by John Galt
June 12, 2017 23:30 ET
The long hot summer has begun and thanks to climate change so has the case for gold to rally started also. After all, if the enviroloons can blame the election of Donald Trump on global warming, why not blame a massive geopolitical economic collapse which causes gold to go to the moon, right?
After several severe hits to the gold price since the disruptions of November 2016 where the dollar rallied in the belief that our nation would get its act together (silly me, I thought that also), it would appear now that the fiat funny games the Federal Reserve has been playing may indeed trigger the ultimate worst case scenario for Janet & Company:
A declining valuation for the US Dollar while interest rates rise and possibly invert before year end incating a MOAR (Mother of All Recessions).
This chart provides the hint as to why I feel this is possible:
The trend is clear as indicated by the large arrow since the bottom of December 2016. However, look closely at the larger trend of higher highs and higher lows which is a powerful indicator indicator that this basing process from the $1220 to $1260 range may soon break out to even higher highs.
But what would be the trigger?
The most pertinent issues to follow from now through October which will contribute to a dramatic rise in precious metals prices are as follows:
- The FOMC’s statements and actions which have been historically wrong for decades now cause a bond market panic which results in a “new new normal” where yields rise and the US Dollar collapses as all faith in the central banking model finally evaporates.
Political ineptness by the ruling parties in Europe and the United States create the proverbial panic to the exits from all fiat currencies not being managed to ensure investor returns at adequate levels.
The Rise of the Machines creates the ultimate paradox that no matter what actions are taken by human intervention (aka, The Fed, ECB, President, Prime Ministers, etc…) the fiat currency panic accelerates until exchange rate discipline and shorting are imposed by the various authorities by unplugging the machines.
Unexpected conflict arising such as an Israeli strike on Iranian forces in Syria or US forces caught in the Persian Gulf defending Saudi Arabia against an Iranian attack. This Black Swan is now at the highest point of risk since the Ukraine-Russia conflict began.
The “there is no sign of a bubble” crowd suddenly realizes that the individual investor is pretty much out of the market and algos do not recognize bubbles, only their programming, and begin an endless cycle of equity and bond selling until the government authorities force them offline.
This could be the summer to stock up on the physical and prepare for the ultimate disaster. This is not a time to be timid. Buckle up ladies and if you need an air sickness bag for the next 180 days, you’re not ready for America’s and the world’s new reality.