Gold Looks Very Attractive
Fundamentals
This transformation has brought about many changes in the system. Technology has created a completely virtual economy. It has transformed the monetary system with the creation of Bitcoin, a virtual currency in a new and unpredictable digital world. Blockchain technology is the foundation for the creation of decentralized digital assets such as Bitcoin and other cryptocurrencies.
The underlying momentum supporting this surge in interest in digital currency is the fact that our old physical fiat currency -- the US Dollar -- is collapsing against gold and other real assets. This collapse was brought about by the pandemic in March 2020, when we transitioned to a digital economy. Gold shot up $600 and reached more than $2000 an ounce. The stock market has more than doubled and real estate is in a state of euphoria. Crude oil prices are reaching $90 a barrel after hitting negative $37 a barrel in March 2020. The CPI indicates that commodity prices are exploding.
Federal Reserve Board Governor Lael Brainard on Monday laid out a strong case for the central bank to maintain low-interest rates, saying that the spike seen in inflation this year was transitory and the labor market was far from healed. Sep 27, 2021
According to Federal Reserve Chairman Powell, all of this inflationary pressure is transitory, but it feels more like a pressure cooker releasing all the pent up inflation we have exported to the world since President Nixon took the dollar off the gold standard in 1971. US debt has exploded to close to $30 trillion and counting and the US dollar has declined more than 98% against the US Dollar Reserve Currency.
For commodities, though, 2020 was not all bad. In August, gold topped $2,000 an ounce for the first time ever, increasing by 16.8% in U.S.-dollar terms as low-interest rates made the precious metal a more appealing haven than Treasuries, even outperforming many prominent asset classes in the process. Gold can act as an insurance policy against monetary devaluation, especially if the dollar weakens. Dollar weakness has traditionally led to gold prices rising, and with a globally-led devaluation of fiat currencies, more so than ever, we anticipate higher gold prices.
Silver is another precious metal that has witnessed significant gains over the last year, touching the $30/oz mark in early August—a price point it hadn’t achieved in more than five years. However, what makes silver an underrated investment opportunity is its place in various industrial applications, especially since a number of products and chemical processes make use of this metal. One such application is in solar panels, and with the Biden-Harris Administration, we can anticipate a more aggressive approach to the reduction of fossil fuels.
With these fundamentals one wonders why gold is not at $50,000 an ounce, similar to Bitcoin’s price. The world knows that gold is a centralized monetary asset. It is and will always be the other side of fiat currency. It has been a proven asset for thousands of years, especially when economies enter an inflationary or hyperinflationary cycle. The big difference between then and now is that we have Bitcoin, which was created by the demand for a decentralized asset that would offer the same protection as gold against imploding fiat currencies like the US dollar.
The advances and acceleration in technology today are unprecedented. We are transforming our physical world into a digital world. With Blockchain technology as the foundation, the future promises exciting opportunities.
Gold Is About To Go Up
Source: ema2trade.com
The gold market has been completely ignored during the past 12 months. We have gone into a second corrective wave that is about to revert and begin the third leg of a long-term bull market that started in March 2020. The fact that gold is ignored may be one of the most bullish signs from a historic perspective. When gold unleashes its reversion to the mean, it will be a strong move and most people will miss it. The collective sentiment on gold is the most bearish in the face of the most bullish fundamentals ever. The economics of price alone are a screaming buy signal when you compare it to other financial assets, digital or non-digital.
“I believe that gold and silver are setting up for a historic move during historic times,” said Equity Management Academy CEO, Patrick MontesDeOca.
Mean Reversion Trading
We use our proprietary AI algorithm, the Variable Changing Price Momentum Indicator (VC PMI), to technically analyze the markets. According to the VC PMI and our Robo-Advisor, Nikki the Robot, the weekly trend momentum of $1781 is bullish. The weekly price momentum of $1790 is bullish. Exit longs at the Sell-1 and Sell-2 levels of $1819 and $1845. Exit shorts at the Buy-1 and Buy-2 levels of $1764 and $1734.
Source: ema2trade.com
The VC PMI identifies the extreme levels above and below the mean when the market is most likely to revert back to the mean. Entering trades at the Buy and Sell levels, the extreme levels away from the mean, offer the highest probability trades. There is a 90% probability from the Sell and Buy-1 levels and a 95% from the Sell and Buy-2 levels that the market will revert from those levels back to the mean.
“Gold put in a seasonal bottom in late September,” we said.
“We are seeing a combination of factors that indicate that gold is set to return back to the mean or higher. Now is the time to buy pullbacks aggressively and add to your core long term bullish position in gold.”
Disclosure: I/we have a beneficial long position in the shares of GDX either through stock ownership, options, or other derivatives.
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