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Inflation: phase one is over

Commentaries & Views

  1. I've suggested that gold investors need to be prepared to watch gold dip below $1800 (and perhaps as low as $1566-$1450) before an enormous rally towards $3000 gets underway.

  2. Double-click to enlarge.  The dip is in play, and the big question is… what's the cause of this dip?

  3. Well, Indian buying has faded, as it always does after a strong rally.  Also, some of the global supply chain issues have been solved, even if just temporarily.

  4. Double-click to enlarge this shipping cost chart.

  5. Any rally needs a rest, and bigger rallies (500%-700% in this case!) need a bigger rest.

  6. The Trump inspired "growflation" was created by the borrowed and printed fiat money his administration put into the hands of mainstream America.

  7. Biden has chosen to focus on indirect stimulus. That doesn't have the same effect on GDP or inflation as direct handouts.

  8. The Biden approach is arguably even more inflationary than the Trump approach… but over a much longer period of time.

  9. For now, the growflation money has dried up, no more is coming, and so GDP and inflation are in a lull… as is the price of gold.

  10. Double-click to enlarge this GDX swing trade chart.

  11. I highlight the Galactic Swinger newsletter swing trades with NUGT and DUST.  The latest gold price swoon shocked a lot of investors, but not our subscribers.

  12. The complete gold investor wisely includes an array of investments (bullion, miners, ETFs, options, and futures) and…

  13. Investors may also be wise to employ a diversified array of strategies for each investment.

  14. Double-click to enlarge.  The CRB index appears to be completing the first phase of its long-term move higher.

  15. Note the overbought positioning of the RSI and Stochastics oscillators. 

  16. It's time to book profits as the CRB approaches significant overhead resistance.

  17. Next, Double-click to enlarge.  While oil is not as overbought as the CRB, Biden's decision to release strategic reserves may cap this rally too.

  18. A pullback towards Fibonacci support at around $55 seems reasonable, especially given the price lulls appearing in other sectors of the inflation trade.

  19. Double-click to enlarge.  Bitcoin is a newcomer to the inflation trade, and it's also in a lull, as I predicted it would be from the $66,000 area.

  20. I expect government CPI and PPI reports to follow these inflation trade assets into a lull.

  21. What does this all mean for the gold and silver miners?  For the likely answer, Double-click to enlarge this GOAU chart.

  22. As the lull in inflation intensifies, GOAU could trade a bit lower and make a double bottom in the $16 zone.

  23. Investors should use the right shoulder low of $17.74 as their beacon; if GOAU stays above that low, what's happening is likely just a simple expansion of the inverse H&S pattern.

  24. To view the potential expansion. Double-click to enlarge.  GOAU could be building the right shoulder of a bigger inverse H&S pattern, with a blast through the neckline on track to happen just in time to ring in a new golden year!
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