Over time, America’s most accurate deflation-oriented economist has probably been Lacy Hunt…

Yet even Lacy is open to the dire hyperinflationary scenario that can happen as a government promotes the use of ever-more debt as a scheme to promote “world leader” growth.

That’s a doomed strategy. Over time, the fiat debt “stimulus” that comes mainly from money printing produces less and less growth. Eventually, it produces none at all. 

I predicted that Lacy would miss the start of the current “inflation era”, and he did. That doesn’t mean he’ll continue to be wrong.

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long-term CRB commodity index chart

I’ve suggested that “Inflation Wave One” has ended and it appears that Lacy has a similar view.

Lacy’s long-term concern is monetary inflation and in particular, monetary inflation created by the US government forcing the Fed to give citizens US crypto dollar accounts that are funded via printed fiat.

For many years, I’ve predicted that the Western world’s inflation era would be driven by “QE for the people”.  

Until the Corona crisis hit, it was QE (socialism) for the rich, for the powerbrokers, and for the “elite” of America.   

Now, universal basic welfare called “stimulus” is in play, and it’s likely here to stay.

The next downturn should see a lot more QE money make it into the hands of regular citizens. That will produce an enormous new wave of inflation and perhaps… significant social unrest. 

What about the stock market?

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US stock market chart

As with gold, it’s best to keep the signals simple. The 10,100 moving averages have been on a “green light” buy signal for some time.  

There’s no need for me to issue “Big crash ahead!” or “Good times are here to stay!” statements to investors. My suggestion is to simply yawn and follow the traffic lights. When the moving averages flash a red light sell signal, and they will, investors will be carried to safety.

Mark Hulbert notes significant bearishness amongst gold market timers and hopes his sentiment index means a gold market low is at hand. Upon closer inspection, investors can see that like any “oversold” or “overbought” indicator, the Hulbert index gives a lot of false signals.

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“buy signals for champions” weekly gold chart

My focus is big-league HSR (horizontal support and resistance). I tweak the signals with a few key oscillators and moving averages.  

Investors should also keep an eye on India and COMEX commercial trader buying (or lack of it). Endorse the KISS principle; Keep it simple, superstar!  

The bottom line is that gold timer sentiment is generally poor at key buying zones, but not all poor sentiment zones are good buying opportunities.

Should gold fall to $1566 (unlikely but possible), sentiment would be terrible, but gold would be at another key support zone, one with much higher odds than the current zone of making gold stock buyers a 20%-30% return in a few weeks or months of time.

I’d like to see investors get excited about gold moving above $1966 (which is inevitable) and focus on being in a holding pattern for the short and medium-term.

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horrifying big picture chart for fiat versus gold

Hardcore gold bugs should be much more concerned about their fiat money than whether gold will stage a new small rally or not.

Over the past 20 years, there’s never been any real reason for lack of gold bug confidence, and I don’t see any reason for it now.

If gold bugs have struggled to make consistent profits in the market, it’s because of spending too much effort trying to call too many tops and bottoms. Ironically, a mellow approach to gold is easier on investor psyche and produces outstanding performance.

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GOAU ETF chart

The 5,15 weekly chart moving average series are helpful.  

Investors who followed my “across the board” buy alert for gold miners in March and the sell alert in May should not be in a rush to fight the current sell signal tide. There’s no need for fear, but there is a need for patience.  

The gold bull era is like a statue, and investors need to take their time. Sculpt each part of this great statue with care!