Catalysts And Risks

In a market as complex as gold, there are several moving parts, and if you want to be less surprised about big moves for the metal – both on the way up and on the way down – it’s imperative that you look not just at one of them, but at all of them simultaneously.

One only has to sit there and ask himself, “If inflationary expectations are now at 30-year highs and if this unprecedented period of clogged ports doesn’t send gold to the moon, then what will?”

The answer is that up until a week ago, Wall Street was under the impression that inflation was caused by supply chain constraints, but now they realize that inflation pressures from said cause, while still transitory, will last longer than previously presumed. Secondly, these issues are actually changing global commerce dynamics in such a way that because they’re taking so long to solve, the alternatives now in the making are inherently more inflationary.

Bottom line, what before Covid-19 cost X amount of dollars and was analyzed as optimal, but got temporarily more expensive in 2021, has resulted in zigzags that permanently cost $1.2x the original amount.

Many things aren’t going to be conducted in the way they were before.

For years on the basketball court, I used to make a particular move that I thought was the best one in my playbook, but because of a slight injury, I had to stop using it temporarily. In the meantime, I had to develop something else and by the time my injury healed, I no longer thought my old move was my best.

This is precisely the same thing.

Now that Wall Street and Main Street both agree inflation is here and will remain elevated for years to come, gold’s price becomes a derivative of how aggressive central banks will get with rate hikes.

Wealth Research Group believes that the market is currently pricing a pretty aggressive hike period. That’s weighing down on gold, but if some of the ports start handling the loads and truckers show back up to work and help transport the goods, then inflationary pressures will slowly wane and that’s great for gold.

A second matter (with the first being this issue of inflationary expectations, their permanency and the FED’s anticipated response to them) is how much funds flow into cryptocurrencies that were competing with precious metals.

In other words, up until 2016, gold and silver were the go-to inflation hedges. Today, they have perceived alternatives, and whether you agree with this or not, this is in motion and discounting it or turning our backs to it won’t make it disappear.

People are going to buy cryptocurrencies; it’s a fact: As the entire cryptocurrency market cap topped $2.5 trillion – a new record high!

I cannot believe that when Wealth Research Group issued its debt bullish alert on Bitcoin, its price was $500/coin and Ethereum’s was $12/token!

Courtesy: CoinMarketCap.com

There are three additional catalysts that play into this: stock market performance, dollar performance and emerging markets.

We will cover all three of them in the next publications.

Best Regards,

Lior Gantz
President, WealthResearchGroup.com