1. The appointment of Jerome Powell as new Fed chair is likely the catalyst that ushers in a multi-decade era of rising inflation and soaring gold stocks.
2. I’ve announced a long term target for GDX of $15,000. That really  isn’t very high… given the strong inflation numbers that I am projecting for America in the years ahead.
3. Having said that, Powell has only been on the job for one day.  Investors need to show patience.  Wait to see what he actually does before taking “back up the truck” market actions.
4. Powell’s first significant actions are likely to be announced at the March 21 Fed meeting.  I expect a firm commitment to more rate hikes and more quantitative tightening.
5. That’s inflationary because it boosts bank profit margins and they become more willing to take lending risk.  That produces a rise in the velocity of money.
6. As the cost of borrowing rises, companies will raise prices and workers will demand higher wages.  If Powell also makes a firm commitment to deregulating America’s thousands of small banks on or before March 21, inflation would accelerate even more rapidly.
7. Please click here now. It’s my contention that wage inflation of 20%+ is not just theoretically possibly, but morally justified.  Here’s why:
8. For many years, global governments have colluded with central banks to run socialist/fascist QE programs.  These programs moved money from workers and savers to government bonds and stock markets.  Additional money was simply printed and taken.
9. QT, higher rates, and small bank deregulation are beginning to re-empower Main Street.  This is happening while “Government Street” (the bond market and the dollar) and Wall Street risk disintegrating.
10. Please click here now. Double-click to enlarge this exciting bond market chart.  A head and shoulders top pattern is in play.  The neckline has been crushed.
11. Please click here now. Around the world, governments are announcing import duties.  That’s inflationary.  If India’s government had cut the gold import duty, it would have increased demand, but the duty itself is also inflationary.
12. Please click here now. Institutional money managers are starting to focus on the inflationary implications of Trump’s tax cuts that I highlighted when he first proposed them.  In the context of QT, rate hikes, and deregulation, these cuts can increase inflation quite significantly.
13. Please click here now. Double-click to enlarge.  The bond market is building what I have dubbed a “super top” pattern.  The target of the super top is about 80.
14. The Fed has projected that rates will take many years to reach “normal” levels.  This chart suggests the normalization process will take about seven more years.
15. This “normalization” sounds great in theory.  In the real world, it involves a decline to 80 for the T-bond price.  That would drive borrowing costs for the US government to incredibly painful levels.
16. In addition, rates could rise much more quickly than this chart suggests if Trump ordered T-bond creditors to take a haircut on what they are owed.  That’s one of his campaign promises.
17. As inflation surges, Trump may be forced to devalue the dollar and revalue gold to prevent the US government from imploding or becoming a full dictatorship.  Inflate, default, or die.  In the near -immediate future, these are the only choices President Trump will have to manage the US government’s horrific size, power, and debt.
18. On that note, click here now.  Double-click to enlarge.  The dollar could go into free fall if it breaks cleanly under 108 against the yen, and the bear flag chart action suggests that is going to happen very soon.
19. A breakdown would almost certainly correlate with a gold price surge to about $1370.  Please click here now.  Double-click to enlarge this daily gold chart.
20. There is a small head and shoulders top pattern in play that could push gold modestly lower to the $1310 – $1290 area.  The good news is that a bull flag-like pattern is also forming that could negate the top pattern.
21. Given the fast-growing inflationary fundamentals, gold investors should now be walking the price gridlines with maximum confidence.  Fresh buying for eager gamblers and investors should be done at key levels that I’ve noted on the chart.
22. Gold has been rising as the T-bond has fallen hard, and rising as the T-bond has rallied.  That’s because gold price discovery for the fear trade is not about rates per se, but about risk.  As stock and bond market investors get rocked hard, gold looks like the ultimate asset iron lady!
23. Please click here now. A major gold stocks versus gold bull era will occur as the T-bond super top ushers in extraordinarily high inflation for the long term.
24. Gold stock enthusiasts need to watch Powell’s actions, because they are the catalysts that will push GDX above $26 and officially begin that fabulous era.  Gamblers can buy call options on a two-day close over $26.  I’ve urged long term investors to be aggressive buyers in my $23 – $18 tactical accumulation zone.  The bottom line is that it’s the cusp of a new era for gold stock investors, and Powell officially launches it on March 21!

Thanks and Cheers,

Stewart Thomson

Graceland Updates

https://www.gracelandupdates.com

Email:

stewart@gracelandupdates.com

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.

Risks, Disclaimers, Legal

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?

