Gold's Next Crash? ‘Much Lower Prices’ Below THIS Level | Gary Wagner

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David Lin (0:05)

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Gary Wagner (0:23)

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Gary Wagner (0:30)

If it breaks below 4,000, all bets are off. And we definitely the model that I have and many others that are looking for a pivot from bearish to bullish will be violated.

David Lin (0:42)

How much weight do you assign to 10 year treasury yield?

Gary Wagner (0:45)

They're absolutely critical. There's an inverse relationship. So as interest rates move higher, that would pressure go lower. What we need to see before I can regain any kind of bullish sentiment is for gold to break back above.

David Lin (0:59)

We're back with Gary Wagner, editor of the goldforecast.com. As yields progress higher, I'm talking about the 10 and 30 year both going up.

Investors are worried about the future of gold. And additionally, the Federal Reserve this week released their September meeting minutes and in it, it was revealed that they are expecting another rate hike by the end of the year. Can gold survive higher interest rates? It's the theme of our discussion today. Gary, welcome back to the show. Good to see you as always.

Gary Wagner (1:28)

Thank you so much for having me in a very, very stormy day here in Hawaii.

David Lin (1:33)

I hope you're surfing or taking advantage of the waves.

Gary Wagner (1:39)

Even if I did surf, not in waves like this and not with rain like this, but.

David Lin (1:44)

All right, Gary, gold is trading currently at $4,100. I had another fantastic gold analyst on goal, Adrian Day recently, and he was saying how it's really remarkable how gold has survived much higher interest rates this year and a strong dollar. And despite the fact that it's already fallen, most corrections in the past from the peak have led to more than a 40% decline from its top. It hasn't happened to gold yet. It's only fallen about 25, 30% from the $5,500 level. And so it is really quite remarkable how gold is still holding up, is what he said. Are you seeing any bullish indicators for gold?

Gary Wagner (2:26)

Well, I see the potential and a possible base formed above $4,100. Currently, we have December gold trading at approximately $4,160, up a couple of dollars under $20 today. But it has been in a strong, defined downtrend. And when we look at some charts, you'll see that from this last peak, we had an $800 rally from about $4,000 to $4,800. And then it came down a little bit below the 78%.

It is still above the lower low that came in on the big move down after hitting $5,500 and then selling off sharply. So I wouldn't say that I see bullish signals, but what I do see is the potential for support coming in.

And if that's the case, I do see potential in terms of our Elliott Wave count that we'll talk about later, that we will enter a motive phase, meaning a bullish rally or a rally in the prevalent trend direction, which recently short term has been down, long term has been up.

David Lin (3:38)

Okay. Well, let's pull up some charts right now, Gary, and take a look at some key support or resistance levels.

Gold's downtrend all year has been marked by strong surges upwards, but the long term trend ever since the beginning of basically September has been down. So let's see what's next.

Gary Wagner (3:58)

So this first chart is simply a daily chart of December gold. You can see the rally that I was referring to with gold hitting around $4,000 on two occasions. The first one was on the 30th of June. Second one occurred on the 17th of July. We had a long period of sideways trading action or consolidation. And from there, we had a huge break that occurred on the 5th of August. That was a tremendous move from about $4,130 up to $4,300 in a single day. And that was the beginning of a about $800 rally that would terminate last week of August with gold at $4,752.

Then we went into a corrective period. The gold sold off pretty sharply from about $4,751 to its most recent low. This occurred yesterday on Wednesday when it traded to a low of $4,098. So it actually broke below $4,100, but only on what we call the wick, meaning the actual close was $4,136. And that's what we want to look at.