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Is Gold About To Rip Higher?


On Friday we
outlined the strange price action in gold.

As a quick recap:

  1. Because
    we are in a fiat-based monetary regime, gold trades like any other asset.
  • Specifically,
    gold typically tracks “real rates” or the actual cost of money as illustrated
    by the difference between yields on Inflation Treasury Inflation-Protected
    Securities or TIPS and regular Treasuries).
  • Recently
    a massive divergence has developed between real rates and gold.

Regarding #3 in the
list above, the divergence between the two items is quite large, which means
either real rates need to come down, or gold needs to catch up.

I believe we will
see gold begin it next leg up relatively shortly.

Why?

Because real rates
usually lead gold on turns.

Let’s go back to
the COVID-19 meltdown. Note that real rates (top box) bottomed a few days
before gold did (bottom box). Real rates bottomed on March 12th,
while gold bottomed on March 20th.

Chart

Description automatically generated

We saw this same
dynamic play out again more recently in June of 2021 when real rates bottomed
on the 17th of June (red circle) while gold didn’t bottom until the
29th (blue circle).

Chart, waterfall chart

Description automatically generated

This would suggest
that real rates will in fact lead gold higher going forward. Again, real rates
have been soaring while gold is struggling to ignite higher. The below chart
suggests gold will eventually be running to $2,000 per ounce in the coming
months.

Chart

Description automatically generated

What would trigger
a run like this?

Inflation.

I’ll outline how and why in tomorrow’s article until then.

In the meantime, if you’re
concerned about inflation, we have published a Special Investment Report
concerning FIVE secret investments you can use to make inflation pay you as it rips
through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And
it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

This entry was posted in Inflation. Bookmark the permalink.



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