Though I came here primarily to chart cryptocurrencies, recently I wrote a couple of articles about traditional markets as well, and that includes Gold/Silver.
I'd certainly emphasize on the fact that all the markets are interrelated with each other.
At the heart of all the markets is the fiat currency we are using: It can be USD, EUR, JPY, or any other currency your country has, and all the currencies are traded on the Forex market.
Disclaimer: I'm not a certified financial advisor and I urge people to #DYOR before taking any major decisions. Of course I can help you out, but your decisions are final, and I'll expect that I dot get blamed in case the markets go unexpected :)
Yesterday I posted about a correlation between Bitcoin, Gold and the S&P and mentioned that I'll cover an article on Gold.
In case you didn't check that out, I'll request you to check that article once :)
I've been bullish on gold since mid 2018, and I continue to stay bullish, though, sadly, I was not here, on Hive to let you all know.
So here I come up with two scenarios on Gold, and I'll share a pattern, which I'm pretty sure most of the seasoned investors/traders/believers in gold would have already noticed.
But as of now, I'd like to say that, "Its just getting started!" Back in 2019, who knew that a virus will literally shake up the entire scenario of the world economy?
So, lets's have a look at the simple, yet powerful chart below:
Gold/USD, 1W
Link: https://www.tradingview.com/x/pglfdhre/
We can see a nice rounded bottom formation, which looks poised for a massive breakout soon enough.
If it takes out the 2011 High, sky is the limit!
If you had a look at yesterday's article, you can see in the bonus section that I compared Gold price with the Turkish Lira, (which was affected because of Hyperinflation)
So will this breakout actually mean that the USD is failing as a fiat currency finally?
Gold/USD 1D chart:
Link: https://www.tradingview.com/x/DoJ4oeFf/
Are we already seeing a breakout?
I think so...
And for this reason, I'm ruling out the bearish case.
And if you ask me to show something better, have a look at Silver charts.
I'm pretty confident that it has the potential to reach triple digits in USD somewhere in the next 4-5 years. :)
I want to emphasize on a few points even though I may be wrong:
- The valuations in equities make no sense, and most of the seasoned investors are now sceptical to even stay in this market.
-> It makes no sense because:- Have a look at the record number of unemployment claims
- Check out the earnings of most of the companies, and the corresponding stock price.
- Many businesses are facing insolvency, which is further highlighting the disconnect between the markets and reality.
Even though they are not positive, we still see the markets surging. Is it rational? No.
But why is it still surging? Because of the Quantitative Easing, Liquidity injections, Plunge Protection Teams, and all stuff.
But, these all are leaving many investors scared, and if the investors, out of skepticism, and fear, leave the market, they will invest somewhere safer. Whats the next so called "Safe Haven?" That is GOLD.
Talk about the interest rates, and they are steadily going down, in order to boost the already failing economies of most countries.
There's literally a money printing madness going on around the whole world. Once the rate reaches below Zero, you know what will happen :)
Think about countries like Zimbabwe, Venezuela, Lebanon. Many more countries will follow their footsteps very soon. (probably by the next few years).
And why is negative interest rates bad? Because it will further weaken the fiat currency,
So if the people are worried about their country's economy, and the failing fiat currency, What will they do?- go for a "safe haven" asset, like gold/silver, buy tangible assets like land,invest directly in some business, or something else. They want to get rid of their worthless fiat money!
Gold is one of the only financial assets available today that is truly "default proof." It has been there since ancient times, and it is never going to be "worthless". Am I talking about trading?
No! Just like holding Bitcoin on centralized exchanges is a bad idea, unless you are holding precious metals physically, that is also a terrible idea.Gold is the best hedge against economic uncertainty in general and, more specifically, against fiscal deficit, negative-yielding bonds, fiat currency debasement and potential inflation.
Are bond Yields negative now?
Ans: YES. (I'll cover them in future articles)Look around the world, we are already seeing a steady demand of gold ever since the Covid-19 madness started sweeping the world. Across many countries, we are seeing long queues in gold shops,Institutions trying to buy up all the gold they want, and much more.
A Brief illustration of the "Great Credit contraction":
Source: Trace Mayerβs RuntoGold.com
And if you can understand this, you will know, why Gold is never Overvalued. :)
That's not all. It's just the tip of the iceberg :)
Even though the actual correlation between Bitcoin and gold is still unclear, it will be good if Both Bitcoin and gold breaks out of the trading range, with a nice rally.
Have a look at the Bitcoin Move I'm expecting here.
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