Author: AG Thorson
Compiled by: Deep Tide TechFlow
Deep Tide's Intro: Certified Market Technician (CMT) AG Thorson's analysis indicates that with the U.S. Treasury's announcement of a bond repurchase plan on Wednesday to suppress long-end yields, the U.S. dollar has fallen below its 200-day moving average, leading to a comprehensive surge in precious metals; gold, silver, and platinum have all confirmed their mid-year lows, with uptrends resuming. Mining stocks (GDX) have soared over 40% from their bottom and are expected to hit new all-time highs before gold this year. While Bitcoin soared on the repurchase news and bullish White House crypto activity, triggering a record $30 billion in short liquidations, the analyst still holds a forecast of a "final dip in September and a bottom near $40,000 in October," although his confidence is wavering.
Key Takeaways
- The U.S. Treasury's bond repurchase news pushed the dollar below its 200-day MA, boosting precious metals across the board.
- Gold, silver, and platinum have all rebounded from their mid-year lows. Mining stocks have surged over 40% and are expected to continue leading the gains.
- Bitcoin regained its position above the 200-day MA, weakening the argument for a "final drop to $40,000 before October."
On Wednesday, the U.S. Treasury announced a bond repurchase plan aimed at suppressing long-end bond yields. The dollar promptly fell below its 200-day moving average, and precious metals surged, with mining stocks leading the rally.
Bitcoin also experienced a sharp rally, triggering significant short covering. Short-term cycles suggest a potential top around next week. The author still anticipates a final round of selling before October—but his confidence in this scenario is diminishing.
The Gold Cycle Indicator reading has risen to 119—the price has moved out of the cycle low.
Chart: Gold Cycle Indicator rises to 119, price moves out of cycle low. Source: GoldPredict.com
U.S. Dollar Falls Below 200-Day MA
U.S. Dollar Index: Influenced by Wednesday's bond repurchase news, the dollar broke below its 200-day MA, supporting the judgment that a major top was formed in June. Occasional rebounds are expected, but the overall downtrend should resume, with prices potentially falling below 90 next year.
Chart: U.S. Dollar Index falls below 200-day MA, likely peaked in June. Source: StockCharts.com
Crude Oil Testing Upper Boundary
WTI Crude Oil: Oil prices are testing the upper boundary. A consecutive close above $88 would support a breakout. Such a move could push inflation higher, putting upward pressure on long-term Treasury yields.
Chart: WTI Crude Oil testing upper boundary, $88 is a key level for a potential breakout. Source: StockCharts.com
Gold Formed a Significant Low Mid-Year
Gold: As previously forecasted, gold formed a significant low mid-year, and the uptrend has now resumed. Although it may take some time for the price to sustainably reclaim $5000, we expect gold to ultimately exceed $7000 next year before reaching the next major top.
Chart: Gold rebounds from mid-year low, overall uptrend resumes. Source: StockCharts.com
Silver Also Formed a Significant Bottom Mid-Year
Silver: Silver also formed a significant bottom mid-year as predicted, and the uptrend has now resumed. We expect prices to consolidate sideways between $90 and $100 before silver makes a new all-time high next year (most likely in the second half).
Chart: Silver turns up from mid-year low, breaks above descending resistance line. Source: StockCharts.com
Platinum Breaks Above Cyclical Downtrend Line
Platinum: Platinum has broken above its cyclical downtrend line, confirming the formation of a significant bottom. We expect resistance in the $2200-$2400 zone before prices make a new all-time high next year.
Chart: Platinum breaks above cyclical downtrend line, confirming a significant bottom. Source: StockCharts.com
Mining Stocks Taking Over Leadership from Gold
GDX: As predicted, mining stocks formed a low mid-year and have since surged over 40% from the bottom. This confirms our outlook for continued outperformance and supports the judgment that "mining stocks are taking over the leadership role from gold." We expect mining stocks to make new all-time highs well before gold, likely before year-end.
Chart: GDX soars from mid-year low, gold miners taking leadership. Source: StockCharts.com
Junior Miners Find Support at 200-Day MA
GDXJ: Junior miners held support at the 200-day moving average, and a meaningful pullback now appears unlikely.
Chart: GDXJ holds 200-day MA, extends rebound from major low. Source: StockCharts.com
Silver Junior Miners Rally Immediately After Testing Trendline
SILJ: Silver junior miners immediately turned higher after testing the trendline. July may have marked a significant bottom. The author continues to believe they will make new highs well ahead of silver itself.
Chart: SILJ turns up after testing trendline, significant bottom formed in July. Source: StockCharts.com
Bitcoin Initially Soared on Bond Repurchase News
Bitcoin: Bitcoin initially soared on the bond repurchase news, then accelerated during a bullish White House crypto event. The result was heavy short covering, with a record $30 billion in liquidations.
In the short term, cycle indicators support the possibility of a top around August 25-26. However, with the price back above the 200-day MA, the author admits one judgment—perhaps both—could be wrong: either the price won't drop to $40,000, or the bottom won't occur in October.
The author still believes a final liquidation round could begin in September. From a sentiment perspective, Bitcoin needs to fall below $50,000 to completely wipe out remaining bulls. If prices don't decline significantly in September, then he is wrong, and a bottom could form approximately 3 months earlier than expected.
Chart: Bitcoin rallies back above 200-day MA, short covering accelerates. Source: StockCharts.com
Bitcoin's Equilibrium Price
Bitcoin bottoms every four years like clockwork, and in each cycle, the price has at least tested or fallen below the equilibrium price—currently $39,880. This is why the author has been anticipating a test of $40,000 for the past six months.
He still believes there is a high probability of another decline before October. Therefore, this could be the last rally before the final drop—but time will tell.
Chart: Bitcoin's equilibrium price remains near $40,000, having previously marked four-year cycle lows. Source: Look Into Bitcoin
Conclusion
Watch for price volatility around Warsh's speech at Jackson Hole next week.
A pullback in metals and miners wouldn't be surprising, but overall, prices appear to have marked significant bottoms in June and July as predicted.
Gold will need time to sustainably reclaim $5000, and silver to climb back above $100, but we expect both to make new all-time highs next year, with miners likely leading the charge.
AG Thorson is a Certified Market Technician (CMT) and a technical analysis specialist.
