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Dedollarization and Deglobalization: Got Gold?

Published 06/18/2024, 03:48 PM
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The significant synergy between the Dow Jones Industrial Average and gold bullion continues.

INDU Daily Chart

A look at the chart. Technically, an upside breakout is favoured, with a $2600 target for gold.

The fundamentals? Well, inflation (according to the government indexes) is close to the Fed’s 2% target zone and global growth is fading. The Fed is becoming slightly more dovish.

If the current price congestion is resolved to the downside, the good news is that it would likely see gold trade at the massive $2150-$1985 buy zone for gold, silver, and the miners (NYSE:GDXJ).

Gold Weekly Chart

The $2150-$1985 area is arguably the most important support zone in the entire history of the US gold market.

Back in 2015, many amateur gold investors got overly obsessed with predicting the price as gold dipped towards $1000… and they bought nothing. Some even sold.

They were sure that a drop to sub $1000 was imminent. Worse, they had done no preparation to buy that mighty zone of support. The bottom line:

The $1228-$1033 price area was a gargantuan buy zone... and $2150-$1985 is even bigger.

$2300 is a current buy zone for gold but it’s small. $2265 is a buy zone for silver and the miners but it’s also small.

If gold does push above the $2450 area highs, that will become a decent buy zone for the future.

Sadly, it’s easy for investors to forget about preparing for the future and instead focus on the emotional excitement that can be garnered from predicting what’s likely to happen next.

Globalization is dead. Dedollarization and deglobalization are the themes in play.

The tensions created by inflationary tariffs come at a time when there are still 18 months left in the 2021-2025 war cycle. Got gold?

The US government had a chance to turn the nation into a giant version of Monaco while China and India (and eventually Africa) become the industrial engines for the world. Here’s how it could have worked:

By switching from fiat to gold and charging a tiny fee on all movement of digital “US gold currency”, all other taxes could be eliminated. Currency sanctions would be banned, and nations would rush to embrace the US gold currency for trade. Three billion citizens of China and India would embrace it for savings too.

Tariff taxes are a de facto fiat caveman scheme, doomed to do nothing but create another wave of punishing inflation for citizens of the world… and bring more dedollarization and deglobalization.

The US government empire is rotting (and ending) because of its hideous obsession with debt, war mongering, sanctions, fiat, and global meddling. Most citizens have no savings at all… let alone savings in the ultimate currency that is gold.

Silver Monthly Chart

What about silver? There was a lot of excitement amongst silver analysts about the supposed “breakout” over $30… when the focus should have been preparing to buy a veritable truckload of it if gold trades down to $2150-$1985.

Where the current pullback ends will depend on gold. If gold makes a low near $2265, silver could make a low around $26-$24. If gold trades down to $2200 or $2150, then the big buy zone for silver is likely $23-$22.

GDX Daily Chart

The miners? On this daily chart for GDX (NYSE:GDX), the potential H&S top danger is clear. The good news is that the key 14,7,7 series Stochastics oscillator is now fully oversold. A move above 20 would be positive.

GDX Weekly Chart

On the weekly GDX chart, the RSI and Stochastics oscillators are both moving down towards the 50 zone (a key zone for momentum buyers)… but they are not quite there.

The current sideways action for gold began on April 12 when Chinese regulators raised the gold futures margin for speculators. Odds favour an upside resolution for the price, but what’s far more important is identifying the most key zones to buy.

GDX and associated senior miners can be bought if gold trades near $2265 and core positions should be held with an iron hand. If gold shoots to $2600, some gold stocks can be sold. At $2150-$1985, the physical market is likely to experience “thunder buying” from both global banks and a veritable army of citizens in India. The bottom line: Gold could rise, fall, or trade sideways… but I’ll dare to suggest that what’s most important is to enjoy its awesomeness today.

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