Fed Meet A Key Catalyst For Gold

Competition is supposed to be healthy, but when governments compete to see who can borrow the most money while paying their lenders little or nothing… that’s not healthy at all.

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daily gold chart 

The next key Fed meeting is on Wednesday, and it’s unlikely that the Fed does anything to interfere with the government’s insatiable thirst for more printed and borrowed money.

Will doing nothing be enough to encourage investors to bid gold higher? 

Maybe, but my suggestion is for investors to wait for the breakout to happen, rather than guess when it occurs.

The triangle pattern is arguably negative, and gold could ease to $1800-$1775 if the breakout is to the downside.

In a nutshell: Using technical analysis as outlined by Edwards and Magee, gold bullion investors should wait for the market to show some higher highs and higher lows before assuming this reaction has ended.

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GDX chart

A dip below $39 would likely usher in a deeper sell-off, but it would likely relate to a meltdown in the US stock market.

The government has no savings. All it does to solve every type of crisis is borrow more “funny money”… money that the central bank electronically prints with relentless gusto.

The bottom line is that any deeper correction in gold or the miners is likely to be short-lived… and followed by fresh “money printed” highs!

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Dow futures chart

There are some resistance zones in play on US stock indexes. The QQQ ETF is near $300, a key round number. The Dow is near the all-time highs at about 30,000. A reaction is expected and normal.

Sadly, stock market investors have become akin to welfare deadbeats who don’t want to work. They can buy any rally or dip without worry because they know their government and the central bank will race to save them if valuations tumble.

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