Gold vs. Palladium

It was only a three-day weekend — but it feels like ages since we last checked on the markets.

Stocks enjoyed a strong finish last week as the major averages pushed higher into the close. Blue chips led the way as the Dow gained nearly 450 points. By the closing bell, the Dow had erased every cent of its December swoon. The major averages are now all perched at year-to-date highs heading into the holiday-shortened trading week.

But political mischief doesn’t sleep. The president declared a national emergency before the close of business Friday to secure border wall funding. MarketWatch reports no less than sixteen states have since filed lawsuits challenging the declaration.

Meanwhile, trade talks resume this week. China is apparently sending its “economy czar” to Washington later this week to get in on the action. While investors continue to look for any signs that the US and China might resolve this trade war debacle, the news remains the same. Both sides claim they are making progress, yet few details have emerged regarding a potential deal.

As of this morning, Trump and Xi have less than two weeks to figure something out or push their March 2 deadline.

The clock is ticking.

As the major averages wander slightly into the red this morning, gold is perking up.

The Midas metal is higher by nearly $11 early this morning, pushing to new year-to-date highs. It appears gold is finally finished consolidating its January rally. After more than two weeks of sideways action, precious metals are back in the limelight.

GOLD

Gold is fighting back toward $1,350, which just so happens to mark its 2018 highs. More importantly, the $1,350-$1,400 area has stymied gold ever since it broke below this level way back in early 2013. A significant rally above $1,400 could spark the next bull market in gold.

Personally, I’m rooting for gold to make a strong push toward $1,400 to set up another big test of resistance. No, I don’t have a horse in this race. But I’m still sorting through the piles of hate mail I received six years ago when I showed how gold’s breakdown below $1,600 probably marked the end of a decade-long bull run in precious metals.

I can only assume you’ll heap endless praise upon my inbox should I correctly pinpoint the next major breakout. I look forward to reading your, ahem, thoughtful replies.

By the way, gold’s not the only metal making moves this week.

Remember last month when I showed you palladium was going parabolic?

Palladium was streaking to new all-time highs just one month ago. The forgotten precious metal was on an insane tear and briefly touching $1,400 for the first time ever before finally retreating. Following this powerful rally, an ounce of palladium was even more expensive than an ounce of gold.

This action capped off an impressive run that had sent palladium soaring by 70% since bottoming out in August. Frankly, I wasn’t sure this rally could last. After such an explosive move, I expected palladium to stage a quick retreat.

But after a brief retracement, palladium continues to march higher. It’s leading precious metals higher this morning with a gain of more than 3.5% as it breaks above $1,450 for the first time ever.

Palladium

While I doubt it will ever possess the emotional pull of gold, palladium remains a highly useful precious metal. You probably own some palladium, too. If you drive a car, chances are there’s palladium in your catalytic converter.

Many analysts are quick to point out how shortages of the metal due to a worldwide crackdown on emission controls have played a key part in platinum’s recent rise. That’s probably true. But we can only assume wild-eyed speculators have taken over this trade as palladium has shot straight-up over the past several months…

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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