Gold and Miners Decline Despite the Iran-Israel Conflict

Today’s big news is gold’s decline despite the escalation of conflict in the Middle East.
 
Despite more rockets flying from Israel to Iran and vice versa, gold – the safe-haven asset declined instead of rallying.
A tiny rally here would be bearish. The lack of rally would be very bearish. And what we got is a $40+ decline. This is
remarkably bearish.
One could think about it as a non-technical invalidation of a breakout.
Essentially, it’s the same thing. Based on a breakout, the price is “supposed to” rally. If it doesn’t and it declines instead,
it serves as a sell signal. Right now, gold is “supposed to” rally based on increased geopolitical tensions, but this is not
taking place, and it also serves as a sell signal.
This shows that gold is not willing to trade higher here and it’s in tune with multiple points that I’ve been making in the
previous weeks.

Gold just invalidated the moves move above its May high, its 78.6% Fibonacci retracement, and above its early-June
high. All while having all the reasons to rally further.
I’m not sure what else I can say to further emphasize how bearish this is.
All right, I’ve got two things.
First, this is in perfect tune with how gold topped in late 2012 – very close to its previous highs.

Second, gold is declining despite a daily decline in the USD Index.

Dollar Breakdown? Not So Fast
Yes, it’s a breakdown. Is it bearish yet? It’s not because:
1. It’s far from being confirmed and last week’s breakdown was quickly invalidated.
2. The USD Index is right at a combination of super-strong support levels based on its long-term chart.

The sentiment… Well, let me just quote a comment from below one of my articles (the emphasis is mine):
“The USD is slumping sharply, feels like that the United States is on the verge of collapse and downfall. Market
sentiment is so crazy.”
Is the U.S. collapsing here? Of course, it’s not. Despite the current sentiment, please keep in mind that the USD remains
the world’s reserve currency, the U.S. has the world’s most powerful economy (think about the key global tech and AI
players) and the world’s most powerful army. Please also keep in mind that the U.S. tariffs are fundamentally bullish for
the U.S. dollar.
And yet, here we are. I’m not sure if many of you remember the USD sentiment at its 2008 bottom. Everyone and their
brother thought that the USD was trash. And yet – it soared back with a vengeance after this key low.
What happens if the USD declines more? Well, today, gold is proving that it can decline even if the USD declines from
here, and the same goes for mining stocks.
 
Investment Framework Update
Before signing off, I’d like to emphasize the huge change in our approach based on the just-posted investment
framework report: The Golden Meadow® Portfolio Strategy
Yes, today’s reaction in gold is exciting as it’s not a moderate or mild indication of gold’s willingness to decline from
here – it’s a strong one. However, the adjustments to the overall strategy toward one’s portfolio will likely have a much
greater impact on at least one’s portfolio. And as you read the full report – I know, I know, it’s a small book, so you
haven’t had the chance to read it so far – you’ll see that it can have a generational impact on more than just money.

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