Gold and silver both popped since Tuesday’s election results. Last Friday, as you may recall, I urged my paid readers to cover all of their shorts on gold/silver and the securities.
Since then, both gold and silver have jumped nearly 5%.
We don’t tend to see 5% moves in a matter of days in these metals unless people are spooked.
Tech stocks, led by AI, were rocked by the “blue wave” and now fear that Democrats are going to stymy AI buildout is governing that market. The tech-heavy Nasdaq was down 6% in one day of trading. Volatility (as measured by the volatility index, which tracks derivative pricing) jumped 8% on sky-high volumes.
It’s good to see gold and silver fulfilling their role as a safety asset, but this kind of volatility rarely ends in a whimper.
What it means for us as gold investors is that we are likely to see pricing snap from one extreme to another over the short term. It means we could see some bargains today become even better bargains early next week.
This correction in AI/tech also aligns neatly with my thesis for the next leg of the gold bull. I believe we’re going to continue to (on net) see AI’s downfall coincide with an upswing in gold.
I’ve been talking about this trend for the past month or so, and while it feels good to be validated by market action, I also know that we could see another leg down for the metals along with another leg up for AI/tech.
I’m not waffling here. Markets never move up or down in a straight line. The key is not to get spooked by volatility, but to use it to your advantage to get better prices.
The higher the volatility, the more you should be sniffing around for bargains as people run for the exits to raise cash.
The ironic part of this Nasdaq decline is that some of the best/safest gold and silver stocks that I cover trade in the Nasdaq. So when spooked Index investors dump the whole basket to get away from AI, they’re also selling some companies that I consider to be world class gold and silver assets.
They sell not because they don’t like those companies, but because they see everyone else selling and/or they need to raise cash to offset losses.
One of these companies just reported 80%+ higher cash flows than this time last year.
Right now, there’s still a gap between the opportunity in gold stocks and their pricing. And we know exactly where the new investment will come to fill in that gap: it will come from AI investors desperate for safer/more profitable pastures.
I don’t think a 6% down day is going to be the end of AI. Real motivation to rush into the gold sector will require much bigger moves.
In the meantime, I urge you to make a shopping list of gold stocks you want to own, or want to own more of.
If you don’t have a list, you can take a look at what I’m doing in my lowest cost service: Golden Portfolio IV, with regard to the AI correction.
I’m looking at this market constantly. Every minute that I’m not writing an update or researching individual companies, I’m paying attention to the indexes, the bond market, gold and silver, oil and more.
I don’t know if we’ve seen the end of the gold/silver correction that started in February, but I promise I will keep you in the loop for whatever that comes next.
Have a great weekend.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
