Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Larry Kudlow vs. Vladimir Putin on Gold

Commodities / Gold and Silver 2018 Mar 21, 2018 - 09:37 AM GMT

By: Jason_Hamlin

Commodities

The gold price is up just 1% year to date in 2018 and has advanced 5.5% from the December 2017 low. There are some bullish signs from the chart, including a number of higher highs and higher lows following the late 2015 bottom at $1,045. But it certainly hasn’t been the powerful breakout the gold bugs have been hoping to see.


The late 2017 spike above the resistance trend line was also bullish, but the price has been unable to continue higher since then. We need to see gold climb through the 2018/2017 high at $1,365, the 2016 high at $1,377 and the 2015 high at $1,392 in order to turn bullish in the short term. This triple top is significant resistance for gold and the declining nature of the tops paints a bearish picture.

So, it has been a waiting game for gold investors that prefer to harken back to the early 2000’s, when gold was in a powerful and fairly consistent uptrend from $250 to nearly $2,000. In the six and half years since that high, the gold price has corrected and consolidated, mostly in the $1,125 to $1,375 range. Long consolidations can be bullish, building a base from which the next advance is launched. And if gold can break through the resistance levels mentioned and climb decisively above $1,400, I think that we will see a very rapid race back towards the $2,000 level.

The gold price has a strong inverse relationship with the U.S. dollar. During the massive gold bull market from 2002 to 2012, the dollar index corrected from around 120 to 72. The USD index bounced during the financial crisis of 2008/2009, as investors sold multiple assets classes and initially sought the safety of the dollar.

The dollar then rebounded from 72 back above 100, causing the gold price to plummet. But it ran into resistance around the 100 level and has dropped significantly over the past 15 months to 88. The USD index fell through key support around 92, which was prior resistance. Dollar bulls would ideally like to see these prior resistance levels turn into support.  But the 92 level failed and then the 89 level also failed briefly. The dollar is now at a critical inflection point, resting at the 2009/2010 resistance level at 89. This is also trend-line support as shown in the chart, making this support even more critical. The next major bull market in gold will be ignited by the USD falling below the current support level, which could happen at any moment.

President Donald Trump named Larry Kudlow, the conservative media analyst who served as his informal economic adviser during the 2016 campaign, as the next head of the White House National Economic Council. The Trump administration has been mostly bearish for the dollar, stating that a weaker dollar is good for trade.

But Trump’s latest appointee, Larry Kudlow, has another view on the dollar and gold. In an interview with CNBC Wednesday, Kudlow said that he supports a strong U.S. dollar policy adding:
“I would buy King Dollar and I would sell gold. I’m not saying the dollar has to go up 30%, I’m just saying let the rest of the world know that we are going to keep the world’s international reserve currency steady.” That creates confidence at home.”
Of course, this could just be a deliberate attempt to talk up the dollar and provide the image of stability, while implementing policies that actually allow it to drop. And Kudlow doesn’t have the best track record when it comes to predicting the future. On the cusp of the 2008 financial crisis, he was among the mainstream pundits saying the whole subprime mortgage thing was “no big deal.”
“Too much is being made of both the sub-prime credit problem and the housing downturn. It’s just not that big a deal. So all this talk of recession seems greatly exaggerated.”
All eyes will now be on the Federal Reserve meeting Wednesday, where FED chair Powell is widely expected to announce another rate hike. They are also likely to highlight strong economic data, which could be supportive of the dollar. Any hint that they may raise interest rates four times this year, rather than three, would certainly send the dollar higher and hurt the gold price.

On the other side of trade is Russian President Vladimir Putin, who just won re-election in his country this week.Russia added 800,000 ounces of gold (24.88 tons) to reserves in February. They added a record 224 tons of gold to reserves in 2017 and over 600 tons since June of 2015. Russian gold reserves at $806 billion are the fifth largest in the world and constitute 17.76% of overall Russian reserves. Meanwhile, Russia has been selling U.S. debt, with their holdings of U.S. Treasuries falling below $100 billion in January of this year.

Chart source: smaulgld.com

So, would you be better off following the advice of Larry Kudlow and selling gold or following the actions of Vladimir Putin and buying more during this dip?

Kudlow worked for Bear Stearns, generated income from financial institutions that advertised on his show and has always aspired to political power. It is therefore not surprising that he would have a hatred of gold, as it is an asset class that his Wall Street buddies can’t make much money from. It is an asset class that has no third-party risk and continually highlights the flawed nature of the dollar and the entire fractional reserve fiat monetary system.

He is a also a self-described “Reagan supply-sider”, but has no formal economics qualifications. A T.V. star with no economic qualifications seems like a good fit for the Trump administration, but probably not in the best interests of the American people. I guess only time will tell.

Whatever you think of Putin’s policies, he is one of the most powerful men in the world and is also believed to be the wealthiest man in the world. According to Fortune, he has more money than Jeff Bezos and Bill Gates combined, at around $200 billion. Meanwhile, Kudlow is a TV personality with no formal economic credentials. He has been wrong about nearly everything on the economic front over the past decade, missing the biggest collapse since the Great Depression.

Politics aside, I believe the smart money is accumulating gold, not U.S. dollars. And if the dollar slides lower in the months ahead and gold is able to finally take out $1,400, it will soon be very apparent which was the better investment.

To get our monthly investment newsletter, model portfolio and trade alerts, become a premium member. You get can started for just $195.

By Jason Hamlin

http://www.goldstockbull.com/

Jason Hamlin is the founder of Gold Stock Bull and publishes a monthly contrarian newsletter that contains in-depth research into the markets with a focus on finding undervalued gold and silver mining companies. The Premium Membership includes the newsletter, real-time access to the model portfolio and email trade alerts whenever Jason is buying or selling. Click here for instant access!

Copyright © 2018 Gold Stock Bull - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules