Real Rates, Gold, & The Miners

The disappointing price action in gold (against the dollar) is mainly related to the perceived rise in real interest rates.

It’s unfortunate that the US government and the Fed use indexes of inflation that the average citizen can’t relate to at all.

For the average person with minimal savings, rising debt, questionable job security (if they have a job at all), and skyrocketing prices of the items they need for daily life…

The 1.4% inflation rate used by the government is a very bad joke.

It’s equally unfortunate that institutional money managers focus on these “out of touch” inflation indexes.

If money managers used “common man” inflation gauges, they would now be buying gold maniacally rather than selling it somewhat aggressively.

America’s inflation indexes are about as useful for the average person as a rotary phone, but because money managers move substantial funds in and out of gold based on these indexes…

All gold bugs need to stay professional in their actions. A major focus on the weekly chart is very important.

(Click on image to enlarge)

the most important gold chart in the world

There’s no point flailing away trying to call “final lows” or “big tops” in the gold market. Building sustained wealth is all about buying into weekly chart support zones and selling into weekly chart resistance zones.

The buying and selling can be tweaked by using a couple of solid technical indicators like my 5,15 moving average series and 14,5,5 Stochastics.

Market sentiment is also important. Market rallies in gold rarely begin before most analysts and investors are 100% sure the price is going lower.

On significant price reactions, professional investors feel roughly the same way that amateur investors do (demoralized), but they are able to essentially “bet against themselves”; they buy even though they are sure the price is going lower.

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