Gold Stocks Buy In July And Watch Them

“Buy in July to watch your gold stocks fly!”  That’s a time-tested mantra from “Goldlion”, who picks the junior mining stocks for my Graceland Juniors newsletter.

Sadly, this is not July. It’s the month of May, and May is part of the soft demand season for gold. The strong demand season typically runs from August to February.

A lot of gold stock investors want gold stocks to roar higher now, but nothing happens before its time. Interestingly, gold’s strong season begins just as the stock market crash season begins. 

The crash season for the US stock market typically runs from August to October. As the business cycle matures, the stock market crash season becomes more dangerous and the strong demand season for gold offers more potential reward.

(Click on image to enlarge)

The soft price action is seasonally expected and there’s short term technical weakness, but there’s nothing overly negative, let alone bearish, on this daily gold chart.

(Click on image to enlarge)

weekly gold chart

Like Ray Dalio, I’ve suggested the next crisis will be a US dollar crisis more than an economic growth crisis.

That’s mainly because Trump administration is pro-growth and pro-business, but it’s also continued to grow both the government debt and the overall size of the government, all in the name of “making citizens great”. 

This approach to running the government has greatly strengthened the private sector economy while greatly weakening the ability of the government to fund its insane debt and size growth in even a mild economic downturn. 

In the next downturn, I expect the American private sector to weather the storm reasonably well while the government is forced to print money to fund itself. The bottom line:

In the last downturn, QE was used to promote growth and it was deflationary. In the next downturn, QE will be used to make up for lackluster demand for government bonds, and it will be extremely inflationary.

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