"Gold to $900 - macro bearish divergence
Are the 2020’s going to be the worst decade for buying Gold? I believe so.
The argument here is part technical analysis part fundamental, followed by challenging popular arguments.
First the TA. On the above 6-month chart:
1) Price action has printed the first ‘bearish engulfing’ candle since 1953. That’s quite a statement.
2) Price action printed a higher high at resistance at the same time a lower high was printed in on RSI and Stochastic RSI . Bearish divergence.
3) Look left. Throughout history Gold price action tests the 35 year moving average (red line). It has been 20 years and price action has only gone one direction. We’re coming due for a test/correction by 2030.
Now the fundamentals - (sources below)
1) The premium paid for gold at this time is massive. It only costs $750 to extract from the ground at current wage levels yet folks are currently paying $1800+.
2) To service this premium more mining companies are springing up, gold production is increasing at a crazy rate. Production has almost increased 25% in the last 15 years.
Popular arguments:
1) “The FED is printing to infinity and beyond, the value of gold must go up!”
Back to 1990-95 period dollar supply was stable, measurement taken from here at roughly the same time Gold tested the 35 year moving average. M2 money supply to present day has increased 5.7 fold. Gold price against the dollar has increased 7 fold.
2) “Inflation is coming! Prices are going to go through the roof”
I’m a deflationist. I don’t believe for a moment we’re going to see more inflation . Why?
a) we’ve already seen it. The last 10-15 years inflation has been out of control.
b) Credit. Inflation only comes with easy credit. A monster credit crunch is coming. 2008 was just the starter. When that happens people sell anything to get their hands on cash, property, stocks, gold , the cat next-door. Cash will be king.
c) Rising interest rates. No matter what, rates will rise again. Every asset that was inflated with easy credit is in for a shock. Property,stocks, metals. Astonishingly people are using debt to buy gold - that's a whole other story in of itself.
What do you think? Is gold price in for a crunch or will prices rocket as the majority of people seem to believe?
Polite disagreement always welcomed!"
https://www.tradingview.com/chart/XA...sh-divergence/
Are the 2020’s going to be the worst decade for buying Gold? I believe so.
The argument here is part technical analysis part fundamental, followed by challenging popular arguments.
First the TA. On the above 6-month chart:
1) Price action has printed the first ‘bearish engulfing’ candle since 1953. That’s quite a statement.
2) Price action printed a higher high at resistance at the same time a lower high was printed in on RSI and Stochastic RSI . Bearish divergence.
3) Look left. Throughout history Gold price action tests the 35 year moving average (red line). It has been 20 years and price action has only gone one direction. We’re coming due for a test/correction by 2030.
Now the fundamentals - (sources below)
1) The premium paid for gold at this time is massive. It only costs $750 to extract from the ground at current wage levels yet folks are currently paying $1800+.
2) To service this premium more mining companies are springing up, gold production is increasing at a crazy rate. Production has almost increased 25% in the last 15 years.
Popular arguments:
1) “The FED is printing to infinity and beyond, the value of gold must go up!”
Back to 1990-95 period dollar supply was stable, measurement taken from here at roughly the same time Gold tested the 35 year moving average. M2 money supply to present day has increased 5.7 fold. Gold price against the dollar has increased 7 fold.
2) “Inflation is coming! Prices are going to go through the roof”
I’m a deflationist. I don’t believe for a moment we’re going to see more inflation . Why?
a) we’ve already seen it. The last 10-15 years inflation has been out of control.
b) Credit. Inflation only comes with easy credit. A monster credit crunch is coming. 2008 was just the starter. When that happens people sell anything to get their hands on cash, property, stocks, gold , the cat next-door. Cash will be king.
c) Rising interest rates. No matter what, rates will rise again. Every asset that was inflated with easy credit is in for a shock. Property,stocks, metals. Astonishingly people are using debt to buy gold - that's a whole other story in of itself.
What do you think? Is gold price in for a crunch or will prices rocket as the majority of people seem to believe?
Polite disagreement always welcomed!"
https://www.tradingview.com/chart/XA...sh-divergence/
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