The Start of a New Gold Bull Market? (w/ Steve Strazza) | Stock Trade Ideas

The Start of a New Gold Bull Market? (w/ Steve Strazza) | Stock Trade Ideas


Welcome to real visions trade ideas today. We’re sitting down with Steve Strasse of the chart report. It is great to have you back Thanks for having me. So we’ve had actually a fair amount of real vision contributors Come on from Greg Weldon – Peter book far and talked about the breakout that we’ve seen in gold and so far a lot of contributors have been fairly bullish on this rally I’m curious as to where you stand and what you see going on right now in the gold markets, so we’re bullish gold definitely on June 20th, it broke out above the 1375 1380 level which has been a critical level of resistance for about six years now. So now that we’re above that level We’re definitely earning on the bullish side, and I have a trade idea today that’s in the gold space But I wanted to talk a second about like you said a lot of technicians and a lot of investors are talking about gold Broadly and at the chart report, that’s what we do. I call it the top technician top-down analysis strategy So what we do is we look at top technicians we see what are the themes that they’re talking about and we see how can we express this theme into a trade idea or a Trade setup and that’s what we’ve done with gold. We see a lot of people talking about it So now we’ve kind of dug in I’m going to share some risk appetite ratios with you today And I’ll share a vehicle that we’re gonna use to express our bullish thesis in gold now in terms of the technicals I mean just looking at a basic gold chart I can understand why the technicals might look good because we are seeing a breakout But stepping back in taking a look at the macro picture I mean stocks are near all-time highs the dollars fairly strong given the fact that we might see a Fed rate cut unemployment still pretty low so Why would now be the time to be looking at gold our bullish thesis on gold has nothing to do with the economy Crashing stocks going down anything like that. This is isolated to gold precious metals complex. We’re seeing bullish price action Stocks and gold can go up together. We’ve seen it many times throughout history golden the dollar they don’t typically go up together So I guess our bullish thesis on gold really has nothing to do with equities at all I think you could be buying equities right now and I would be as they’re all resolving to the upside and I think you could Also be buying gold and you’re diversified in that way. So it’s a great way to hedge. So then is your thesis It’s a lot of it’s predicated on weak in the dollar specifically That’s one of I’m gonna share like five characteristics today that I think you want to pay attention to and make sure are in place and if they are I believe that we’re in the beginning of a new secular bull market and Not just gold but precious metals. Okay, so starting out with the first out of those five things that you’re gonna talk about What do you see going on with the dollar? So we want to see the dollar roll over here stay below that critical Ninety-eight level which has been key resistance for more than a year and a half now it failed to break out twice Earlier in the year a few months ago And then it recently broke its downtrend line Going back to early 2018 and now it’s back in retesting that key 98 level again We want to see a rollover and fail here. That would be very bullish for gold and commodities more broadly Okay, and so then moving on from that in terms of other precious metals, what are you looking at there? So when we look at gold breaking out We want to look at the entire precious metals complex and make sure kind of everything’s clicking that we’re hitting on all cylinders in order for this to be a true New long-term breakout. So when you look at gold you see a lot of very bullish price action But Silver’s been lagging and that’s been a concern palladium has been doing very well for multiple years now So that’s been the leader in the space platinum is finally looking like it’s picking up So what I brought with me is a custom index of equally weighted precious metals So that’s all platinum palladium gold and silver. The one we’re most concerned about is silver We’ll often also look at a ratio of gold to silver to kind of gauge that out Performance or under performance from silver? And the reason that we do this is I liken it to last time I was on I said frontier markets are to develop markets as micro caps are to large cap stocks They’re the riskier, you know, they’re like the ugly stepchild. That’s what silver is Gold bulls or gold bugs can get pretty crazy and pretty bullish on metals during bull market periods But the silver bugs are really where you know, the true crazies hang out So if we see silver working and moving to the upside That’s just a risk on signal for the entire space that all metals should really be working in that environment And we haven’t really seen as big of a breakout in silver right now. So what do you see going forward here? so we finally just got a breakout of Multiple year down trendline and silver. So that’s something nothing like gold gold is at new six-year highs Silver is still facing overhead resistance, even from their year-to-date highs. I think what’s around the sixteen dollar level? So we want to see silver Continue to break above this downtrend line See some follow-through take out those year-to-date highs and keep moving higher and the way we really want to see silver performing Well is relative to gold so we want to be paying close attention to either the gold silver or the silver to gold ratio I brought a long-term chart of the gold to silver ratio, and that’ll show you It’s a pretty much nosebleed levels historically It’s rarely been over $80 an ounce gold over silver and it was briefly in the 90s and it is right now It doesn’t seem to hang out at these types of extreme highs for very long So what I then did was I inverted the ratio using popular ETFs SLV and GLD and you could see silver to gold silver relative to gold We have a nice bullish divergence and momentum as price just undercut some kilos So I think you’re starting to see that ratio thaw out and if we could get a failed Breakdown and see prices reverse to the upside here that’d be incredibly bullish and to me that’d be another feather in the hat for precious metals bulls, and that would be a sign that This rally is really gonna have legs Okay, so seeing silver specifically rally in regards to gold that’s gonna be big for precious metals overall Yes, and it’s also important to point out that that’s not just bullish for silver. That’s also bullish for gold So even though silver will be outperforming gold If you look at the longer-term chart that I marked up with red and green it shows the zones it shows times when silver was outperforming so that gold to silver ratio was falling and you can see silver rising in the lower panel each time and if you were To chart gold in that lower panel also even in periods where silver is outperforming gold you’re gonna see gold rising So it’s good for the whole space really. So in addition to the dollar weakening and seeing silver outperforming What other factors are you looking at? Alright, so we want the dollar to be weak We want gold to stay above that Kiera’s level. We want silver to keep moving and working to the upside We want the silver to gold ratio to reverse and begin a new uptrend But then we also look at another