1. With the ratio charts of most senior miners versus gold bullion looking droopy at best, I will suggest that inflation is needed to give these stocks some “mojo”.
2. Will they get it?
3. For some quality insight into the matter, please click here now. Hedge fund manager Paul Singer thinks significant inflation could happen, and sooner than most investors expect.
4. Please click here now. Double-click to enlarge this weekly T-bond chart. From March to late July, there was a disconnect between bond yields and gold; yields rose and gold soared.
5. That happened in a much bigger way in the 1970s and the big question is of course… can it happen again?
6. Investors need the patience to wait for a sustained move higher in the consumer price index (CPI). Most people in the world know that “boots on the ground” inflation is much higher than the CPI indicates.
7. Rent, government services, taxes, and fees move relentlessly higher, but the CPI just sits there, year after year!
8. Unfortunately, the big unleveraged institutional money managers won’t take “here to stay” positions of size in the miners until they see the CPI showing a strong uptrend.
9. The good news for the miners: I’m predicting that the ascension of Janet Yellen to the US Treasury throne will be a game changer for inflation as measured by the CPI.
10. As Fed chair, Janet added momentum to the stock, bond, and real estate market inflation that was created by Ben Bernanke’s ludicrous QE program.
11. That program deflated Main Street’s purchasing power while enriching the government and Wall Street.
12. The Fed clearly likes printing money to create financial markets inflation for the richest people in America, but as Treasury Secretary, Janet is more likely to direct enormous amounts of printed and borrowed money at Main Street.
13. Please click here now. Double-click to enlarge what is arguably the most important gold chart in the world. Investors really need to stay focused on two items; the fundamentals that can create Main Street inflation and this weekly gold chart.
14. The most important support and resistance zones are highlighted here, and those zones are where investors need to take action. The amount of action taken should relate to the fundamentals for inflation that are in play.
15. I suggest buying the $1767 area with a stoploss.
16. I already urged investors to buy the $1788 area without a stoploss, sell some into $1966, and hold some… for the rest of time!
17. Now, it’s unknown whether gold will make a base and rally, or possibly move under $1767 and find support near the low around $1671. Investors don’t need to know which scenario is next. They just need to prepare act with professionalism in either case.
18. Support created by lows offers stoploss enthusiasts great potential reward with minimal risk.
19. For a short-term view of the action, please click here now. Double-click to enlarge this important daily chart of the dollar versus gold. Note the dotted blue uptrend line. That’s a line of support for the dollar.
20. A move to $1880 would be great news for gold bugs and probably see a move to $1966 and then $2089, but without a “pop” in the CPI index, a bigger move towards $3000 is unlikely to be in the cards for now.
21. Click to enlarge this “ETF of champions” chart. From my initial buy zone (created by the arrival of gold at $1450 in March 2020), SILJ has been one of the world’s great investments, and some of the component stocks look even better!
22. The arrival of gold at round number $2000 created the “book partial profits” sell signal, and the consolidation has taken the shape of a symmetrical triangle.
23. A breakout has occurred and the pullback to the triangle apex offers new investors a chance to join the inflation-oriented silver stock party.
24. The current price is in the $14 area, which is a sweet spot to board the silver mining stock train… before it leaves the station loaded with rising CPI index fuel!