1. Gold and related investments are off to a very positive start in 2018.  I don’t expect any major pause in the action until China’s Golden Week holiday celebrations get underway.

2.   Chinese gold dealers will be on holiday this year from about February 15 to February 21.  This creates a significant vacuum in gold demand. As dealers and Chinese gold markets close, the gold price tends to soften in global markets.

3.   The good news is that gold has a rough general tendency to rally strongly ahead of the Golden Week festival, and that’s happening right now.

4.   Please click here now.  Double-click to enlarge.  Gold has reached the outer boundary of my $1340 – $1365 resistance zone.

5.   A flag pattern is possibly forming.  Note the nice pennant pattern that formed at the $1320 resistance zone area.  I would also like investors to note that gold has burst through resistance at both $1300 and $1320 with ease.

6.   Short term technical indicators are overbought and a pullback is expected.  Hopefully the pullback is a flag pattern rather than something deeper.

7.   Regardless, both the $1320 and $1300 price zones should now function as support on any pullback.

8.   The $1365 area on this February futures chart is much more formidable resistance, because it represents the highs made when India’s Modi “trumped the Trumpster” by calling in the nation’s fiat money.

9.   Modi did that on US election night, as India’s powerful gold buyers were buying enormous amounts of gold to bet on a Trump victory.  Their bets were correct, but Modi ruined the payoff.

10.   That horrific demonetization announcement was followed by “know your client” and GST tax policy announcements.  In the short term, these policies were all negative for both gold and GDP growth.

11.  Please click here now. A lot has changed since those policies were unveiled.  The Indian gold jewellery market has almost finished restructuring. 

12.   Demand for gold in India is now very steady and rising.  That trend is not just “here to stay” but here to accelerate!

13.   The upcoming Indian Federal budget could feature some positive announcements for gold.  The post office plan to help rural Indians buy more gold is just one of many proposals coming from India’s top jewellers.  There’s also a chance for a duty cut, which is endorsed by the nation’s commerce department.

14.   In America, Jerome Powell is set to become head of the central bank in just three weeks.  His aggressive plans for more quantitative tightening, consistent rate hikes, and deregulation of small banks could be a game changer for the twenty-year bear market in US money velocity. 

15.   I’ve predicted he ends that bear market by the summer.  That would be a game changer for the equally long bear market in gold stocks versus gold.  I believe that bear market ended in 2014-2016, but gold stocks need a major money velocity bull cycle to stage serious outperformance against bullion.

16.   I expect less useless talk from “Fed speakers” in 2018, and more boots on the ground action from Powell with deregulation.

17.   In terms of money velocity, I’ve suggested that gold stocks are probably at a time that can be compared with the 1968 – 1970 period.  Inflation is starting to rise, and interest rates are starting to rise.  This is exactly what happened from 1968 to 1980, and over the next decade, gold stocks should perform much like they did in the 1970s.

18.   Please click here now. Double-click to enlarge this dollar versus yen chart.  The dollar broke below another low yesterday.  Arguably, it could also be a neckline break on a head and shoulders top pattern.

19.   The bottom line for the dollar: It looks like a train wreck against the yen, the yuan, the rupee, and the euro.  A rally is expected now, but it should be modest.  That fits with my “possible flag for gold” scenario.

20.   One of Trump’s campaign promises was to lower the dollar against the fiat of other major economies.  A bullish bet on the dollar is a bet against the president of the United States.  I wouldn’t recommend taking that bet.

21.   Please click here now. Double-click to enlarge this exciting Ripple blockchain currency chart.  I tend to approach blockchain investing much like junior gold stocks; I buy a grub stake with 20% – 30% of the total fiat capital I’m willing to commit to the asset, hold 20% to buy at higher prices on pullbacks, and keep 50% to buy at much lower prices.

22.   Right now, I’m a ripple buyer of all 10 cent pullbacks, with a $5 target for the next major move higher.

23.   Please click here now. Double-click to enlarge.  GDX looks like a technical “wonder kid” right now.  Note the massive volume on the upside breakout from the rectangular drift pattern that is almost a flag!  I expect India to provide the higher price gold floor foundation for a possible surge to the $1500 area for bullion. 

24.   In turn, Powell’s deregulation should make GDX look like bullion on steroids, and I expect it could stun most investors by making a new all-time high long before bullion does!

Thanks

Cheers

St  

Stewart Thomson 

Graceland Updates

https://www.gracelandupdates.com  

Email: stewart@gracelandupdates.com  

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.

Risks, Disclaimers, Legal

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?