By Graham Summers, MBA | Chief Market Strategist
That didn’t last long!
The pullback in gold appears to be ending with the precious metal once again catching a bid. This is extremely bullish. Remember, gold ripped from $2,950 to over $3,500 per ounce in the first half of April alone. The fact the precious metal has only corrected down to $3,200 per ounce before catching another bid indicates there is incredible demand from investors.
What’s going on here?
What’s going on is that collectively, the investment world has realized that gold has certain key attributes that make it incredibly attractive in this environment.
For one thing, gold doesn’t have earnings that will be negatively impacted by tariffs. Gold also doesn’t have to hit its quarterly numbers or maintain its annual forecast to stay in Wall Street’s good graces (see what happened to Palantir last night, which is down over 7%).
Gold doesn’t have to worry about the finding new suppliers to avoid tariffs and duties. It doesn’t commit accounting fraud, engage in stupid mergers than offer no shareholder value, nor does it go out of business.
But most importantly, gold is a hedge against inflation. And the financial system is slowly realizing that the only way out of the current economic environment involves central banks printing money.
Both Europe and Japan are on the verge of recession. The U.S. is not far behind, with numerous signals that the consumer who accounts for the bulk of economic growth is finally breaking down (PepsiCo, Chipotle, Southwest Airlines, McDonalds and even Walmart have issued warnings on this).
Bear in mind, these economies are starting to roll over when their governments are already engaged in fiscal madness. Europe is running a fiscal deficit equal to 3% of its GDP. Japan’s is equal to 4% of its GDP. And the U.S. fiscal deficit is equal to 6% of GDP.
As the chart below reveals, this is an emergency level deficit, the kind typically used to cushion a recession. And the U.S. is running it while the economy is still growing! Imagine what will happen when the U.S. economy rolls over and both Uncle Sam and the Fed move to stimulate to cushion the contraction.
This is what gold has figured out: that central banks and governments will soon need to stimulate/ print even more money. And this will unleash another wave of inflation/ currency devaluation.
If you don’t believe me, consider that gold is breaking out against EVERY major world currency: the $USD, the Euro, the Yen and even the Franc.
The writing is on the wall. Gold is going to be a major beneficiary of what’s coming. Smart investors are actively taking steps now to profit from this.
We detail this situation, what’s to come, and THREE investments to profit from it in a Special Investment Report titled How to Profit a Inflation.
Normally this report is only available to our paying clients, but in light of what’s happening in the markets today, we are making just 99 copies available to the general public.
To pick up one of the remaining copies…
Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
