This posts makes the case for gold. If I’m correct (and I may not be) – we will see massive fiscal deficits from government enabled by Federal Reserve bank money creation as a result of the long-term damage inflicted. And that’s a bullish scenario for gold…
Gold has been sold heavily since the beginning of August… but today I will present the case as to why it’s time to buy.
The price peaked at US$2089 a troy ounce – however has since fallen to around $1810 at the time of writing.
That’s a fall of just over 13%… and this spells opportunity
The S&P 500 is up 10.5% year-to-date. The Nasdaq is up over 30%. If we can finish anywhere near today’s close – it will be considered a solid year – despite a 35% bump-in-the-road over March. So here’s today’s exam question: Will the market be higher or lower as we close out the final two months?
It’s very important we balance the near-term ‘optimism’ in equities with what we see with leading macro indicators such as gold, the US dollar index, treasury bonds and credit default swap spreads.
For example, whilst bond investors are typically early, over the long-run they are generally right.
July 31 I wrote “Gold and Silver are Hot… Perhaps Too Hot!”
Gold was ~$2,000 an ounce and I suggested: (a) if you’ve enjoyed the run up in gold the past few weeks – take at least half profit; and (b) if you don’t have a position- don’t initiate a long position here.
Outside of big tech – perhaps the hottest trade of the past month or two has been precious metals. Call it “FOMO” – the fear of missing out. Why? the rush? Look no further than reckless actions of both central banks and government… globally.
Chairman Powell told the market mostly what they wanted to hear today… i.e., export more fiscal and monetary support until the economy recovers (which he suggested might be years). Equities and gold rallied on the news..
Last week I talked about the (positive) impact on various assets should the US dollar continue to weaken. One of the more obvious beneficiaries are precious metals. Gold has since made a new record high and silver is up over 20% in a week
Silver has broken long term resistance. Here are three ways to trade an expected higher price.
Bank of America call for the S&P 500 to end the year at 2900 – citing a number of headwinds… with one (strong) bullish case.
