Submitted by Stewart Thomson:
- Oil prices are on the move again, and they are potentially set to take out the all-time highs.
Is this rally in oil as negative for gold as Western mainstream media claims?
- For some technical insight into this matter:
On this US rates chart, there’s a significant inverse H&S pattern in play.
- The target of the triangle is about 6%… and the H&S target is arguably 8%-10%!
- Having said that, there’s no question that a quarter point rate hike could see gold dip to $4200 or the $3941 area lows.
Numerous rate hikes could push gold even lower against US fiat, perhaps to $3700 or even $3500 but… - Rate hikes won’t end the oil shortage and a move to just 6% would add substantial pressure to the US government’s ability to finance itself.
- A move to 8%-10% in the 1970s did not create a crisis for the government because its debt was so low compared to current levels.
- Today, interest rates in the 8%-10% range would essentially bankrupt the debt-obsessed government, destroy the overvalued stock market, bring home prices back to Earth, and probably send gold to $10,000, $15,000 or higher.
- Gold would surge because confidence in the fiat dollar would be destroyed.
- Double-click to enlarge this Shiller/CAPE ratio chart for the SP500.
Since 2008, the government and the central bank have been interfering with free market forces.
- That interference has led to the outrageous overvaluation that’s in play now for the US stock market.
A surge in oil to my $200 and $300 target zones (even without rate hikes) would sound a death knell for both GDP growth and the stock market. - AI has helped copper become the “new oil” and the inverse H&S pattern targets the $8-$10 zone.
Ultimately, I see copper rising to $50 as the US 40year inflation cycle proceeds, with occasional “blow off” moves that could see the price reach $100/pound.
- Double-click to enlarge this sugar ETF chart (CANE).
Mainstream media is ignoring the fact that the rise in key commodities is occurring while interest rates rise, which is exactly what happened in the 1970s.
- Double-click to enlarge this daily chart for gold.
There’s no question that if this week’s PPI and CPI reports run “hot”, mainstream media will talk about a possible rate hike at the upcoming FOMC meet.
- There’s also no question that panicking US futures traders could push gold to $4200 or even $3941 ahead of the meet.
- Double-click to enlarge this weekly buy zones chart for gold. The $4200-$3500 zone likely represents the “rate hiking floor” for gold.
- It’s the zone where numerous rate hikes stop being negative for gold and start being bullish…because of the immense pressure on the debt-obsessed government’s ability to finance itself.
- A daily focus on the big picture is critical for investors as inflation, tariffs, war, a wildly overvalued stock market, government debt horror, and empire transition dominate the investing landscape. I cover this big picture 5-6 times a week in my flagship Galactic Updates newsletter. At $199/year, investors feel the price is too low, but I’m offering a $179/15mths “special offer” that investors can use to get in on the winning action and meticulous analysis. Click this link to get the offer or send me an email and I’ll get you a payment link. Thanks!
- Double-click to enlarge this spectacular long term silver chart. It can be argued that the entire $65-$45 zone is a “gift” for silver bullion accumulators.
- In a nutshell, the threat of rate hikes is mildly negative for the metals, but
actual hikes create a game of chicken between gold and the government: - The bottom line is that there is an interest rate level where US futures market gamblers stop selling gold because it pays no interest.
- They switch to buying because the government’s interest rates are beginning to cause panic selling of its bonds and the fiat dollar.
- Double-click to enlarge this exciting GDX chart.
A dip in the price creates a large inverse H&S pattern, and that makes the chart even more bullish than it already is. In a nutshell:
- The game of $200 oil and rate hiking chicken has begun, and savvy gold bugs around the world have no intention of blinking.
- Can the same be said for a government that is drowning in its own heroin-like addiction to debt? The answer is no, and it’s a big part of my thesis for $15,000 gold and $500 GDX!
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Thanks! Cheers
Stewart Thomson
Galactic Updates
