After touching new all-time highs, the market indexes are starting to sag. Not because of the usual reasons, though, like poor earnings or economic headwinds.
Instead, investors are selling because China is supposedly getting cold feet. According to a report from Bloomberg News, “unnamed sources” have reason to believe that Xi Jinping won’t sign the “phase one” trade agreement as is. Beijing’s afraid that Trump will walk away from any deal, should it suit him, at a moment’s notice.
That has bulls stressed and bears licking their chops now that uncertainty is back in a big way.
And like always, whenever uncertainty (or inflation) rears its ugly head, gold bugs start rubbing their hands together in anticipation of another precious metals boom.
Which, incidentally, might actually happen based on what the charts are telling us. Several gold miners are recovering now after selling-off, and one in particular – Kinross Gold Corp. – could be set to burst.
In the weekly candlestick chart above, you can see that KGC enjoyed a consistent May-August rally. Over that timeframe, share prices rose over 60%. And, coincidentally, we took a look at KGC in June right before the rally truly kicked off. At the time, we set a trade trigger at $3.35 as the stock had just hit the lower Bollinger Band (BB) and bounced off key support.
It was a great trade and had you purchased an appropriately priced and dated call option; it would’ve performed even better.
This time, KGC is in a similar situation. Stochastics are low after the stock chopped around for a few months. However, unlike with our last KGC trade, this one involves both a higher low (relative to the low of May) and a positively sloping 50-week moving average. There is no BB contact, but with the 50-week moving average moving upwards, KGC’s price action – in which the current weekly candlestick is trading above the last four candle bodies – is satisfactory.
Should KGC clear resistance from the last four candlesticks, past the current week’s high, it might make sense to go long at $5.05. Now, KGC might not do quite as well as it did during its last rally.
But that’s not to say that KGC isn’t capable of another impressive run. With our last KGC trade, it rose consistently at a time when the general market was trending upwards. That’s not what you’d expect from a gold miner, but nonetheless, that’s precisely what happened.
So, even if the market presses on and sets more all-time highs in the next few months, KGC can still perform as it did before.
And that should have gold bugs excited, regardless of how the rest of the market moves.
