Danger Will Robinson, Danger!
The classics are always the best. And in the view of the broader economy, the robot seems to be telling everyone who will listen that perhaps, just perhaps, the global economy is in much worse shape than the sheeple are being told.
Unfortunately gold might just be the indicator flashing a warning sign that the danger is closer than even the robot thinks. This morning the carnage in the gold market continues:
The hourly chart does some justice to the dangers facing goldbugs, but a longer term view shows how gold has rolled over with a warning about all of the stimulus that has been injected into the economy by not only the lying political elites, but by the Federal Reserves insanity:
This pattern of a massive rally in anticipation of the “reopening trade” and the belief that inflation associated with this large amount of financial largess was going to all but guarantee gold will push above $2250 per ounce and on to unseen record highs. Unfortunately for the gold bugs, the mismanagement of not only the financial system by those in charge but the political economy by the idiot savants who think they are our “betters” are running this country into the ground at a faster pace than they did under the previous two administrations.
The last time the “pattern” decided to show it’s ugly head was also in anticipation of financial turmoil, highlighted by an insane rally in WTI crude prices, just like it has in this past year:
The rallies in gold, silver, and commodities pretty much across the board is more of a speculative guess than reality. The phrase that everyone is looking for to describe what has been happening?
Anticipatory inflation.
Unfortunately for the goldbugs and inflationistas, this is not the great monetary move which will spark hyperinflation, although political and economic instability in the U.S. will eventually trigger the “big one” as far as that future move shall go. The pattern we have been witnessing since the all time highs in gold is a deadly warning about something bigger, and something most people are dismissing unless they reside in Japan or Brussels.
The song doesn’t remain the same, nor does a pattern repeat precisely throughout equity nor commodity history, but the similarities are eerily there for what is happening now versus 2007-2008.
If this pattern validates and gold breaks through the $1640 mark, which I do anticipate, then the warning is simple:
Deflation due to economic instability and collapse.
What are the triggers? At this point in time, I will defer that to a later article, but the indicators of a financial dislocation due to political irresponsibility and excessive speculation are beginning to appear. The data might support a greater increase in GDP but that is relative to the shock of one year ago and comparisons to pre-pandemic data would be more valid. Thus when the talking bobbleheads of financial television and print begin their song and dance about “short term disinflation” that should be the signal that the robot was trying to tell you something:
Danger Will Robinson, we’ve hit a time warp back to 2008 to finish the great bear market and financial correction which has been put off by central banks to be paid back at a later date.
I believe the “later date” is coming soon and the economic payback is going to be extremely painful.
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