Gridline Tactics A Kiss For Gold

The big story is yields.

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ten-year US treasury nominal yield chart

For gold, what matters right now is real yields (nominal yields minus the rate of inflation). Unfortunately, the US rate of inflation is measured with what I call…

The Orwell Index.

The US CPI (consumer price index) seems to include almost everything that is of no consequence to the average citizen and nothing that is. 

While George Orwell didn’t create the US CPI, it could be an entity in one of his fictional novels about unchecked government socialism and propaganda.

Substantial inflation destroys stock markets. Institutional money managers already have inflation as their number one concern after a tiny “pop” in the CPI.

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The brick and mortar Dow looks good but the Nasdaq is soft. 

If the $300 support zone on this chart fails, high-tech darlings (like Tesla) could implode. The Biden administration is borrowing money and giving it to consumers (vaccinated or not) who want some fresh air.

For now, the consumers are sitting on the money and much of it is just arriving in their bank accounts. It’s potentially incredibly inflationary. I call it “growflation”; the economy grows, but it’s mostly oriented around outrageous amounts of new government debt.

Money managers are stampeding out of technology and into the Dow, but if the Orwell inflation index stages enough of a rise to cause real yields to drop as nominal yields break above the inverse H&S neckline pattern on the ten-year nominal rates chart… all stock markets could begin to crash.

(Click on image to enlarge)

the world’s most important chart, which is, of course, the weekly gold chart highlighting the key support and resistance zones

It’s important for amateur investors to remain calm in a price reaction. Buy at support and sell at resistance. It’s really that simple. 

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