Goodbye in July: Noise vs. Signal
@TheGoldAdvisor · · 1 upvotes · 0 replies
Gold Below $4,000? Buyers Keep Showing Up
Jeff Valks, Senior Analyst
As we wave goodbye to July, I thought we’d take one last look back at the month before heading into a weekend of sunshine and pretending birthday cake has no calories.
Wifey and I both turned 42 this month and I have no regrets about my caloric intake. But it’s time to get serious heading into a new month.
It looks as though gold has the same mindset.
Go to the Net
Those of you who’ve followed my reports know I’ve been watching the US$4,000 support line on gold like a hawk.
Think of a support line as the safety net beneath a trapeze artist. If the performer slips, how far do they fall before the net catches them?
Yes, yes… I know modern acrobats don’t perform with nets anymore. I’d argue that’s a terrible life decision, but they certainly train with one.
Gold slipped below US$4,000 three separate times in July.
Three times buyers stepped in.
In other words, keen buyers recognized a good price when they saw one.
The sharpest swing measured roughly US$192 from trough to peak. As my friendtor (friend and mentor) Jeff Clark likes to say, “I love big dips and I cannot lie.”
Clearly, the market thinks that way too.
The World Gold Council (WGC) reported this week that while gold ETFs were trimming positions, central banks added another 289 tonnes.
The WGC also mentioned that mine supply remains low.
ETFs don’t fall in love with gold—they fall in love with returns. When prices run, they’ll happily ring the register.
Central banks are playing a different game. They’re thinking about currencies, reserves, and purchasing power years down the road.
Different motives. Same market.
A tug of war in prices.
When the Tide Goes Out
Peak to trough, the Nasdaq shed roughly 1,840 points during its best-to-worst moment in July.
When large funds seek liquidity, they don’t politely sell one thing. They sell everything.
It becomes a liquidation sale, everything must go.
Tech. Junior miners. Physical gold. You name it.
Funny enough, last week I wrote an entire article on the tumults of summertime trading… then pulled it moments before our wonderful e-mail master, Jenn Alcee hit send.
Now I kind of wish I’d let it fly.
The thesis? Summertime investments are not for the faint of heart but don’t mistake seasonal turbulence for a broken thesis.
The article was inspired by an onslaught of texts from friends lamenting the chaos in the markets.
My response to them? “Welcome to summertime trading, enjoy the ride but don’t get off.”
Summer markets can feel like riding a teeter-totter with the neighborhood bully. One minute you’re stuck, suspended in the air; the next your backside is smacking the hard ground and you’re left feeling sore.
Don’t Confuse Noise With Direction
I spent yesterday afternoon on a conference call with several mining execs. Unsurprisingly, management teams remain upbeat. Low mine supply has a funny way of doing that.
One CEO, though, said something that matched my thesis.
Summer is almost always slow for gold. Come fall, he expects fewer dramatic spikes and a steadier climb—think steady 1–2% increases every week, not $500 spikes and swings.
Markets have a habit of testing conviction before rewarding it.
The summer always feels like one of those tests.
Gold dipped below US$4,000 three times. Buyers showed up three times. That’s the story I’ll remember.
Sometimes the strongest signal isn’t the rally.
It’s seeing what refuses to stay down.
Gold keeps passing the test. The question is which miners will be ready when the next move begins.
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