very important risk appetite indicator in the precious metal space Which is simply the gold miners performance relative to gold so you can easily chart that with GDX, which is a popular gold mine or ETF and if you Chart it over GLD. You’ll see that it’s been in quite a downtrend for some time But it’s finally basing and we’re starting to see this break it nice down trendline and start moving to the upside as well So that’s similar to silver versus gold We want to see that Investors are buying gold miners at a more aggressive rate than they’re actually buying spot gold because that’s the higher beta leverage trade in the space and it shows that Those animal spirits are really alive and well so that people are taking on more risk Absolutely, and you can even take it a step further same exact concept But you take the junior gold miners, which are really like venture capital firms. They’re Literally looking for gold in the ground if they’re being capitalized and they’re moving to the upside and working then it means that there’s a lot of Bullishness in the space and that sentiments really good so you see those junior gold miners actually outperforming the gold miners and that would be GD XJ and The gold miner ETF GD X is really gold producers. These are companies that actually have already hit gold to have gold They’re often paying a dividend their mature companies while the miners are really the they’re like biotechs So right now we’ve seen this rally in gold. Do you see that as a sustained breakout? Are we now in a new bullish cycle for gold or is this simply a short-term trend? so I think that’s still a big if um but I think that this is a very Timely thesis in the sense that we’re just seeing these risk appetite indicators that we just talked about We’re seeing them bottomed out and start to move higher and if that happens then to me, I would say yes We’re in a new secular bull market for precious metals This will be a one to three year thing at least and you’ll probably see gold move back to all-time highs Potentially silver also and I think in that scenario you’ll see the gold miners go to but it’s very important – just keep in mind you only want to be in this trade for the long term and it’s only gonna be a long-term Bullish trade if all these five things are working. So how would you go about trading your thesis? I think that GDX the gold miners ETF is really an excellent way to do it. It’s a leverage play It’s higher beta you’ll make more money on this then you will if you just are long gold. For example, I think GDX is about 140 percent off its all-time high still So in order to get back there If you use that resistance level that I’m talking about which is about 25 50 25 25 It gives you about 17 and a half risk reward ratio Okay, and you would consider buying that even now even though we’ve seen somewhat of a run-up? Yes So there’s a couple ways you could play it if you’re gonna hold on Long term and all the risk appetite Indicators that we’re talking about and silver and the dollar rolls over and everything Kind of plays out the way we want it to I think yeah, you can continue buying weakness all the way back to all-time highs And that could be a while There’s other more tactical ways to play it if you want to wait for prices to potentially retrace back to our risk level closer to 25 25 25 50 and you can get long there again and play a tactical trade just back up to 2016 size and then we also have a 62% Fibonacci retracement, which I have on the GD X chart you could also use that as a price target So there’s a couple different ways that you could play this but I think the bottom line is that this is a brand new Secular bull market so it’s gonna take some time to play out There’s gonna be some backing and filling and we could be buying Weakness and betting a much higher prices over the long term if we’re patient and where are you putting your stop-loss on this? the 25 25 25 50 resistance level and GDX that they finally just resolved above and then in terms of time horizon you’re in the Long run this is one two three years Yes that you see they didn’t the target if you don’t want to put on a more tactical trade and like I said right now I think we have about 15 to 17 percent depending on where the current price is back to the 2016 highs You could play that as a trade and maybe by weakness back towards the 25 level So your risk is a little more well defined on the long end So you could you could definitely craft a tactical trade out of it But personally me seeing all these risk appetite and Gators turn bullish I’d rather be in it for the long run not trying to pick spots and Just kind of buy and hold and accumulate on weakness as we go What do you see as the biggest potential risk to this trade if silver doesn’t start working here or? If the miners don’t keep working what looks like failed break downs right now and whipsaw moves that are gonna resolve higher they could actually turn into Prolonged down trends and if we do see that happen and you do see silver Again, Silver’s been outperforming for about a week now It’s been underperforming four months ahead of this even as gold had showed shown strength earlier in the year silver was not there So we need to see this actually turn into a sustained move from silver I think that’s your your biggest risk and you want to see the miners continue to work as long as those things happen and the Dollar remains below 98 and the side ways are in a downtrend This trade is gonna keep working All right Can you briefly recap your trade thesis as well as the trade on GDX? Sure. So for this trade thesis to be in play and for it to work for Multiple year timeframe like we talked about we want to see the dollar continue to roll over stay below 98 we want to see gold continue to break higher stay above the 1375 breakout level when I see silver do the same thing and Move up move above those year-to-date highs and begin a new uptrend and then we also want to see silver start outperforming gold That’s very important And we want to see the miners outperforming gold and the riskier miners the junior miners outperforming the less risky miners the gold producers so if all those things are happening and I brought all the charts that you could look at to check on these things then you Want to be long gold and I think you want to express that bullish thesis through the ETF GDX, right? And the reason why you want to do this is because there’s still a lot of room back to highs So you could do this in a number of ways I would define your risk at that key resistance level that’s now support that we’ve talked about at the 25 25 25 50 level then you can either Play the move in GD X up to the 62 percent retracement Which is that at about $45 that gives you about an 8x risk reward ratio Or you can play it all the way back to all-time highs which if you limit your risk at the 25 50 25 25 level It’s about 8% and downside that’ll give you about a 17 and a half X risk/reward. Okay, great, Steve Thank you so much for breaking this down for us. Thank you for having me. So Steve is bullish on gold Specifically, he likes buying the gold miners ETF ticker symbol GDX at current levels with the stop-loss at 25 25 his initial target price is 45 and he sees it breaking through all-time highs over the next one to three years just Remember, this is a trade idea and not investment advice. You should do your own research consider your risk tolerance and investing ly for real vision, I’m Justin under health You

