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David Skarica: Major Fall Rally Coming in Gold & Gold Stocks

David thinks that we are seeing pretty classic gold action. Gold stocks are normally more volatile when compared to the regular markets. The U.S. system is currently very dysfunctional, nothing seems to get done, just like it was under Obama. Overall this will affect the psychology with the dollar.

The Canadian dollar and gold charts look very similar since these are tied to natural resources. The Canadian dollar improvements in recent weeks have caused Canadian mining stocks to move up in USD terms.

We still need some sort of catalyst, an external event, some small drop in the markets to get things started. People are going to be surprised how quickly gold heads for the all-time high.

US Dollar weakening has not driven a rally in gold, last year gold followed the trend, that seems to have stopped. One of the reasons for this is that the overall political climate in Europe has improved. If you look at the last six to nine months there has been a lot of capital flow into ETF’s. The overall markets have a mania psychology in things like tech stocks and crypto currencies. These things take away from resource equity inflows, it’s a good time to get deals on gold equities.

The trading pattern in the markets from the election till now is very similar to what took place in mid-1986-1987 and 2008-2009. We are in a bubble and close to some sort of blow off. If that happens gold equities may temporarily fall with the rest of the markets.

Talking Points From This Week’s Episode
• Need an event to kick start gold and gold equities higher
• Market volatility is low, which will magnify any crisis or market drops.
• Mania phase has taken hold of equities, the tech sector, and crypto currencies.
• US Dollar decline and Euro has not caused a gold rebound, it’s probably just lagging.

David Skarica is the founder and Editor of Addicted to Profits, a popular newsletter known for its stellar performance in both up and down markets. Skarica entered the financial markets at a very young age and, at the age of eighteen, became the youngest person on record to pass the Canadian Securities Course. He is a regular speaker at trade and investment conferences in Canada and is a guest on the Business News Network (BNN), Canada’s flagship business broadcasting network. His work has appeared in publications such as the Bull and Bear Financial Report, Barron’s, Investor’s Digest of Canada, and Canadian MoneySaver. Skarica also writes Gold Stock Adviser, an investment newsletter for the conservative media outlet, Newsmax. David’s newest book, Collapse, is available on amazon.com.