Gold And The Winds Of War

When I predicted the virus crisis of 2020 before there was any Corona, I did it using long-term cycles. I’ve since suggested that investors need to be prepared for a possible (and potentially more ominous) war cycle in 2021-2025.

Will Afghanistan become a catalyst for a major American government war, like Japan in 1941? Clearly, the winds of the war cycle continue to blow.  

For decades, the US government has failed with Mexico and Cuba in its own backyard, while meddling in almost every faraway land and expecting to succeed.

In any major crisis, governments dismantle citizen liberties. They can do this because their fiat currency systems let them print, borrow, and spend vastly more money than they have.  

It costs money to run FATCA goon squads, lockdowns, deranged regime-change operations, and socialist welfare programs (QE) for stock, bond, and real estate market investors who are rich but too lazy to buy a price sale.  

The governments and central banks don’t have the money for these disgusting programs, so they borrow and print it.

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horrifying US fiat versus gold chart 

America’s citizens have paid a heavy price for allowing their government to operate with a fiat money system, and the price is only going to get heavier. 

This US fiat versus gold chart essentially charts the loss of freedom for the nation. Until the fiat money system is put to death in America, citizen freedom will continue its relentless journey into the dumpster.

Tactics? Well, please see below,

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spectacular buy and sell signals chart for the REMX rare earths ETF

Both lithium and rare earths are solid long-term holds for all savvy investors.

The bottom line for Afghanistan is that it may transition into “Madmaxistan” and the US government then cancels more citizen freedoms in a new scheme to protect the people from possible terrorist attack…

Or Afghanistan becomes a rare earths mecca, and China’s government and companies are the big winners.

It’s another lose-lose situation for US citizens, in what’s become an endless list of these fiascos.

Domestically, Jay Powell’s first term is ending, and Biden may appoint a Fed chief more open to “QE for Main Street”.

That’s obviously good news for gold. Any further stimulus or QE directed at Main Street is going to usher in more “growflation” (and eventually stagflation). 

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important gold chart

Back in mid-May, I laid out a scenario of a two-headed inverse H&S pattern, and that might be in play now.

A move above $1840 would be fabulous. It would add weight to the H&S scenario.

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key stock market signals chart

Many gold investors are nervous about a possible US stock market meltdown and the ramifications for their mining stocks.

I don’t share those concerns because I sold into the $1850 area for gold, and I’m prepared to buy the $1566-$1450 zone. Also, any reaction in stocks now is likely to be a “meaty pullback” rather than a meltdown. 

The odds of gold going to $2000 now are as good as a drop to $1500.Handling the possible dip should be child’s play for serious investors. They can also short the stock market and buy put options on gold stocks to effectively manage risk…

I am short the stock market as of yesterday, but until the QQQ moving averages flash a sell signal, there’s no cause for alarm.  

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GDXJ buy and sell tactics chart

My buy alerts in November and March were “Grade A”. The current reaction has put GDX, GDXJ, GOAU, SIL, and associated miners in a buy zone, but it’s just a C-grade opportunity. 

A two-day close above $43 for GDXJ would be positive, but not nearly as positive as a close above $1840 for gold. As trading vehicles, gold stocks are awesome. As currency, gold bullion is supreme!

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Leslie Miriam 2 years ago Member's comment

Oh boy!? Didn’t we set up anything there? What did they do for 20 years?