first majestic silver

Gold And The Dollar: Rally Time For Both

President of Graceland Investment Management
July 5, 2022

It was a June swoon for the metals and miners.  Can they fly in July?

The daily gold chart.  A double bottom pattern is in play.  The initial target is about $1880, and a breakout over that price targets $2000!

From a technical perspective, both the daily and weekly charts look like it’s either “rally time” now or very soon.

The fundamentals are also positive. Economists and money managers are growing concerned that central bank rate hikes will create recessions in many countries…

And may do little to tame supply-themed inflation.

The Atlanta Fed’s “GDP Now” chart suggests America is already in recession.  I warned investors that this would happen as the Trump handouts during the Corona crisis got spent.

The Biden “gun control” platform is mainly about spending tens of billions of dollars on a horrifying array of guns to prolong the Ukraine war.

The sanctions are already turning the already-severe supply chain problems into a potential nightmare of food and fuel riots, and they could cause the starvation of tens or even hundreds of millions of African citizens.

Led by “Jackboot Joe” Biden, Western governments have been bragging that wrecking the economy of Russia and ruining citizen lives there would be “awesome”. 

Now, the citizens of Western Europe are at risk of no heat in the winter and perhaps not enough food on the table.

The Urkaine war horror reached a crescendo in the February to March period, and both gold and the USDX rallied together then… with gold as the leader. 

That’s likely about to happen again, as the Russian government begins to “return fire” in the proxy war that Western governments launched with their sanctions.

Investor tactics:  Hold lots of gold and lots of US fiat cash!  My flagship GU newsletter gives investors the big picture for the major markets of gold, commodities, bonds, and the stock market, and holding lots of gold and cash is a major mantra of the letter.  At $199/year, the value is outstanding, and I have a special offer this week of just $169/15mths!  Click this link or send me an Email to get the special pricing.  Thanks!

As US GDP slides, is it possible that the Fed becomes a “chicken hawk”, and kills or reduces the aggressive hikes it has scheduled?  US rates are in a resistance zone and there’s a negative divergence of the RSI oscillator on this weekly 10year yield chart.

The most likely scenario is that the Fed hikes into September as scheduled, but “blowback” from Russia with gas and oil creates much bigger supply-oriented inflation… one that Fed man Jay can’t fix with his hikes.

Rather than the Fed turning chicken hawk, arbitrage brings down long-term rates modestly while the Fed Funds rate gets hiked.  The bottom line:

Credit card and mortgage rates will rise, hitting the average citizen hard, but US T-bond rates should decline, allowing more war mongering and reckless spending from the government to occur.

Gold bugs dream of a day when the Fed and the government lose control of the dollar, and it plummets into the abyss against gold.

That’s likely several years away but it’s coming.  Rates will skyrocket as it happens… and may not come down for many decades.

The XAU gold miners index is roughly at the same price it was when it started almost 40 years ago, while gold has risen to six times its $300/oz price.

Clearly, a buy and hold approach is AOK for gold, and significantly “less than OK” for the miners.

The GDX daily chart.  Technically, Friday was a day of key reversals for an array of mining stocks.  Note the strong position of RSI and Stochastics. 

All signs point to a rally beginning “about now” and lasting into late August or even September.  The next Atlanta Fed update for US GDP is Thursday and the jobs report is Friday.  US GDP for Q2 is likely to come in around minus 2% (or worse) and the jobs report could be shaky. 

Will Friday morning mark the official start of the summer rally for the miners?  I think so.  Investors eager to participate could use any day before Friday to get positioned… for some very enticing upside action!

Special Offer For Gold-Eagle Readers: Please send me an Email to [email protected] and I’ll send you my free “Golden Slingshots!” report.  I highlight key gold and silver miners trading under $10/share that are poised to stage 20%-200% summer rallies after the jobs report starting gun sounds!  Investing tactics are included for each great stock. 

Thanks!    

Cheers

St

Stewart Thomson 

Graceland Updates

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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form.  Giving clarity of each point and saving valuable reading time.

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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:  

Are You Prepared?

*******

Stewart Thomson is president of Graceland Investment Management (Cayman) Ltd. Stewart was a very good English literature student, which helped him develop a unique way of communicating his investment ideas.  He developed the “PGEN”, which is a unique capital allocation program. It is designed to allow investors of any size to mimic the action of the banks.  Stewart owns GU Trader, which is a unique gold futures/ETF trading service, which closes out all trades by 5pm each day. High net worth individuals around the world follow Stewart on a daily basis.  Website: www.gracelandupdates.com.


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