The way gold has been moving the past few weeks, it’s easy to overlook the 11% growth it is enjoying during 2017. As we move towards year end, we see gold has been flat while suffering attack after attack from the banking cabal. The charts over the past ten trading day have these massive waterfalls that are intended to frighten traders. A few years ago this worked like a charm - today, not so much.
While these waterfalls make the chart look horrific, if you look just past where the attack ends, you will see a reversal. Not just a reversal, but over the past ten days, close to a 100% reversal. This shows just how the “strong hands” are not letting go and not being shaken at all from their stance. The word is out – gold is where it’s at and physical gold is really where it’s at.
We have one more Federal Reserve meeting scheduled for the second week of December. We can only hope Fed Chairman Janet Yellen aka Mother Felon does her thing and raises the Fed Rate by another 0.25% – 0.50%. If this happens we expect a similar reaction as has happened in January 2016 and January 2017.
On December 15, 2015, gold bottomed out at $1,049 (on the London pm gold price fix) the day after the Federal Reserve raised rates for the first time in almost 10 years. Gold immediately took off and rose by almost $200 per ounce to $1,241 in less than two months (by February 11, 2016).
On December 20, 2016, gold bottomed out at $1,125 on December 20, shortly after the Fed raised rates again. Gold then rose gradually to $1,257 in February and $1,346 by the next September.
It could happen again this year. Even if gold fell to the low $1,200s range, it could take off again in late December. That’s the theory of the Commodities Corner column in last week’s Barron’s. First, the article points out that gold rose 8.6% in 2016 and is on track to gain over 10% in 2017, so each year’s low gold price is higher than the previous year’s low. Then, Barron’s explained that speculative gold traders tend to ‘short’ gold in advance of the FOMC meeting and then cover those shorts when the Fed meets. Source
We are hoping Mother Felon signals that 2018 is going to another great year for gold. Keep your eyes and ears open for the Fed Chair to, hopefully, announce an early Christmas present on December 12-13. The only question that remains is whether she will or she won’t do as she has done the past two years.
Starting last Sept. 20, immediately after the Fed’s “pause” on rate hikes, the market began to price in a Fed rate hike for December. Asset classes adjusted in line with those expectations.
Treasuries, gold, euros and yen all fell. Bond yields and the dollar both rose. Tight money was on the way.
The problem is that the markets have now priced in a 100% chance of a Fed rate hike in December. You can’t get any more sure of yourself than that. This means that Treasuries, euros, gold and yen have all found a bottom.
They’re just waiting for confirmation from the Fed in a few weeks. As I said, markets are waiting for Godot.
This sets up one of my favorite trading situations. I call it the “asymmetric trade.”
When something is fully priced, the happening of the event does not move prices. But if the event does not happen, prices move violently to reprice for the unexpected outcome.
This means you have a “Heads I win, tails I don’t lose” situation. Source
I agree people that are holding physical gold, and not an illusion of gold like GLD, it’s a “Heads I win, tails I don’t lose” scenario. While gold is still under the control of the West, gold is nothing more than a hostage and does what it is told by its capture. Gold, in our opinion, is going higher: not just higher, but much higher from where it is currently. Will the next “gold master” allow it to roam free? We doubt it - we just hope gold has some breathing room and the leash is slightly longer than it is today.
The global monetary system is beginning to change. Gold is going to be part of the change and a major player in the future global trade system. If one simply reviews gold through the lens that is the countries in Mackinder’s Heartland, you will see nations scooping up gold with both hands. These nations are members of the BRI, EAEU, SCO, AIIB and the endless list of economic and military alliances that are currently developing and solidifying their future economic growth. The picture is very clear – gold, probably on the blockchain or some form of new fintech, is going to be included in the future of global trade. The major players, Russia and China, are making this crystal clear. How we get to the new system is the question of our life time that could have a very ugly answer.
We will continue holding physical gold and encouraging people to research reasons to hold physical gold. As we see it, our financial insurance policy increased by more than 8% in 2016 and another 11% in 2017 and is poised to continue to post gains over the next few years. Either way, gains or losses, insurance is insurance and only works if you hold it. We choose to hold it.
Check out these other articles by our contributors:
Dave Kranzler - The Debt Bubble Is Beginning To Leak Air
Craig Hemke - Does The CoT Structure Prohibit A Rally?