Equities got clobbered on Wednesday and this morning we are seeing some follow-through to the downside. Gold and silver rallied on Wednesday but not as much as you would have thought based on the trashing of equities. However, both are joining the Jeffersons this morning and are “moving on up.”
As we have written many times, we don’t look at gold as a safe-haven play; we look at it as a hard asset to which every portfolio should have some exposure. Although gold remains in the consolidation phase, it looks like it’s getting ready to test the top end of the range.
The keys over the next couple of days are — can gold get to the $1,220 level resistance level? Will $1,220 reject prices, causing gold to sell off again? There is no guarantee, but we expect gold to reach $1,220, resist, have a small pullback and then break out to the upside.