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Transitory inflation: great news for gold

Commentaries & Views

  1. Most market analysts believe the Fed got inflation wrong.  They feel higher prices are not transitory and the strong arm of the Fed will push gold modestly lower in 2022.

  2. Could it be that these analysts who failed to predict the rise of inflation… are about to fail again?

  3. I think so.  That's because inflation and deflation come in waves.  There's an ebb and flow, and the first wave has likely run its course.

  4. The impact of Trump's "QE for the people" stimulus checks is fading fast.  America's new president "Gman Joe" shows no interest in any more direct handouts, even though many citizens are still struggling with the horrifying medical and financial fallout from the Corona crisis.

  5. This is happening while the Fed gets ready to reduce its "stock, bond, and real estate market welfare" QE programs… and the first big reduction could come with tomorrow's Fed announcement!

  6. Double-click to enlarge this big picture chart for gold.

  7. A rally to the neckline of the massive inverse H&S pattern appears imminent, but this rally is likely to happen with a background of fading inflation, falling stock markets, and a Fed that back peddles on its rate hike plans.

  8. After that, the breakout above the H&S neckline for gold is likely to occur with the Fed moving back into aggressive tightening mode, in response to a much bigger wave of inflation.

  9. Institutional loss of confidence in the Fed is likely only in its infancy.

  10. Bloomberg's commodity market "maestro" Mike McGlone is one of the few mainstream analysts who may have the outlook for the coming year correct…

  11. But I doubt he anticipates the resurgence in inflation in 2023 that I see.

  12. Regardless, double-click to enlarge this weekly oil price chart.  Oil has quickly surged from about $6 a barrel to above $80.

  13. That's created a lot of news headlines, but the $80 area is significant resistance, and a dip towards $50 (or even lower) looks likely.

  14. Double-click to enlarge for a second look at this important oil chart.

  15. A big inverse H&S pattern appears to be forming, and that's good news for stagflation enthusiasts.  The price target of the pattern is…

  16. Fresh all-time highs above $147.

  17. Another big price driver for gold is of course the Asian love trade.

  18. Last year's Chinese New Year was a dud for gold demand, but this year looks better.  Also, Indian demand is recovering fast, and digital gold (backed by physical metal) is seeing phenomenal growth.

  19. Double-click to enlarge this horrifying US stock market chart.

  20. The Russell 2000 mutual fund chart shows a deadly accident waiting to happen.  When calculating the P/E ratio, the money managers strip out the companies with losses and that makes it look like the ratio is about 20:1.

  21. When those companies are (rightfully) included in the calculation, the P/E ratio for the Russell 2000 index is revealed to be… above 600 to 1!  The bottom line: A deflationary wave in 2022 is highly likely, and an inflationary tidal wave in 2023 is likely to follow. 

  22. 2022 looks good for gold and 2023 should be great!

  23. Double-click to enlarge this GOAU ETF chart.  January is just two weeks away, and the technical action suggests a significant rally for the miners is imminent.

  24. GOAU has entered what I call the "launch pad" zone.  This is where gamblers can purchase call options on an array of miners.  Watch for a break over the 20 level for my key 14,7,7 Stochastics oscillator.  That breakout should usher in the New Year, with golden cheer!
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