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When will precious metals markets finally make their move? It’s a question that has frustrated many investors in 2021. Gold and silver prices have remained stubbornly rangebound for the past several months.
There is no way to know exactly when this consolidation period will end. Long-term investors would be wise to hold their core positions regardless of market conditions (and grow them when feasible).
However, there are signs both technical and fundamental that point to a major directional move coming in the relatively near future.
One of them flashed on Wednesday following the Federal Reserve’s latest policy announcement. As expected, officials said they plan to begin withdrawing some of their “emergency” stimulus in the face of surging inflation pressures in the economy. They will still be stimulating already overheated markets, just at a more “tapered” pace.
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Price levels have risen so rapidly in recent months that Fed Chief Jerome Powell had to essentially walk back his oft-repeated “transitory” assurances by redefining the meaning of the term.
“Inflation has come in higher than expected,” he admitted. “The level of inflation that we have right now is not consistent with price stability” – i.e., not consistent with the Fed’s own statutory mandate!
Powell blamed supply bottlenecks, denying any culpability in driving “higher than expected” costs through monetary policy decisions.
“I don’t think we are behind the curve,” he insisted. “It will be premature to raise rates today.”
Powell is taking an astounding position for a central banker – namely, that he is unwilling at this time to pursue price stability as required by the Fed’s own dual mandate. Instead, he projects (hopes) that inflation rates will move down on their own by the second or third quarter of 2022.
Never before has a Federal Reserve chairman so openly flouted the responsibility to fight inflation. Powell no longer even denies that inflation has gotten out of hand. He just refuses to do anything meaningful about it!
And next year, new excuses may emerge. The Fed may even start verbalizing what it sees as the benefits of high inflation in another deflection of responsibility for its unwillingness to stop creating inflation.
Investors should take note of this insanity and act accordingly. Given that interest rates will remain artificially suppressed well below the inflation rate, dangerous economic and market distortions will continue to build.
It is dangerous to buy risk assets such as stocks at artificially inflated valuations. It is especially dangerous to own false safe havens such as bonds when their yields are so low that they are virtually guaranteed to deliver negative real returns.
“Don’t fight the Fed” may be a mantra with common sense appeal. But a wise investor doesn’t look only at those asset classes the Fed is trying to stimulate directly.
A wise investor also anticipates unannounced, unintended, potentially unpleasant consequences of Fed stimulus that can devastate the portfolios of the unprepared.
The last thing central bankers and their beneficiaries on Wall Street want to see is a massive flight from financial assets into gold and silver. But market history shows that Fed-fueled asset booms always lead to busts – whether in nominal or real terms or both.
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The gold chart shows prices forming a massive descending triangle pattern over the past year and a half, with major support at $1,675/oz and resistance coming in around $1,800 level.
The market will ultimately break either above or below the consolidation pattern.
Since it formed from an all-time high in August 2020, the triangle carries more bullish implications than one that might appear within the context of a larger downtrend.
But anything is possible in these markets, including false breakouts and false breakdowns that whipsaw short-term momentum traders.
Long-term investors need not worry about day-to-day price action – except insofar as value opportunities for accumulation emerge.
Despite lackluster price action, bullion investors have been buying heavily this year. So much so that coin premiums remain elevated, and many of Money Metals’ weaker competitors are struggling to keep up with demand.
As with other areas of the economy where shortages are helping to drive massive price hikes, the same phenomenon could soon be seen in precious metals markets. How soon? Stay tuned…
A whole new wave of headline-following, momentum-chasing buyers would likely be drawn in by breakout moves in gold and silver, whenever they occur, further feeding into their bullish supply and demand fundamentals.
Photo by Jingming Pan on Unsplash. Article cross-posted from Activist Post.
Will America-First News Outlets Make it to 2023?
Things are looking grim for conservative and populist news sites.
There’s something happening behind the scenes at several popular conservative news outlets. 2021 was bad, but 2022 is proving to be disastrous for news sites that aren’t “playing ball” with the corporate media narrative. It’s being said that advertisers are cracking down, forcing some of the biggest ad networks like Google and Yahoo to pull their inventory from conservative outlets. This has had two major effects. First, it has cooled most conservative outlets from discussing “taboo” topics like Pandemic Panic Theater, voter fraud, or The Great Reset. Second, it has isolated those ad networks that aren’t playing ball.
Certain topics are anathema for most ad networks. Speaking out against vaccines or vaccine mandates is a certain path to being demonetized. Highlighting voter fraud in the 2020 and future elections is another instant advertising death penalty. Throw in truthful stories about climate change hysteria, Critical Race Theory, and the border crisis and it’s easy to understand how difficult it is for America-First news outlets to spread the facts, share conservative opinions, and still pay the bills.
Without naming names, I have been told of several news outlets who have been forced to either consolidate with larger organizations or who have backed down on covering certain topics out of fear of being “canceled” by the ad networks. I get it. This is a business for many of us and it’s not very profitable. Those of us who do this for a living are often barely squeaking by, so loss of additional revenue can often mean being forced to make cuts. That means not being able to cover the topics properly. Its a Catch-22: Tell the truth and lose the money necessary to keep telling the truth, or avoid the truth and make enough money to survive. Those who have chosen survival simply aren’t able to spread the truth properly.
We will never avoid the truth. The Lord will provide if it is His will. Our job is simply to share the facts, spread the Gospel, and educate as many Americans as possible while exposing the forces of evil.
To those who have the means, we ask that you please donate. We have options available now, but there is no telling when those options will cancel us. We just launched a new GiveSendGo page. We also have our GivingFuel page. There have been many who have been canceled by PayPal, but for now it’s still an option. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
JD Rucker
