1. The dollar and the US stock market may be starting their next major legs down today. Please click here now. Double-click to enlarge this ominous US dollar versus Japanese yen chart.
  2. Central banks around the world are ramping up their tightening.  Back in 2013-2014 when I predicted quantitative tightening and relentless rate hikes were imminent, almost nobody believed me.
  3. I promised that this tightening cycle would be like no other because of the enormous size of the QE money balls in Japan, Europe, and America. The tightening action is moving the money balls out of the deflationary government bonds asset class and into the inflationary fractional reserve banking system.
  4. Powell just raised rates again and is poised to launch another increase in quantitative tightening.  He’s also beginning to change the spread between the Fed funds rate and the excess reserves rate that banks get paid to keep money at the Fed.  Going forward, I expect him to put much more pressure on banks to move money out of the Fed.  This is highly inflationary action.
  5. Please click here now.  Double-click to enlarge.  The US stock market looks like a technical train wreck.
  6. For the stock market, one mainstream money manager just referred to the global tightening cycle in play as akin to a sports team losing their goalie!  
  7. It’s obvious that the stock market is doomed.  Powell appears determined to push through another rate hike in either August or September. Maybe the market staggers sideways or slightly higher until then, but the US stock market train is headed towards a global central bank tightening cliff.  It’s going to go right over that cliff and implode, and tariffs are just icing on the cake.
  8. Please click here now.  Double-click to enlarge this interesting T-bond chart.  Stock market money managers usually buy bonds when they panic, and that’s starting to happen now.
  9. This time they are jumping from the fire to the fry pan.  They believe the Fed will blink and stop hiking.  In contrast, I predict the hiking will be accelerated, with a possible half point hike coming in December as inflation continues to rise.
  10. Because of the widening spread between the Fed funds and excess reserve rates, banks will become more aggressive about moving money out of the Fed.  Ultimately, the money managers will panic-sell bonds and buy gold as they see the stock market melting but inflation getting even stronger.
  11. The bottom line is that Powell’s tightening actions to date have not done enough damage to the bond market to kill it as a safe haven for stock market investors.  That will change fairly soon.
  12. Please click here now.  Double-click to enlarge this GDX chart.  Gold stocks continue to meander sideways in my important $23 to $21 accumulation zone.
  13. Many individual miners have started to trade independently of the ETFs and mine stock indexes, and are staging fabulous rallies.  There are always some outperformers in a sideways market, but the large number of them staging these rallies now is quite impressive.
  14. Note the strong volume bar that occurred on Friday.  Gold stocks are in very strong hands now at a time where some possible “game changing” news is coming for bullion.
  15. On that note, please click here now.  India and China are the biggest markets for physical gold, and price discovery on the COMEX and LBMA ultimately relates to changes in demand there versus mine and scrap supply.
  16. When Narendra Modi got elected as India’s prime minister, he put Arun Jaitley in charge of the finance department.  This was disappointing, because Jaitley’s actions and words have been very negative for gold, and the finance ministry has the power to set the gold import duty.
  17. Jaitley has a long history of health issues, and he just had a kidney transplant.  Piyush Goyal has been appointed as “interim” finance minister. He’s pro-gold and fought against the import duty.  There are rumours that his appointment may become permanent.
  18. If that happens, I think gold investors around the world are going to watch the import duty tapered to zero just like American QE was tapered to zero.
  19. Please click here now.  Double-click to enlarge this spectacular long-term gold price chart.  The Indian finance ministry is the main driver of the global gold price doldrums that have been in play for the past seven years.
  20. It’s unknown if Goyal takes charge of the finance ministry on a permanent basis, but if he does, that is likely the catalyst that launches a massive and sustained rise in Indian gold demand.  That demand will be enough to drive gold in an Elliott C wave advance to at least $1650, and probably $2000!
  21. If “Royal Goyal” has charge of India’s finance ministry at the same time as Powell is joined by the ECB and then Japan in a giant effort to roll the QE money balls into the fractional reserve banking system, gold will likely surge to $3000 – $5000 very quickly.
  22. When gold began its “eight-bagger” advance from the $250 area in 1999, few people anticipated the upside potential.  The highest price targets coming from mainstream analysts were in the $400 area.  Most of them thought gold was going to stay in the doldrums for decades, while the stock market would never decline in a material way.  They had no clue what was coming!
  23. Please click here now. Double-click to enlarge. I believe the potential for another eight-bagger is much stronger now than it was in 1998.  This quarterly bar chart shows gold making an epic bull wedge breakout.
  24. All that’s technically in play right now is a pullback from the breakout zone and that’s very healthy.  Note the rise in volume from 1998-2002. That came ahead of the runaway action in the price.  The exact same thing is happening now.  Gold and silver investors should have absolute confidence in their holdings… and look to eagerly accumulate more!

Thanks and Cheers,

Stewart Thomson

Graceland Updates

https://gracelandjuniors.com

Email:

