-- Published: Tuesday, 9 October 2018 | Print | Disqus
By Stewart Thomson
1. The incredibly positive price action of many gold stocks relative to bullion continues to occur on days when bullion falls hard against the dollar, and when the stock market gets hit. Thatís impressive!
2. Please click here now. Double-click to enlarge this key daily chart of GDX versus gold.
3. Thereís a fabulous inverse head & shoulders bottom in play.
4. I coined the phrase, ďsafehavenization of gold stocksĒ. This is a developing theme in the West, where money velocity reverses, inflation rises, and corporate earnings growth fades.
5. In this environment institutional money managers begin to move their focus away from growth stocks and towards value, defensive stocks, and finally to gold stocks.
6. Please click here now. Corporate earnings are still incredibly strong, as I predicted they would be in 2018 in this stage of the business cycle.
7. They are strong, and inflationary! The other main inflationary forces in the West are tariffs and a Fed policy that is pushing money into the commercial banking system.
8. Like Jay Powell, Iíve cautioned investors that inflation from tariffs takes time to appear. Just because itís not here yet doesnít mean it isnít coming, and more tariffs could set off major alarm bells amongst institutional money managers, analysts, and economists.
9. Speaking of Jay Powell, please click here now. When I first began predicting a taper to zero, rate hikes, and quantitative tightening (QT), most gold market analysts thought QE to infinity was here to stay. They were dead wrong.
10. Now, Iím warning those same analysts that Jay Powell is a rate hiking steamroller. He doesnít ďblinkĒ just because a US stock market price chaser feels sad when the US market falls. In the face of peaking earnings and skyrocketing yields, the stock market is almost certainly in danger of suffering a major decline.
11. Jay Powell is not going to stop hiking in the face of 20% corporate earnings growth this quarter. Heís not going to stop with rates and unemployment both still at historically low levels. Heís also not going to alter the QT program that Janet Yellen laid out for him years ago.
12. Iíve warned investors that a 50basis point hike from the Fed is quite possible. The bottom line: There wonít be any blinking, except from investors who are blinking to wipe away tears as their stock market price chase is incinerated by rate hikes, inflation, a spiking trade deficit, and fading corporate earnings.
13. The stock market game has changed for institutional money managers over the past week. With 20% corporate earnings growth, buying the US stock market for a traditional year-end rally with 20% was a ďno-brainerĒ market play.
14. Now, money managers are suddenly staring at the astonishing speed that interest rates on the US 10year government bond are rising and this is a major alarm bell ringing very loudly for them.
15. My ďbottom lineĒ advice for all institutional money managers and retail investors: If you bet against the Fed you will lose.
16. Please click here now. I predicted the ECB would follow the Fed, kill QE, and launch rate hikes and QT.
17. It now appears that could happen even faster than I predicted it would! Iíve also predicted that euro hiking and QT would be followed in 2020 or 2021 by Japanese hiking and perhaps QT.
18. ďWe expect gold to trade in a range between $1,200-1,350 for the year end. US dollar trades are getting crowded and US equities are trading at historical highs with stretched valuationsÖĒ Ė Robin Tsui, Street Street ETF gold strategist, October 8, 2018.
19. With Chinese and Indian stock markets and currencies hit by US tariffs, the massive population there is beginning to position themselves in gold bullion and related ETFs in preparation for a topping process in US stock, bond, and equity markets.
20. Please click here now. Tariffs have created a surge in the US trade deficit by driving investment money out of China.
21. As the money exits, itís converted from yuan to dollars, putting upwards pressure on the dollar. In 1985 the US Treasury helped organise the Plaza Accord. That resulted in massive devaluation of the dollar.
22. More tariffs are a near-certainty. Those tariffs are ultimately inflationary and put immediate upwards pressure on the dollar. As they are unveiled, they will cause another spike in the US trade deficit. This situation is of great concern to the US Treasury.
23. It is happening as the head of the Fed calls the US government debt ďunsustainableĒ in the long term. Iíve been emphatic that the US government can win the trade war with China and make its debt sustainable by devaluing the dollar. Quite simply, Iíve predicted this will happen, because it must happen.
24. Please click here now. Double-click to enlarge this daily gold chart. Gold continues to majestically carve out the right side of a double bottom pattern. That pattern has a $1270 target price. That should be achieved easily as a tidal wave of positive forces are converging on the gold market right now. Chindian demand, tariffs, peaking US corporate earnings, QT, inflation, and many other gold-positive factors are all in play, all at the same time!
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Written between 4am-7am. 5-6 issues per week. Emailed at aprox 9am daily.
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?
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-- Published: Tuesday, 9 October 2018 | E-Mail | Print | Source: GoldSeek.com