Oil prices jump after Iran says critical Strait of Hormuz to remain shut
Whether it was the Afghanistan war of 1980, the Ukraine war of 2022, or one of many other examples, the fact of the disturbing matter is that the beginning days of wars between governments tend to mark short-term peaks… for the fiat price of gold.
Clearly, a new war (or at least a major skirmish that could morph into a war) is here.
A look at the gold price action, the fantastic PAXG gold price chart from Binance.
As the US government attacked the Iranian government on Saturday morning, (using more debt and fiat extorted from US citizens to do it), the gold price reached my significant profit booking zone of $5600.
Sadly, it appears that none of the government officials from either side volunteered to fight in their war, while eagerly ordering others to partake in the macabre festivities.
Conspiracy buffs note that the war has conveniently ended mainstream media’s obsession with the Epstein files.
Regardless, a closer look at the price action, the fascinating hourly chart. A massive ascending triangle is in play…
And it suggests a spectacular rally to $6600 will commence soon.
Tactics? The $5100 area is a big zone to buy. I’m an eager buyer there… because a person’s financial life is ultimately all about getting more gold!
What about the somewhat safe haven of the fiat bugs, the US dollar? There have been only four rallies (of minor significance, really) of fiat against gold over the past 55 years.
A fifth one will eventually occur, but perhaps not until gold is above $6000. For the average investor, a mix of 30% gold bullion, 30% fiat, and 30% miners/silver bullion could be ideal.
Oil? Because the Hormuz chokepoint is now choked, oil could rise to $100 if the war ends quickly, or surge to $200-$250 if it becomes a quagmire.
A look at a key oil price chart. There’s a large but loose inverse H&S pattern in play, targeting the $100-$147 area.
Friday’s producer price inflation report was a disaster (coming in at about 10% annualized). The oil price rise related to the war could see the PPI spike to 15% in the next reporting period.
The inflation-adjusted PE ratio chart for the SP500. It looks like the death knell is finally sounding for the ridiculously overvalued US stock market.
This market is used by the government as a “poster boy” for the economy and to get election funding from rich investors.
A stock market collapse would be disastrous for debt-soaked and fiat-themed governments around the world.
Further insight into this interesting matter. A move under 553 for the ADL (advance/decline line) for the Dow and a close under 19,000 for the Dow Transports would be an ominous development and one that is suddenly highly likely to occur.
What about the miners? The fabulous CDNX daily chart. The entire 1100-800 zone is best described as… the greatest buy zone in the history of markets.
At $5100 gold and $80 silver, the producers are cash cows and the explorers have dirt-cheap costs too.
The weekly CDNX chart. The big investor risk today is being left out of the market. A pause is possible and investors should hold some fiat cash to manage the emotional swings if that pause occurs, but higher price glory is near!
Another historic chart, GDX priced in supreme money gold!
Many gullible gold bugs were fooled into selling their holdings during previous dips in the gold price. May 2006, October 2008, and October 2023 are three such examples. Thanks to the rise of three billion gold bugs in China and India, Western bugs are now a stronger breed, and this week’s little sell-off is now correctly viewed as a gift… for gold bull era enthusiasts around the world!