Systemic Inflation And Euro Wasteland, Got Gold?

What lies ahead for America and the world, for the rest of 2022 and 2023? Well...

Legendary economist Steve Hanke warns of a major recession in 2023 and suggests it would be happening… even with no rate hikes.

In regards to rate hikes specifically, I’ve asked investors to think about a scenario where Fed boss Jay Powell has watched the US government become the main driver of US inflation with its crazed levels of spending and debt

And Jay is forced to raise rates until the government finally begins to shrink itself.  

The bottom line: There will be an ebb and flow to US rate hikes, but the general trend of hiking is likely “here to stay” for decades because that’s how long it will take for the US government to ween itself off its hideous addiction to debt, spending, and global meddling.

If the US “Gmen” don’t throw in the white towel on sanctions, European inflation could spiral to levels now seen in nations like Venezuela and Turkey.  

In turn, that inflation will be imported into America.

At the same time as he watches US citizens being impoverished by what is becoming systemic inflation, Jay is watching the US government’s insane war-mongering and sanctions create a European nightmare… 

A nightmare where not just thousands, but millions of people are set to freeze to death, millions more become horribly sick, and the health care systems of Europe become completely overwhelmed. 

Got gold?

Hardcore gold bugs have the luxury of being able to yawn as the American fiat empire implodes and the madness of the 2021-2025 war cycle envelops the world…

If they follow the mining stock rules of the road.   

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daily gold chart

Mining stocks need to be bought at support for gold and sold at resistance.  

This should be every gold stock bug’s main mantra; buy low (at gold price support) and sell high (at gold price resistance). It’s the simplest approach, in theory.  

In practice, it requires tremendous emotional control.

Recently, gold traded at the key support zone of $1675, igniting a buy signal for the miners, and just a few weeks later it traded at resistance at $1785, igniting the sell signal.

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CDNX daily chart

While the $1675 to $1785 rally for gold produced only modest gains for the CDNX index, many individual juniors surged 50%, 100%, and more… while the buy signal was in play.

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GDXJ “tactics and predictions” chart

GDXJ is called a junior miners ETF, but it’s really more of an intermediate producers ETF, and sometimes it holds senior producers too.  

While I’m projecting a rally to $40-$42 for GDXJ, there’s no current buy recommendation because gold is not at key support.  

When they rally, gold stocks move at tremendous velocity; from the July buy zone at about $29, GDXJ rallied about 20% in a month. Annualized, that’s a velocity of about 200%.  

If investors snooze for even a week or two after gold arrives at a key support zone, the opportunity in the miners… is lost.

Spectacular management, business models, and drill results can produce individual mining stock outperformance at any time, but most investors will not build sustained wealth with that approach alone.

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GOAU tactics and predictions chart

The double bottom pattern (with lows in the $13-$14 area) suggests GOAU is set to rocket to $18 or higher, and that’s good news, but the main tactic in play is to wait for the next big buy signal from “Queen Gold”.

Hardcore gold bugs who like the idea of making profits of 50% a year are generally going to be happiest holding lots of gold bullion, lots of fiat cash, some land, a general commodity fund or two, some mining stock core positions, and playing the miners “hard and heavy” at major support/resistance zones for gold!

More By This Author:

War And Inflation Rally Time For Gold
US Civil War Cycle & Gold
Gold & The Intensifying War Cycle

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