Gold: Inflation Is Accelerating

We welcome this correction in gold and we believe it is a great opportunity to add to your long-term position in gold.

The Biden administration will implement the proper stimulus package that is being demanded by the market. The stimulus is only one factor affecting the price of gold. The bigger picture includes the need for stimulus in almost every country on earth. If not, then the markets could collapse and we could be in a deep depression. Based on current leaders and policies, they will continue to increase stimulus as much as needed. The printing numbers, if anything, are going to expand exponentially. If inflation reaches 2% according to their formula. If we do see an inflationary spike, it will put tremendous pressure on the record debt around the world. Policies will be implemented to control the rise in interest rates. Debt is above 100% of GDP in many countries. The world’s economic leaders are planning to do a reset of the world economy. Part of that will be to increase debt. We may see the beginnings of a virtual currency. The key issue in relation to gold is whether they use any kind of backing on a new virtual currency. Gold might serve as a backing for a virtual currency and be a way to get out of the current reliance on fiat paper currencies. If they do, it would increase trust in that virtual currency. Virtual currencies are less than a decade old, so they are not going to replace gold. However, if they link such currencies to gold, it could provide a virtual currency with the much-needed credibility to be broadly accepted.

With such issues at stake, it is one of the most exciting times in our lifetimes. This could be a life-changing situation for you and your family. Gold is offering an excellent opportunity to provide a financial foundation for your future.

Technical Analysis

Gold is in a fast market. It is trading last at $1802.90. We are long gold at $1800 from the Buy 2 level according to the Variable Changing Price Momentum Indicator (VC PMI). You can use $1799 as your protective level or a dollar stop to suit your profile. A close above $1799 activated a buy signal on the close at $1803. The target above is $1817 for day trading. This is an area with the strongest probability of buyers coming into the market. The mean is $1847, so we are below that mean and the market is extremely oversold. The VC PMI predicts that there is a 90% probability of a reversion back up to $1817 unless we close below $1799 using the 15-minute bar.

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Disclosure: I am/we are long GDX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from SA). I have no business relationship ...

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