Gold Price Forecast: What’s Dogecoin Has to Do With Gold?

Cryptocurrencies are all soaring and have reached incredible highs as of late – so why should you – the gold investor – care?

Do you remember about bitcoin? Some time ago, I wrote that the bitcoin situation made the overall situation in currencies similar to late 2017 / early 2018.

Figure 1 - Bitcoin Vault (BTC.V)

Just as we saw back then, bitcoin soared while the USD Index plunged. Then both markets reversed.

Figure 2

That was also the time when precious metals and miners (and stocks) topped.

So, what’s new?

We just saw another clear confirmation that this is the very final inning of the rally. You probably heard that in the final part of a bull market, everything that’s in it soars. If it’s a gold bull market, then even stocks that have “gold” in their name will likely rally even though they might have nothing to do with the precious metals market. People don’t care to check, and emotions are too high to bother checking what they are actually buying.

Well, there’s a cryptocurrency that started as a joke, but then became a relatively big market.

Dogecoin.

The reason why I’m mentioning it is that dogecoin just soared…

Figure 3

And it had previously soared in this way in early 2018, a few weeks after bitcoin topped.

This is exactly what one would expect to see at a market top, based on common sense (analogy to buying just about anything close to the top), but the fact that we already saw pretty much the same thing in bitcoin, dogecoin, and the USD Index at the top 3 years ago should be flashing a big red light even for the most bearish of USD bears and most bullish crypto bulls.

Remember, early 2018 was also the moment when the stock market and PMs topped.

The above indications are on top of myriads of other factors pointing to lower precious metals and mining stock prices – this is all much more important than forum posts – even very convincing ones.

Summary

The medium-term top in the precious metals is in and the following weeks are not likely to be pleasant times for anyone who jumps on the bullish bandwagon just because prices moved higher in the previous months, or based on some forum posts.

Please note that today’s volatility is somewhat expected - it’s Friday (options expire) and it’s also the final session of the month. Quite many people and entities might want to push prices and indices in their favor, so that options expire on their preferred side of their options’ strike prices. So, whatever happens today might easily be erased in early February.

What’s profitable is rarely the thing that feels good initially. As silver often moves in close relation to the yellow metal, forecasting gold’s rally without a bigger decline first is thus likely to be misleading. Silver is likely to slide as well. The times when gold is continuously trading well above the 2011 highs will come, but they are unlikely to be seen without being preceded by a sharp drop first.

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Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.