Gold's time finally has come! Last month, we were able to break above the resistance line around the 1380 price area. This resistance has never failed to hold the price back since 2013, a total of 6 years (!).
Now, I am not ignorant of the fact that this could be a huge fake-out and we'll close this month's candle back below the resistance line and keep moving within the ascending triangle formation shown on the chart.
However, given the current geopolitical activities - the trade war between the US and China, general uncertainty in the global markets, and the federal reserve cutting interest rates again by either 25 or 50 basis points - my view is optimistic/bullish and a drawback below the 1380 price range seems improbable. Gold has always served and will continue to serve as THE most reliable store of value that we know of and lower interest rates incentivises investors to sell their dollars and move the money towards alternative stores of value, usually gold.
I wanted to specifically point out the monetary policy fiasco we experience at the moment around the world. ZIRP, negative yielding bonds, and a confused federal reserve are bad news for the world, but good news for gold, which in my eyes has been undervalued for a long time now.
The attempt by the fed to normalise the balance sheet with QT and bring back interest rates to somewhat economic respectable levels has failed dramatically, as we saw last December when the Fed hiked rates to only 2.5% and we immediately afterwards recorded the worst December in financial markets history. No surprise that the Fed made a 180 degree turn and is now looking to reduce interest rates, stop their balance sheet reduction, and probably go back to QE4, as noted by chairman Powell, all to preserve this ridiculously massive debt based asset bubble from popping.
My sense is that the markets slowly start figuring out that QE has never been a temporary measure, that the Fed can never bring back interest rates to normal levels, and that the next session of Quantitative Easing will not only affect asset prices but will start to cause huge inflation in the consumer markets. Again, while this is all bad news for the American economy and the global markets, this is good news for gold. Once the Fed starts printing money again, and trust me they will, investors will lose their confidence in the American economy, the dollar will lose even more purchasing power and many people will switch back to REAL money: GOLD.
Besides these non-technical facts, all major TA indicators switched to bullish within the last months:
- we gained momentum
- the RSI is back in bullish territory since 2012!
- we are above the ichimuko cloud on the monthly chart
- breakout of the ascending triangle formation
- major support by the MAs
Now, I am not ignorant of the fact that this could be a huge fake-out and we'll close this month's candle back below the resistance line and keep moving within the ascending triangle formation shown on the chart.
However, given the current geopolitical activities - the trade war between the US and China, general uncertainty in the global markets, and the federal reserve cutting interest rates again by either 25 or 50 basis points - my view is optimistic/bullish and a drawback below the 1380 price range seems improbable. Gold has always served and will continue to serve as THE most reliable store of value that we know of and lower interest rates incentivises investors to sell their dollars and move the money towards alternative stores of value, usually gold.
I wanted to specifically point out the monetary policy fiasco we experience at the moment around the world. ZIRP, negative yielding bonds, and a confused federal reserve are bad news for the world, but good news for gold, which in my eyes has been undervalued for a long time now.
The attempt by the fed to normalise the balance sheet with QT and bring back interest rates to somewhat economic respectable levels has failed dramatically, as we saw last December when the Fed hiked rates to only 2.5% and we immediately afterwards recorded the worst December in financial markets history. No surprise that the Fed made a 180 degree turn and is now looking to reduce interest rates, stop their balance sheet reduction, and probably go back to QE4, as noted by chairman Powell, all to preserve this ridiculously massive debt based asset bubble from popping.
My sense is that the markets slowly start figuring out that QE has never been a temporary measure, that the Fed can never bring back interest rates to normal levels, and that the next session of Quantitative Easing will not only affect asset prices but will start to cause huge inflation in the consumer markets. Again, while this is all bad news for the American economy and the global markets, this is good news for gold. Once the Fed starts printing money again, and trust me they will, investors will lose their confidence in the American economy, the dollar will lose even more purchasing power and many people will switch back to REAL money: GOLD.
Besides these non-technical facts, all major TA indicators switched to bullish within the last months:
- we gained momentum
- the RSI is back in bullish territory since 2012!
- we are above the ichimuko cloud on the monthly chart
- breakout of the ascending triangle formation
- major support by the MAs
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.