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GOLD COMEBACK: HERE’S THE BLUEPRINT!

Contributing Author
December 2nd, 2020
Portfolio Wealth Global
Comments (3)

This article was contributed by Portfolio Wealth Global. 

Gold does not directly correlate with the dollar. This couple has ceased from trading inversely to each other for many years. It’s very common to see a strong dollar and a strong gold rally, as well as a weak dollar (like right now) along with a weakening gold price (like right now). So, if the dollar isn’t the leading indicator for future gold prices, then what is?

The answer isn’t government debt either; the federal deficit and the national debt pile are contributors to the macro case for owning and storing precious metals, but the debt rises by the second, so if that were the case, gold would always go up.

It’s not inflation either; there’s inflation in the system inherently. Our global economy keeps adding more currency to circulation with each passing year and gold has been rising at more than a 1.6% pace, which is what the Federal Reserve cites as its gauge for CPI (Consumer Price Index).

Inflation and gold correlate much more once inflation becomes a noticeable issue, which any person can see and recognize. The truth is that the average American not only does not know how to define the term monetary inflation, he also has no idea what the consumer price index is – which means that inflation isn’t a hot topic, mentioned daily by influential figures.

Courtesy: U.S. Global Investors

This, as you can see, is an inverse correlation at its best. Bond yields, especially real yields, are the best barometer for where gold is headed next. Real yields are the result of discounting CPI from the nominal 10-yr bond yield.

Right now, the 10-yr bond is 0.84%. Because inflation is higher than that in the United States, there are negative yields, when accounting for real life. If one lends the government $100,000 for a decade, receiving 0.84%/annum, while his purchasing power erodes by more than that, he’s actually banking a guaranteed loss.

In that type of world, one is incentivized to allocate a portion of his savings towards precious metals, since bonds don’t offer much of an alternative to cash.

But, if the sentiment on the street is that this trend is reversing – which means rates are headed higher, while inflation stays tame, causing negative rates to disappear – the reason to own gold, as a trade, goes away.

This is what’s happening right now: Wall Street is convinced that rates bottomed in March and after six months of recovering from the initial shock, lenders have more options to choose from, so they’ll demand higher rates from the U.S. government.

Courtesy: Zerohedge.com

We do not anticipate inflation remaining the same as today. In fact, with the latest reporting about oil prices in 2021, it seems that the street doesn’t either.

On top of that, as you can see above, the markets are euphoric, with valuations resembling Dot.Com era levels. Right after it burst, gold bottomed and then soared for eleven consecutive years.

That’s not what we’re envisioning, but if stocks peak soon and trade sideways for a number of months, gold could do well, as money rotates toward it.

The point is that this slump could be based on a totally false narrative.

So, what we’re doing is building our watchlist and waiting for the SWING, which will occur the moment the trend reverses.

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    Author: Contributing Author
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    Date: December 2nd, 2020
    Website: https://www.portfoliowealthglobal.com/

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    1. Andrea.Iravani. says:

      Since the military, government, universities, health care, and pharmaceutical companies are so terrified of viruses, they really ought to stop working with them, and we know with 100% certainty that they are intentionally creating viruses and that it is a pre-meditated act. 

      So, if you really, really, really, want to eliminate viruses, logic would dictate that you first stop creating them, and that you destroy the ones that you have. Since you are too fucking stupid to figure that out for yourselves, I thought that I would point that out to you, free of charge! 

      Andrea Iravani
      P.S. Those are the places that are points of interest in stopping infectious diseases. I would not work with them. No way. There is an extremely high early death rate for those that do, in case you didn’t know that, and that is because they choose to work with microscopic viruses, which are not people. You literally have absolutely no idea of what you are getting into, and it is a gamble that is not worth the risk! So, spare us the preaching of ineffectual wearing of masks, social distancing, and lockdowns, hypocrites! 

    2. Cmoore says:

      This article is a nothing burger!!

    3. Assange, where the bloody hell are ya?! says:

      Scott Morrison head faked Australia. Morrison has turned Austalia into the most isolated country on earth, surpassing
      North Korea, even though Morrison was the head of tourism
      for Australia and New Zealand. Morrison was also an economics major as well as a geography major, and destroyed both the economy and geoography of Australia while wild fires ravaged the region, Morrison decided that the only thing that is missing from the Island country is more nuclear waste, and decided to turn Austalia into the largest nuclear waste dump on earth and pour nuclear waste into underground caverns in Aboriginal lands, even though heat rises, even underground, which is what explains volcanic erruptions.

      Scott Morrison, famous for his Australian tourist ad campaign,
      “Where the bloody hell are you?” , turned Australia into a bloody hell.

      The economy has also seen its largest decline of 7% under Morrison, since it began its record keeping in 1959, ending 28 years of economic growth, with 1974 suffering a 2% decline as the second highest economic decline since 1959 record keeping.

      Haha, tricked ya! It was all about voting for Morrison! Nothing to do with the economy, nothing to do with tourism, in fact nothing to do with Australia for that matter! It was all just the marketing of Scott Morrison, the crooked son of a cop!

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