21 Comments

  1. Good assessment. I am biased..I loved gold since 08. So, this has been a long bear market. I still have frost bite.

  2. Gold is bull at any time. just kidding, good insight still focusing in this precious metal for more pullbacks.

  3. Life is complicated.
    Luckily I can set this video to any point in time I want so that I can replay it and GET MY BEARINGS.
    So, let me see…
    What is the difference between a "trade idea" and "investment advice"?
    Does "my own research" include watching this video?
    My risk tolerance is not good. I'm afraid of my water bill. How about a zero risk GDX trade with
    unlimited upside potential using multi-leg options?
    If the material in the video is NOT investment advice, then how are we supposed to "invest accordingly"?
    According to what?
    Life is beautiful too.

  4. Marginal cost to mine silver is like $5 — it can still under-perform gold a lot from here and has nothing to do with silly technicals.

  5. A HISTORIC GLOBAL DEFLATIONARY CYCLE HAS BEGUN THIS YEAR WHICH MEANS ALL STOCK MARKETS AND COMMODITY PRICES INCLUDING GOLD, SILVER AND CRUDE OIL WILL PLUNGE BY AT LEAST -50% FROM CURRENT LEVELS BY DECEMBER 2020…

  6. Weakness in the dollar? When there's basically a dollar shortage worldwide? When the Chinese are fleeing the yuan for dollar-denominated assets? When US rates are higher than anywhere else and our stock market and economy is stronger than anywhere else? Exactly how does that equal weakness in the near term?

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