by John Galt
November 30, 2016 22:20 ET
Today, gold died:
All short and intermediate term technical support was violated with a crash below $1178-$1180. Tonight it has broken below $1170 and very little support seems imminent until the $1100 price area is reached.
The economy is about to face a very short term bout of deflation which will scare the dog snot out of the newly elected Republican political majority, thus resulting in rapid reflationary programs with tax reform, Obamacare repeal and replacement, and huge targeted infrastructure programs. In the end the Fed will play ball and keep rates lower than 1.00% or old Janet Yellen will be notified to plan on an early retirement as Federal Reserve Chairperson.
Look for gold to pause in December and hold the $1100 level briefly; of course this price target changes if World War III is started by the Ukraine and George Soros overnight. After that period and the holidays, once President-Elect Trump begins to outline his policies even clearer and the Republican legislative majority puts down its marker, there should be one more Federal Reserve rate increase causing the common U.S. Dollar Index to test the 120 level and push gold below $1000 per ounce. The potential for a retest around $800 in the middle of 2017 exists as the dollar continues to strengthen but after that, look for the reflationary policies to become inflationary forces and cause gold to have a “V” shaped bottom and start to recover rapidly into 2018.