Gold Pulls Back After A Strong Rally

Gold is not a stock, bond, or business deal… let alone a casino chip in a paper money casino. 

Double-click to enlarge this horrifying US government fiat versus gold chart. 

Gold is a currency. It is the ultimate currency… and as this 50-year chart shows, gold’s superiority over fiat is indisputable. 

Over time, it is very difficult to engage in a business deal that is better than just putting the money into gold and holding it. There are good business deals of course, and when investors get a “fiat profits score”, it’s important to put a nice portion of those profits… into gold!

Double-click to enlarge this daily gold chart.  

In the short-term, gold has rallied $100/oz from my $1671 area buy-zone, and the mining stock ETFs like GDX and GOAU have rallied 15%-20%.

That’s always a good time for traders to shift a bit of gold into fiat, and to sell some miners. A pullback towards support at $1754 (and perhaps to $1720) is in play.

Odds favour theis pullback ending between $1754-$1720, but if there’s a deeper reaction, $1566 is the next key buy zone where real money enthusiasts can take action.

 As I’ve noted repeatedly, in a higher rate environment where the main theme is “growflation” (followed by stagflation): long-duration equities and growth stocks tend to act like T-bonds; they flounder.  

Growth stocks do well in low growth environments where the Fed pumps the market with QE and low-rate welfare handouts.

“Think about what people love. They love long-duration equities right now… That shows that people are kind of ill-prepared for this higher inflation.” - Rich Bernstein, all-star investor, CNBC News, April 19, 2021.

The bottom line is that US equity bugs need to rethink their positioning; for ten years QE welfare handouts essentially went to Wall Street. 

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