VRA Investment Letter: Massive Wall of Worry Building…with Extraordinary Broadening Action. Goldman On Gold!
/Good Thursday morning. If you look up “wall of worry” in the dictionary you might just find a picture of the current set-up for our bull market.
- Most everyone we speak to is waiting for an “October surprise”, with the election just a month away.
- October seasonality is bearish (with the markets coming off of extreme overbought conditions),
- The dockworkers strike has the Plandemic hoarders back in full force (have you tried to buy toilet paper this week?)
- The Mid East conflict could ramp to next-level dangers at any moment.
- North Carolinians are desperate for help, only to be told they may get $750 from the govt, while we’ve already sent $250 billion to Ukraine (the most corrupt country on the planet) in what is one of the largest money laundering operations in history.
- And…they’ve already tried to assassinate Trump twice.
Without question, we have a huge wall of worry that’s being constructed. And what do we know about a “wall of worry”? Bull markets love climbing them.
However, there is one thing about this wall of worry that’s different; investors have remained highly bullish, with the Fear & Greed index sitting at 68 (Greed Level). We’ll also note that the market internals have remained strong, even on down days, with the VRA Investing System remaining at 10/12 screens bullish.
While we’ve paused our buying in the short term (on the broad markets only…not our VRA 10-Baggers), in just a couple of weeks Q3 earnings will start kicking off. We expect smart money front-running to begin building next week. BTW, market leader Nvidia (NVDA) reports earnings on 11/19…we’ve got some waiting to do here.
We’re watching the semis like a hawk. We are aggressively long the semis/tech. If the semis have bottomed, this market is not going lower.
And there’s this: As of the end of September, the share of S&P 500 stocks outperforming the index itself just hit 69.2%…the highest reading on record. The broadening action underway is “extraordinary”. A rising tide lifting all boats, right before our eyes. HIGHLY bullish.
VRA Bottom Line: regardless of what happens in the very short term, we remain aggressively long the market. As we’ve done from the birth of this bull market (10/13/22), should we have a large dip, we will be buyers. We’ll give you advance heads up, as always. This bull market is only in the very early innings and should Trump win (my call), the move higher into year-end will be breathtaking. For the time being, “discipline” remains the smart money approach…let’s see how this wall of worry plays out.
Goldman Sachs: Own Gold!
Goldman Sachs just aggressively recommended gold, while raising their gold price forecast for early 2025 to $2,900/oz from the previous $2,700/oz, citing two primary reasons.
First, they anticipate faster declines in short-term interest rates in Western countries and China, adding that the gold market “doesn’t fully price in the rates boost to Western ETF holdings backed by physical gold yet, which tends to be gradual.”
Second, ongoing robust purchases by emerging market (EM) central banks in the London over-the-counter (OTC) market are expected to continue fueling the gold rally that began in 2022. Strategists believe “that these purchases will remain structurally elevated.”
Goldman’s nowcasting tool, which provides timely monthly data, shows that central bank and institutional demand for gold in the London OTC market has remained strong. Through July, purchases have averaged 730 tons on an annualized basis, accounting for about 15% of the global annual production estimates.
China has notably contributed to this demand, with the nowcast offering estimates comparable to those of the World Gold Council (WGC). However, the nowcast boasts advantages such as monthly updates, country-level transparency, and the use of customs data and institutional knowledge to inform its estimates.
Goldman also reiterated its long gold recommendation, citing the anticipated gradual boost from lower global interest rates, the structurally higher demand from central banks, and the traditional role of gold as a hedge against geopolitical, financial, and recessionary risks.
Last: $2675/oz. We believe this is the bull market where gold tops $5000/oz.
VRA Bottom Line: the bull market of bull markets…our long term prediction for this move higher in metals/miners….is now fully engaged. Gold hitting ATH after ATH with silver at its second highest price on record and with the miners (GDX) recently hitting 30 month highs.
Here too we’ve been pounding the table, with GDX up 58% from the late February lows with our VRA Buy Rec up a big 125%. We’ve yet to see two important events take place in the miners; volume continues to be anemic…the 10 day moving average in GDX is just 24 million shares traded. Until GDX volume starts topping 50 million shares on a regular basis, this bull market has yet to really even begin (my call).
Also; gold is hitting our most overbought designation of “extreme overbought on steroids” (EOBOS) with GDX coming off of overbought levels. Longer term, this bull market is just getting started.
Finally on gold/silver; we only recommend buying physical gold and silver and we recommend buying it from a precious metals dealer near you. Do your research, locally. PM dealers are the exact people you want to know, should the sh*t ever hit the fan. They know all of the most important people in your area. They are perfect fits for your personal mastermind group (Think and Grow Rich, Napoleon Hill).
Until next time, thanks again for reading…
Kip
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