stewart@gracelandupdates.com

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. The main drivers of global stock, bond, and gold markets are interest rates and demographics.  Unfortunately, most investors focus on items that get a lot of media attention but are almost irrelevant to price discovery in the markets.
  2. Please click here now. I’ve predicted that there will be no trade war, but governments around the world will roll out a modest amount of mildly inflationary tariff taxes.
  3. Clearly, top economists at both Fitch and Goldman have the same outlook that I do.  Moderate tariffs are getting a lot of flashy media coverage, but what really matters to the major markets is Fed policy, US citizen demographics, and Chindian citizen demographics.
  4. Some tax cuts have now been passed in America.  Yellen and most democrats call them “ill-timed stimulus”.  Most republicans appear to believe the tax cuts are well-timed stimulus that combined with deregulation could create tremendous GDP growth, using ridiculous demographics to do it.  Throughout world history, this type of thinking has been typical in the late stages of ruling empires.
  5. Libertarians believe there is no bad time to do a tax cut because tax cuts are about the restoration of citizen freedom and morality rather than economic stimulus.  They believe these tax cuts must be accelerated until the income and capital gains taxes are eliminated regardless of the consequences for the debt-obsessed government. 
  6. The libertarians believe the US government resembles a mafia extortionist operation more than a government.  Are they correct?
  7. Well, probably.  I don’t think most republicans or democrats really want to face the reality of what governments around the world have become, and nor do the governments themselves.
  8. Regardless, with the Fed engaging in significant QT and a rate hiking cycle, the ability of the US government to finance itself is about to come under stress that is unprecedented in America’s history.  Sanctions and tariffs are irrelevant to this stress.  QT, rate hikes, and demographics are of epic relevance.
  9. Please click here now. Double-click to enlarge.  I don’t think it’s wise to try to pick an exact top in the US bull market for stocks, but it’s very wise to understand that QT and rate hikes are creating the “beginning of the end” for this market.
  10. In 1980 the Fed began a 35-year rate cutting cycle with the baby boomers entering their prime working and investing years.  Tax cuts from Reagan increased the government debt, but the demographics of the baby boomers and the Fed’s massive rate cuts made the government’s debt problem a minor issue.
  11. Today, the Fed is engaging in a tightening cycle and the baby boomers are pensioners.  The millennials don’t trust banks or government. Elderly savers are destroyed and generally soaked in debt.  Tax cuts are morally correct, but they are turning the US government’s debt problem into an epic nightmare.  Trump has more cuts planned, and rightly so.  These cuts are going to ramp up the government’s debt nightmare, and from a libertarian gold enthusiast’s “end the extortionist insanity” perspective, that’s fantastic.
  12. The bottom line: More stimulus is coming from the US government, and more tightening is coming from the Fed.  This is what is known as “gold market nirvana”.  Trump will soon announce infrastructure spending stimulus, and do so as Powell announces more rate hikes and accelerated QT.  This will crush the bond market and unleash the inflation genie from her bottle.
  13. Western stock and bond markets are going to enter a period of massive volatility and then collapse.  Gold is going to continue to rise steadily and then go ballistic as that happens.
  14. Millions of Chinese gold market gamblers that bought physical bullion at $1450 – $1320 in 2013 are being “made whole” as gold moves steadily higher now.  The world’s largest gold gambler class is poised to begin a new phase of aggressive buying once gold trades at $1450.
  15. India’s “Gold Board” will soon be launched, which will likely have the power to decide the import duty.  In Dubai, talks are underway between gold jewellers and the government to streamline the VAT.
  16. On the supply front, mine supply is poised to decline overall and in most countries except Canada and Russia.  I’ve described the emergence of a “gold bull era” based on events in both the West and the East, and any gold market investor reading even a portion of what I’ve written here today can only come to the same conclusion.
  17. Please click here now. Double-click to enlarge this key daily gold chart.  Gold is poised in what I call a “golden coil” formation, and there’s a miniature bull wedge in play as well.  It’s unknown whether gold drifts down one more time within the coil or just blasts above $1370 now.  What is known is that the upside blast is coming.  Fed tightening, Chindian buying, and US government stimulus are going to make it happen.
  18. Please click here now. Double-click to enlarge this T-bond chart.  The next big theme that US institutional money managers are going to face is the end of the bull market in bonds.
  19. For 35 years, investors’ stock market meltdowns have been buffered by bond market rallies.  In early 2018, that changed.  The bond market barely rallied on stock market crash days, and fell on some of them.  It has not reached the panic stage for money managers, but they are getting concerned.
  20. Not since Paul Volker ruled the Fed has a Fed chair been as forceful about tightening as Powell.  Last week, with the Dow down 700 points, he gave a speech to the media stating that more rate hikes were coming.  A lot of money managers think he is bluffing.  They don’t believe he will hike relentlessly or keep ramping up QT if the stock market falls.
  21. These money managers are greatly mistaken, and as more rate hikes, QT, and fiscal stimulus turn their supposed safe haven of T-bonds into flaming rice paper, they will turn to gold.  It’s already starting.  GLD-NYSE has seen tonnage rise to 859 tons during the latest stock market gyrations.  The bond bull market is dead, and fiscal stimulus and Fed tightening are going to pressure the dollar as well as the stock and bond markets, leaving gold as the only safe haven for investors.
  22. Please click here now.  One of my largest gold stock holdings is of course Chow Tai Fook, China’s biggest gold jewellery retailer.  I cover the action at my www.gracelandjuniors.com website.  This chart tells the story of Chindian demand for gold.  Chinese gamblers don’t gamble much on paper gold markets.  They buy gold bullion and jewellery to get in on the upside price action.
  23. This stock is a key leading indicator for Western gold miners.  On that note, please click here now. Double-click to enlarge this interesting GDX chart.  I’ve coined the term “Safehavenization of Gold Stocks” to describe the rise of institutional money manager interest in gold stocks as an actual safe haven from the coming implosion of US government, debt, and stock markets.
  24. The volume pattern is positive for GDX and most gold stocks, but what’s most interesting is that a price rally of just a few dollars a share represents almost a ten percent gain.  For institutional money managers facing the hurricane winds created by fiscal stimulus and Fed tightening in stock and bond markets, gold stocks are becoming an ever-more enticing opportunity for both shelter and gain.  Gold investors around the world should be totally comfortable buying various gold stocks on all two and three-day pullbacks.  Sell a portion of what is bought on rallies, and hold the rest to enjoy the biggest rewards offered in the glory of the gold bull era!

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?

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