All fiat currencies appear to be in a race to the bottom. When a nation’s currency is based on the questionable word of a man, rather than real assets of a nation, at minimum, there is a substantial door that opens up for… abuse. Without the fiat currency of the United States government, reckless spending could not have occurred to the degree that we all have lived through, in horror. CNBC seems to want you to believe that gold is a bubble. I think what is happening is an awakening.
The great gold awakening has begun. The US government keeps spending without pause. Your government’s only solution to the crisis is to have the Federal Reserve monetize more and more debt. These policies could create worldwide inflation. The dollar moved a bit higher on Tuesday, but not due to its own strength. This tiny rally was simply due to another debt crisis, involving the euro! How terrible it is for us all, here in the gold community, to understand that the world’s paper currencies are in a race to zero.
Technically, the dollar cannot muster even a single fuel cell volume indicator day. My gold to US dollar ratio chart above unmasks the dollar as nothing but a dead cat. Included on this chart is a general projection of the bounce in the dollar. I anticipate the US dollar dead cat rally will peak inside of 6 weeks, and it will be followed by a horrible decline that shocks even seasoned institutional money managers.
Here is a glimpse of General Motors in action. One look at the chart says it all; this is yet another situation where the government has intervened to supposedly save us all, and instead destroys the shareholders and bondholders of the company.
The general chart picture says something is seriously wrong. General Motors is running commercials stating they’ve had a good year. Really? A good year for who, exactly? Certainly not for the shareholders! Soon after the first batch of GM shareholders was wiped out, the new ones are already down about 50%.
Investors are taking it on the chin, along with taxpayers. There has been a saying in America, and that is, “As GM Goes, So Goes The Nation”. Unfortunately, I see government overstepping and overspending everywhere I look, whether it is at GM, or in the White House itself. Overspending is at the heart of every debt crisis.
One of the main traits of the gold market for the last few years has been price over-achievement, meaning overshoot of defined technical targets. In this mighty bull market for gold the consistent overshooting of technical targets demonstrates how far price probably has yet to run.
Tactical action. I see the consolidation I called for last week continuing for the next 2-3 weeks and probably into Oct 1st. The current consolidation is a base building process, and it is extremely necessary, technically. The longer gold holds here, the more pressure is building for a big move, to the upside.
One of the greatest traders I know told me the other day, “I would rather be a year early than a minute too late”. Don’t play games with timing, if they are games that could take you substantially out of this bull market.