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Gold: Is The Tactic Now Buy And Hold?

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Published : April 20th, 2022
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Category : Gold and Silver

The battle for $2000 gold continues and the horrific tension between the governments of the East and the West intensifies.

 

Click to enlarge.  My base case scenario is that gold pulls back by $100+ an ounce before finally staging a major breakout over $2000 that is “here to stay”.

Regardless, predicting the short-term action in a major war cycle (for the years 2021-2025 in this case) is a crap shoot at best.

Double-click to enlarge.  This Quaich pattern has been forming since the year 2011.  It’s one of the most awesome price patterns in the history of markets.

The OTC derivatives crisis pattern that formed in 2008-2009 seemed enormous at the time, but it looks like an ant compared to the current Quaich pattern.  That’s because war and inflation are both in play… and they are in play during a time of empire transition.

The citizens of America are fiat-oriented while the citizens of the rising empires of China and India are focused on gold.  As the US government tries to stop the transition with its fiat tools, it’s laying the groundwork for a truly monumental “gold bull era”.

Tactics?  Well, this gold market bears some similarity to the market of the 1970s.  Investors did best then by simply putting concerns aside and buying with courage.  In this type of market, overbought conditions tend to be resolved with minimal price correction.  Investors who assume a bigger correction is coming can end up missing the entire era!

There’s a real danger of food riots in America as the nation’s government continues its evil meddling in the affairs of almost every nation on the planet.  The meddling is exacerbating supply chain damage from Corona, but it brings opportunity for investors.

Junior miners look set to outperform everything as the gold bull era rollout continues.  I write my junior resource stocks newsletterabout twice a week, and at just $199/12mths it’s an investor favourite.  Given the bull era ramp-up and the imminent CDNX buy signal, I’m increasing that to 4-5 issues a week and doing a special pricing today of $169 for 14mths!  Send me an emailif you want the special offer and I’ll get you onboard. Thank-you.

Double-click to enlarge this shocking GSG-NYSE commodities fund chart.  The price action is vertical!  Incredibly, there’s now a potential bull flag on the chart.  It suggests another massive rally is imminent.

Another major leg higher in food and energy prices should usher in the first inflation-oriented street protests in America, and once oil trades above $200, riots likely begin.

While the US “creep state” (government and banks) enjoys near-zero interest rates on borrowed funds, that’s not the case for the average citizen. Not at all.  Many low-income families are buying their food and gas with credit card debt and paying 10%-25% interest rates on that debt. 

What happens if their credit card, car loan, and mortgage rates begin to soar even higher in an interest rates bull run, while their food and gas prices soar higher too?

Double-click to enlarge.  US interest rates have been falling since 1981.  Not surprisingly, debt has skyrocketed since then too.  The 40year bear market in rates is over, and it’s ending as BNI (Basic Necessity Inflation) skyrockets in a war cycle.  The bottom line:

In 2008, I recommended investors take delivery of stock certificates as insurance against financial system risks.  

Now I recommend investors take delivery of gold bullion, medicine, dry foods, iodine pills, panic rooms, bomb shelters, fishing and hunting gear, and handguns.

The dollar?  The dollar has rallied against Euro zone currencies because of the US government’s mafia-style sanctions on Russia.  That’s not a victory for the dollar.

It’s just more relative failure for the euro zone while the dollar fails against the commodity currencies… and fails most of all against the ultimate currency that is gold!

Double-click to enlarge this dollar versus ruble chart.  After melting against the ruble for the past few weeks a H&S bottom has appeared, but it looks shaky. 

If the lows are blown out, the dollar could begin a crash phase against the ruble.  This, ironically, while the US government flails away trying to ruin the ruble and ruin the financial situation of every low-income citizen in Russia, likely hoping for a civil war.

Horrifically, the policy is backfiring for the stupid US “Gmen”, and now the risk of food riots in America is vastly bigger than the risk of even modest protests on the streets of Russia.  Putin appears to sport an 80% approval rating from his citizens that have become the pariahs of the supposedly civilized West.  This, while Biden’s rating wallows in the sub 40 dumpster and could go sub 10 if food riots begin in America!

Regardless, gold and silver enthusiasts cannot live by doomsday analysis and preparation alone.

Double-click to enlarge this GOAU daily chart.  While a pullback to the triangle apex looks like a done deal, I’ll ask investors to envision gold stocks today at a time like 1967.

It’s not a time to top call the miners.  Rather, it’s a time to hold core positions with an iron hand. Trading with stoplosses or small buy size will be fun and profitable, but even the most aggressive traders should hold weighty core positions. 

That’s because in a truly powerful market, technical sell signals can be quickly overwhelmed by fresh institutional buying.  Traders are left out of the “party time” action.  A buy and hold strategy worked in the US stock market for the past 100 years, to a degree.  Given the mindboggling size of the populations of China and India, that buy and hold strategy will likely work magnificently in gold and silver… for the next century or more!

Thanks!    

Cheers

St

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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form, giving clarity of each point and saving valuable reading time.
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