now earlier this week, it hit 51%. So what we are looking for at some point in the next month is we is to see this roll over down here, test these strong support levels, and then you see this data come down to 30%, 20%. Then you're going to be really, really close to that final bottom of this correction. And those are the points when you want to be a strong buyer. And one other thing I'll mention at that late at that bottom at the very end of 2024, you did bottom at this moving average here, which was the 350day exponential moving average. So that comes into play at about 95 here. Now, there are some really strong retracement levels of support in the low to mid 90s. So in trying to spot the coming bottom, you look at a multitude of factors. We talked about sentiment. You look at price action here. You look at support levels. And then you also look at breadth indicators. This is the most significant breadth indicator for me. We want to see this for GDX and GDXJ fall to 20% or lower. And at that point, that'll be the time to be a strong buyer.
That's all for this video. Thank you so much for tuning in. Hope you had a good week and hope you have an even better weekend. I'll talk to you guys again next week.