Loading ...Fully’s Fundamental Foley
Its a weekend
No tick tic tic of the market
The market is asleep
So lets take a stab at Fundamentals….you know those pesky little things that sometimes shout so loud they distract us from good honest TA. Like friggen mosquitos ….buzz buzz swat.
We gather here because we are of the few investor / traders who try at least to tune out “Fundamentals” which are unknowable ….and anyhow sum total they are ALL in the charts.
However ….lets face it we also gather here because we believe in Gold as the last Currency Standing.
Lets face it too….many of us have been “waiting for the shit to hit the fan” for much of our lifetimes.
Just look at that opportunity we are staring at….the one that is highlighted in Rambus Friday Nite Chart.
Gold Stocks are historically undervalued to Gold….in this next run they will CATCHUP !
So what will be the fundamental driver of this new Gold Rush ?
Most think ( me too) it is happening now before our eyes….The Fed could only “normalize” rates for a shrt period of time and only from 0 to 2.5%
2.5% is all they get…2.5% is historically low too !
So now they capitulate and next move is lower rates…so….the Fed has to fight this one out with no bullets .
They will go to negative rates this time…..and QE on steroids.
Pass the Gold !
Yes, but are zero or negative rates good for gold/gold stocks without inflation? I suspect they would be even if inflation remains low, but am open to everyone’s thoughts.
I guess I ask this also because the Fed and many of those working there are not idiots … some are super smart people, smarter than all of us combined … even if they are boxed in a system they don’t believe in. Regardless, I suspect they already have plan B’s and plan C’s ready to throw out when everything hits the fan again, like U.S. cryptocurrency, or confiscating real assets from real hard working people like us … will gold/gold stocks definitely go up … will they elevate golds value higher so the whole system doesn’t collapse … right when we think we have everything figured out we don’t … remember we are dealing with power hungry deceptive people and governments who want to run/rule the world and will stop at nothing to do so … so where does that leave us? The great Keynesian experiment will collapse at some point, it has to … that’s why I believe in gold/silver/miners.
hear hear.
Interest Rates, Gold Bullion prices I agree major economic forces the fly in the ointment is inflation and the DXY IMO……….
FWIW been looking real hard at historical charts and what and how miners have reacted in the past to the DXY rising into 97 – 100 or greater irregardless of any increase in the Gold Spot during those same periods. The HUI only goes back so far so resorted to looking at Newmont and Freeport McM as proxies. The reaction to a dropping DXY through 97-100 during rising Spot Gold also fascinating. Seems many Gold Bugs focus on DXY extremes I like to look at current parameters fwiw. For a lack of better term call this move of the DXY through this range 97-100 a $US inversion?
GLTA at the tent
I think it’s clear we’re at some sort of inflexion point. Gold has either been building out a 6 year, perfect rounded base, with a breakout above declining resistance OR it’s a mirage. The Dollar has either been juiced by apparent moves towards rate normalization and will now fall fast into its cycle lows, or the Dollar cycle is broken for the first time since we came off the gold standard and will continue to rise. Gold stocks are historically undervalued and will shortly ‘mean revert’ or this historical imbalance will continue. Interest on US debt (worse than 99% of the rest of the world) will soon be over a trillion dollars a year and surpass military spending. For all of you in the US – we (the rest of the world) can see the disaster unfolding. China, Russia, India, Iran are cutting you (the Dollar) out of trade settlements and have advanced plans to introduce sound, gold backed currency alternatives. This will all happen slowly until something breaks.nobody really knows when that will be. The charts suggest something in the mid 2020’s when the Dollar cycle hits its lows and a few years later when gold peaks.
“China, Russia, India, Iran are cutting you (the Dollar) out of trade settlements…”–YES
…”and have advanced plans to introduce sound, gold backed currency alternatives.”–NOT ON YOUR LIFE
Why do you say ‘not on your life’ ?
https://www.google.com/url?sa=i&source=web&cd=&ved=2ahUKEwi2_qCQjpvhAhUByIUKHQQdAckQzPwBegQIARAB&url=https%3A%2F%2Fwww.rt.com%2Fbusiness%2F450904-gold-standard-keiser-report%2F&psig=AOvVaw0DvULtOxhmK3Fj6cJNQ38A&ust=1553528323557259
Well not because I doubted that there are stories to that effect–I’ve seen them myself. It’s just that if I was trying to limit US influence abroad by de-throning the dollar I’d plant stories saying the same thing. I’d say come over to my reserve currency because we’re backed by gold. I don’t however think that Russia or China or India or Iran will allow their new currency to ever be convertible on demand into gold. The value of having the reserve currency (as the UK and US can attest) is the ability to abuse it for political purposes. I wouldn’t trust anyone to do otherwise.
I see. Well, I think the point is that you can see the lower highs and lower lows in all 3 Dollar cycles since the 1970’s. If nothing else, that demonstrates the fact that the Dollar, at each cycle high, has lost a large chunk of its dominance against foreign currencies. I believe that trend will continue.
Thanks for sparking this topic Fully and thank you above posters for your interesting thoughts…
I find it interesting when people say the US Dollar is not backed by anything. Although a hard Gold backing was de-linked by Nixon in 1971, it seems the economic powers simply switched the US Dollar from Gold to Oil backing. In 1974, the US and Saudi Arabia created a deal: US would ensure the stability of the Kingdom, while KSA sold oil in dollars and reinvested their earnings into US Treasuries. Thus, the “Petrodollar” system which we still live in today.
https://www.bloomberg.com/news/features/2016-05-30/the-untold-story-behind-saudi-arabia-s-41-year-u-s-debt-secret
So this makes me speculate that until some technology comes along that dethrones oil as the chief energy source or eliminates our need of it, the Petrodollar (and thus US Dollar supremacy) will likely continue while Gold and Silver watch with envious eyes. If you have US Dollars, you can readily buy “Energy” which gives the holder immense economic freedom.
Having the strongest military and economy on the planet (for now) helps the US and its Petrodollar maintain their thumb on vassal states, no doubt.
yes but as someone pointed out to me decades ago, the Middle Eastern price of a barrel of oil is “set” so that roughly 15 barrels = 1 ounce of gold. This “yardstick” is used to determine when either gold or oil is out of whack. For example,at today’s oil price of approx. $65/barrel, we’d expect the price of gold to be about $1000.00. Since that’s not the case, one could argue that oil is too cheap (and why I own it.) OTOH, now that the US is the world’s major oil producer, things may have changed somewhat. In any case, If there’s validity to this theory that oil is actually priced in ounces of gold,and not dollars as it may appear, then gold is still calling the shots, albeit behind the curtains.
Great point CT! Inspires me to look at some long term $WTIC:$GOLD ratio charts!