Dollar strength pushes Yen to 40-year low despite intervention warnings
Markets rise and fall. Some are of higher quality than others. Some offer more potential reward (and more risk). In the case of global fiats, these low-quality items were overdue for a temporary rally against supreme money gold. They rallied… and they can now be sold.
Fiat is finally exhibiting one of its occasional (and very temporary) rallies against supreme money gold.
The current rally takes the form of a bearish flag-like drift on this daily chart. A look at the long-term chart of fiat against gold. On this chart, fiat’s current rally is so tiny that it’s almost imperceptible.
What do mainstream analysts think about the current gold market? While most mainstream analysts don’t understand the wisdom of working diligently to get ever-more supreme money gold rather than more failed fiat, a few do understand the key price drivers that send fiat to the perennial woodshed.
Ed Yardeni is one of them, and while his $10,000 price is only about half of the more reasonable target envisioned by Franco Nevada founder Pierre Lassonde, Ed does understand the key drivers that are in play… and the compelling buying opportunity that is now at hand.
What is probably the world’s most glorious daily chart, the gold versus fiat chart. Note the stunning Stochastics (14,7,7 series) action.
This spectacular oscillator is now as oversold as it was at the fantastic “launchpad” buy zone of $1810 in October of 2023.
The entire $4400-$3900 area is a massive buy zone for gold money enthusiasts around the world. Whether the ensuing gratification will be immediate or take some time is unknown… and unimportant.
What is most important is the quality of the item, and gold is the world’s highest quality money.
The “buy now” US stock market chart. Some of the greatest buy zones for gold, somewhat ironically, are buy zones for the US stock market.
When the Dow arrives at big support at the same time as gold does, odds are extremely high that buy-side investors fare well.
In China and India, mainstream investors there are savvy (and arguably have more sanity than their Western counterparts), so they celebrate great economic news with fresh buys of gold.
In the West, mainstream investors have been led to believe great economic news should be celebrated by getting rid of their gold. It’s an act of madness, but if most investors believe gold needs to be sold for price driver A, B, or C, then the price will fall if those price drivers come into play.
The recent rally for fiat versus gold can be directly correlated with even more “madness of the crowds”; skyrocketing oil prices and intensifying mid-East war are deemed a reason to sell gold, solely because the ensuing inflation might cause central banks (glorified soup kitchens?) to raise interest rates on fiat money.
In the 1970s, that was not the case, and as US stagflation transitions from a modest annoyance to a deadly tidal wave, the erroneous mindset of the Western investor crowd will be corrected in what I dub a “panic reset of intelligence”.
Regardless, gold is either in a buy zone or not. Fiat is either in a temporary buy zone or not. There could be a few crumbs left on the table for investors who sell gold for fiat today, but that’s likely all they could get. In a nutshell, investors should not live for crumbs of government fiat money, because it’s money that eventually goes off the board.
They should accumulate gold and do so with gusto.
The enticing CDNX chart. If the US stock market and gold are both poised to rally, then the CDNX and associate miners are poised to rally too.
A 10% rally in the Dow Jones Industrial Average could see many junior miners rally 100% and more.
What about silver? The stunning daily chart. I’ve raised my target price to $250, largely because the rising debts of global governments are not being factored into price discovery in a meaningful way… yet.
Like the stock market and gold, silver is also in a phenomenal buy zone for both short-term gamblers and long-term investors. Note the bullish position of the RSI and Stochastics oscillators. Hi ho, hi ho, and up to $250, this shiny metal looks set to go!
The GDX senior miners ETF chart. The dip has taken the price to solid support. More importantly, the Dow and gold are also at solid support.
A move from the $80 zone just back to the recent highs is almost a 50% move… and it could happen quickly. At a key buy zone for gold, the legendary gold bug Jim Sinclair once said, “I’m compelled to buy!”. I’ll dare to suggest that most gold stock investors of the world should be ready to utter those same key words today!