Why gold is diverging from the rest of the commodity markets

Summary

The speaker discusses the gold market's recent surge, attributing it to fear of government rather than inflation. They predict a mild correction in gold prices due to the dollar's potential rally, but consider it a buying opportunity. Gold is seen as a hedge against government actions, unlike Bitcoin, which could be rendered worthless without electricity. The speaker suggests that physical gold and real estate are good investments for protection against future authoritarianism. They also touch on mining stocks, which are more volatile and may see a more significant correction.

Takeaways

• 📉 The speaker believes there will be a correction in the gold market in the coming weeks, but it will be mild.
• 🚀 The current bull market in gold is driven by fear of government rather than inflation, unlike the 2000s when inflation was the main driver.
• 📈 Gold has broken out and is trading sideways, diverging from the general commodity market which is correcting and moving towards a three-year cycle low.
• 💵 The speaker suggests that the dollar is due for an intermediate rally, which could last multiple weeks and put pressure on gold.
• 🏆 Gold is seen as a protection against government, unlike Bitcoin, which could become worthless if the electrical grid is turned off.
• 💰 The speaker advises using any correction in gold as an opportunity to buy more physical gold to protect against future government actions.
• 📉 The speaker anticipates a mild correction in gold, possibly down to $2450 or, in a worst-case scenario, $2300.
• 🏭 Mining stocks have reached resistance and are set for a correction, which might be more severe than the one in gold.
• 💼 The speaker differentiates between mining stocks for trading and physical gold and silver for protection against government.
• ⏳ The speaker warns that authoritarian government is likely to get worse in the future, emphasizing the importance of having assets like gold outside the financial system.

Q & A

Why did the cartel manipulation in the gold market break when gold couldn't go below $2,000?

The speaker suggests that there is a reason behind the failure of the cartel manipulation to push gold prices below $2,000, implying that there is a strong underlying support for gold at that level, possibly due to market forces or investor sentiment.

What caused the recent surge in gold prices?

According to the speaker, the recent surge in gold prices is not driven by inflation but rather by fear of government, indicating a shift in market dynamics compared to previous gold rallies.

Why is gold trading sideways instead of correcting after the surge?

The speaker believes that gold is trading sideways because it is not following the typical market patterns. Instead of a corrective move, gold is consolidating its gains, which could be a sign of strong underlying demand or investor confidence.

What is the potential trigger for a mild correction in gold?

The speaker suggests that a mild correction in gold could be triggered by the dollar reaching a support zone at 100.50 and the subsequent rally in the dollar, which historically has an inverse relationship with gold prices.

How does the speaker view the current state of the dollar and its impact on gold?

The speaker anticipates an intermediate rally in the dollar, which could last for multiple weeks and put pressure on gold. However, they believe that gold will resist this dollar rally to some extent due to its unique market drivers.

What is the speaker's outlook for the dollar in the longer term?

The speaker predicts that after the upcoming multi-week rally, the dollar will break down below its current consolidation, indicating the start of a bear market in the dollar.

Why does the speaker consider gold as a protection against government?

The speaker views gold as a protection against government because it is a tangible asset that retains value regardless of government actions, unlike digital currencies like Bitcoin, which could be rendered worthless in the event of a widespread power outage.

What is the speaker's advice for investors regarding gold during a potential correction?

The speaker advises investors to use any potential correction in gold as an opportunity to buy more physical gold, positioning it as a way to protect against future government actions and to move out of the financial system.

What is the speaker's prediction for the extent of the correction in gold prices?

The speaker predicts that the correction in gold prices will be mild, possibly only reaching $2,450 at most, and doubts it will go as low as $2,300.

How does the speaker differentiate between mining stocks and physical gold?

The speaker differentiates mining stocks and physical gold by suggesting that mining stocks are more volatile and suitable for trading, while physical gold is a better asset for protection against government actions.

What is the speaker's view on the current resistance level for mining stocks?

The speaker notes that mining stocks have reached a resistance level at $40 and are set up for a correction, which could be more severe than the one in gold due to their higher volatility.