1.I’ve strongly stated that in the short and intermediate
term, the most important price driver of gold is the US dollar’s movement
against the yen.
2.The dollar is the world’s largest “risk-on”
market, because America is the world’s largest debtor.Japan is the world’s
largest creditor.
3.Downside action of the dollar against the yen is a financial fire alarm
bell.When the alarm rings, many of the world’s most powerful FOREX economists
urge their clients to buy gold, and many do with substantial size.
4.Today is a very exciting day for the entire Western gold community.To
understand why, please click
here now. Double-click to enlarge.The dollar just broke the key 111 “line
in the short term sand” against the yen!
5.To view the immediate effects of that breakdown on the price of gold,
please click
here now. Double-click to enlarge.On this short term gold chart, the
response of gold to the dollar’s breakdown is very clear.
6.Gold is like a movie star; supporting actors are needed to put on a
great show.On that note, please click
here now. Double-click to enlarge.This daily oil chart shows oil arriving
at some very interesting chart support, just as gold begins to rally and
the dollar versus yen alarm bell rings.
7.Also, note the position of my 14,7,7 Stochastics series oscillator at
the bottom of the chart.A solid buy signal seems to be imminent.
8.Does the alarm bell being rung by the dollar this morning have an
inflationary theme?I think it does.
9.If oil can rise above the recent highs in the $42.50 area, that’s almost
certainly going to generate a new wave of powerful institutional buying in
commodity markets.
10.Sadly, when the dollar alarm bell rings, it can have ominous
implications for the US stock market.Please click
here now. Double-click to enlarge this daily chart of the Dow.
11.There’s a breakdown from a “bear wedge” pattern in play, and
that is occurring as the month of May quickly approaches.The time-tested “Sell
in May, and go away” advice may be particularly valuable this year, if
Janet Yellen announces a rate hike on April 27.
12.I’ve argued that rate hikes are very good for gold in the current
environment, because of the existence of the massive “QE money ball”
sitting at the Fed.
13.The Fed can theoretically offer the banks a higher interest rate than
they can receive by loaning it out in the commercial banking system.That
fact is likely irrelevant, because the banks can use the multiplier effect of
fractional reserve banking to loan that money out privately, at a ratio of 10
loaned dollars to each deposited dollar.The movement of the QE money
ball into the fractional reserve banking system can cause a shocking reversal
of money velocity, and a major rise in the rate of inflation.
14.Mainstream media likes to claim rate hikes are bad for
gold.Unfortunately for them, the facts of the $230+ rally that followed
Janet’s first rate hike speak vastly louder than their words.
15.Higher US rates are bad for the Dow, and good for gold.That’s because
higher rates in the current environment create a risk-off tidal wave.It’s
that simple.Can a second rate hike drive gold another $200 higher, while creating
a crash in the Dow, and perhaps a meltdown in US real estate?I think the
answer is: Yes.
16.In the big picture, gold is on the cusp of what I’ve termed a bull
era.As famous hedge fund manager Stan Druckenmiller recently noted, America’s
population is aging much faster than it is being born.The debt-soaked US
government is a giant ball & chain attached to a small and shrinking
working class.
17.The situation is bad, and set to become horrific and fatal, regardless
of which politician gets elected.Only gold revaluation can restore the US
government’s balance sheet, and I’ve predicted that is probably coming during
the next major economic downturn.
18.At the same time as the American empire dies of old age, the rise of
the gargantuan populations of China and India are bringing unprecedented love
trade thunder to global gold price discovery.The SGE gold price fix should be
launched within about two weeks, and India’s central bank just cut rates,
after issuing a statement that a good monsoon season is expected.That means
large crops, and lots of money for farmers to buy gold!
19.Please click
here now.I’ve argued adamantly that negative rates in Europe are as
bullish for gold as rate hikes are in America.The Europe situation is
different from America, and clearly the WGC (World Gold Council) agrees that
investors need to take strong buy-side action.
20.The bottom line is that gold is the world’s ultimate asset, and
there’s never been a more ultimate time to accumulate it in size than right
now.
21.A lot of investors look at the gold versus silver ratio.Rather than
looking at that ratio, I think silver enthusiasts should simply watch the US
inflation rate.
22.When powerful US money managers begin talking about a “concerning
rise” in the US inflation rate, they will buy silver quite
aggressively.Please click
here now.Double-click to enlarge this fabulous daily silver chart.Silver
has a beautiful inverse head and shoulders bottom pattern in play, and the
initial price target is $18.
23.I think it’s a terrible idea to attempt to “micro manage” what
are likely generational lows in the price of gold, silver, and
associated stocks.Market timers can get destroyed when major value players
are buying heavily.What appears to be a top often becomes a simple pause in
the upside fun. If ever there was a time for Western gold community investors
to “chase price”, with manageable risk, that time is now!
24.In the case of silver stocks, they are poised to soar.Please click
here now. Double-click to enlarge.That’s the monthly SIL chart.The
technical action is probably best described as, “awesome”.The key
5,15 moving average series is verging on a major buy signal.SIL just rose
above the dotted centre Keltner line, which is a momentum-style buy
signal.Volume is rising, and there’s a massive bull wedge breakout in play.Against
the background of the dollar’s inflationary alarm bell ringing, silver stocks
are likely poised to launch what may be the biggest rally seen in any asset
class of the past few years!
Thanks!
Cheers
st
Stewart Thomson
Graceland Updates
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