Now that the Fed has made its decision we can finally see from a shorter term perspective what gold and silver will do. My best guess is they may have a little upside left in them but the money was made shorting gold and silver on Friday. I think the real money made from a trading perspective is to expect lower lows in the metals that I have been calling for quite some time. Let the dollar be your guide.
The dollar took a hit after the Fed meeting and it gave the clear signal to get long a trade in gold. But my phone wasn’t ringing off the hook because of this news and nothing has changed in my predictions of lower lows ahead. As I said in Friday’s Current Thoughts, this is DEFLATION the Fed is fighting. The dollar got back everything it lost on Thursday and is right back where it started from.
Now here is something that logically doesn’t make sense. If the economy is so bad Doug, how come the dollar is stronger? The dollar and Treasuries (see chart below) are stronger because the whole world is contracting (deflation) and there is a rush to the perceived safety of the dollar and treasuries. That perceived safety will at some point switch to the historic proven safety of gold and silver. Since Biblical times gold and silver have been where perceived safety resides. Lets not forget the fact that throughout the history of mankind all fiat currencies have failed. It is not you or I that make the currency fail, but the governments that don’t curtail spending, get into debt, and today have central banks that think they know more than the free market as they implement Quantitative Easing worldwide. This is a recipe for disaster and one must begin preparing for it by owning some gold and silver. Even though I am negative on it short term, this too shall pass. My list of people waiting for my all in article is quite large. So far I have called these markets about as well as anyone, and I don’t use terms like “crashing dollar” and “hyperinflation” to get you to buy gold. I give you the economic data as I see it so you can see what I see. If it makes sense to you as it does me, then you know where we are and what to do.
My next book “Illusions of Wealth” will be a good one because of this same approach. I want you to see what I see. You can sign up to receive notice of its release at https://illusionsofwealth.com
The Fed can’t kick money velocity in gear. Money velocity is at a standstill and the economic data that has come in of late is most all bad.
WHAT DOES THIS ECONOMIC DATA TELL US?
CNBC isn’t asking for “green shoots” but should be. This is a dying economy and could use some healthy data to nourish it back to where the Fed can actually raise rates. How is it those at CNBC cannot see it and they are saying the Fed “chickened out?” What do you see that is bullish around you? Is your local economy doing just fine? One way to look at the local economy is your restaurant activity. Ask the manager of the restaurant the next time you see them how business is doing. I do it all the time. If those who have wealth are hoarding it, they don’t go out and spend it. Let your local community be your guide to the truth. Granted there are some areas that are always busy. For example, San Francisco has much of the wealth from Silicon Valley spending it there locally and in the wine country also where travelers from all over the world go. But this is not mainstream America. Let me know what you see locally at firstname.lastname@example.org I’m curious.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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