A 40year commodities, inflation, and interest rate super cycle began in 2020… and it likely continues until 2060.
As the legendary fundamentalist Jeff Currie notes, this cycle is all about a major mismatch of demand and supply.
The wars in Ukraine and Iran are medium-term drivers of prices, but the long-term cycle is driven mainly by a combination of outrageous global government debt and the rise from poverty of billions of Asian and African citizens.
Some nations are more affected than others by the US government’s latest debt-funded war (Iran) that, as expected, has gone awry.
This is causing some central banks, and gold-oriented citizens in affected nations to sell gold. Almost everything in the world is priced in fiat currency, so “rainy day” gold savings are sold… which is better than taking on more debt.
What would be best is for the world to end its childish obsession with fiat and to re-theme the global financial system around gold money savings rather than fiat money debt.
In time, Hormuz will open again, and probably with perma-tolls. Ironically, the price of oil is set to rise much more after the war ends than it has to date. Citizens of the world need to be prepared to deal with $200 and even $300 oil.
Mainstream pundits have wisely switched from promising themselves that lots of rate cuts are imminent (and even QE “candy bars”) to facing at least some super cycle reality; rates have to rise and…
Unknown to the pundits, they probably need to keep rising for a long time, to counter the effects of both the commodity super cycle and government addiction to debt.
Note the blue arrows on the left side of the chart; in the last 40year super cycle, there were four periods where rates dipped.
It will be similar in this cycle; rates will generally rise but there will be periods where they fall. The first of those periods is likely nearing its end. A closer look at it, the explosive US rates chart. In late 2023, rates dipped from the 5% zone to about 3.5%. The price action took the form of a bullish triangle/pennant.
An upside breakout appears imminent, and it should be followed by a rally to 6%-7%.
? The weekly chart. A potential flag of size is likely in play, but rather than trying to predict what comes next, investors should be far more focused on key zones to buy.
In that regard, $4100, $3900, and $3500 are zones beneath the current price where eager gold money investors can take bold buy-side action.
The Stochastics oscillator (14,5,5 series) also suggests there could be a bit of additional price softness; the latest buy signal failed, and it came prematurely from a point above the oversold line of 20.
A look at the daily chart. On this chart, I highlight all the buy zones… both above the current price and below it.
The most reliable key to investor success (especially for mining stock players) is to buy these buy zones for gold on a price drop into them rather than getting excited about “breakouts” and buying then.
The current zone of $4500 is a buy zone, but only for gamblers. That’s because the price sale currently in play is small.
As stagflation intensifies, there could be additional selling from central banks in nations experiencing significant financial pain from the closure of Hormuz. That’s in sync with the current price consolidation on the charts and the “wishy washy” action of the oscillators.
The long-term versus gold chart. I urged gold stock enthusiasts to brace for a significant pause in the upside action around the neckline of this gargantuan inverse H&S pattern… and that pause is in play now.
A bit of investor patience, and nothing else, is all that is required. The breakout and the ensuing rally will be spectacular and…
It could happen soon! In a nutshell: There’s a big difference between selling government bonds because growth is strong and selling them because the government’s ability to make good on what it owes is in question.
There’s a breaking point where money managers no longer sell gold because it pays no interest in the West… and they begin buying gold because they realize global governments are losing the ability to pay what they owe. This breaking point will be accompanied with maniacal buying of miners. What lies ahead is basically the 1970s on steroids but as noted, patience is required and… patience is golden!
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