AI
As far as the gold market is concerned is it any wonder that short positions kept growing the whole way up the inflation speculation cyclical bull? When this inflation rolls over into disinflation you are going to see a lot of people start dumping their gold as they finally figurate out after a dozen rate hikes that the Fed is going to keep on trucking at its measured pace. My bet is 2 more rate hikes and Real Rates break over zero and that will be enough to break gold under $400. Since miners are equities they are easier to dump. You have more stupid traders in stocks than you do commodities.
There is a lot of US currency flowing back into this country right now from Central Banks and US business that profited heavily on their foreign divisions. All that money is rolling back in and being used not to build out infrastructure but to Merge and Acquire other corporations. They are trying to capture market share. This is not an expansion phase method of doing business this is a recessionary tactic. What will most likely happen is that businesses will sit in massive cash positions capitalizing on high rates waiting for those rates to finally flatten out the US economy. Then they will be able to go around and scoop up cheap land, metals, energy, and resources to build out for the next expansion.
This is playing out very much like every other deflationary period. The question is.. in another year or two will the Fed attempt to reflate the economy one more time or will they accept the inevitable and just let deflation through the US.
One point that I should make is that this reflation of the US economy by running up Money Supply and lowering rates to weaken the dollar caused many other currencies to appreciate against it which caused disinflation or in some cases (Japan and Germany) deflation. So let me put it this way. If the Fed does not attempt to reflated the US economy one more time that means that they are going to have to cut back on Money Supply and raise Interest Rates which will revalue the US dollar higher. That will cause a deflation in the US buy inflation in the rest of the world.
That would explain why US corporations are repatriating US dollars back into this country and Fund flows are running out of this country. They are speculating on foreign inflation and US deflation. So to answer your question about how low gold can go? I’m not sure. I’m speculating support at $400 to keep inflation going and a recovery somewhere around the mid $300s if the Fed stops trying to reflate the economy one last time. But with a global inflation going on foreign countries are going to capitalize on cheap commodities and that might be enough to keep gold prices floating.
I need to do some research into where exactly moeny is flowing. I know a good portion is going into Asia. Most likely Japan, China and South Korea.
There is a lot of US currency flowing back into this country right now from Central Banks and US business that profited heavily on their foreign divisions. All that money is rolling back in and being used not to build out infrastructure but to Merge and Acquire other corporations. They are trying to capture market share. This is not an expansion phase method of doing business this is a recessionary tactic. What will most likely happen is that businesses will sit in massive cash positions capitalizing on high rates waiting for those rates to finally flatten out the US economy. Then they will be able to go around and scoop up cheap land, metals, energy, and resources to build out for the next expansion.
This is playing out very much like every other deflationary period. The question is.. in another year or two will the Fed attempt to reflate the economy one more time or will they accept the inevitable and just let deflation through the US.
One point that I should make is that this reflation of the US economy by running up Money Supply and lowering rates to weaken the dollar caused many other currencies to appreciate against it which caused disinflation or in some cases (Japan and Germany) deflation. So let me put it this way. If the Fed does not attempt to reflated the US economy one more time that means that they are going to have to cut back on Money Supply and raise Interest Rates which will revalue the US dollar higher. That will cause a deflation in the US buy inflation in the rest of the world.
That would explain why US corporations are repatriating US dollars back into this country and Fund flows are running out of this country. They are speculating on foreign inflation and US deflation. So to answer your question about how low gold can go? I’m not sure. I’m speculating support at $400 to keep inflation going and a recovery somewhere around the mid $300s if the Fed stops trying to reflate the economy one last time. But with a global inflation going on foreign countries are going to capitalize on cheap commodities and that might be enough to keep gold prices floating.
I need to do some research into where exactly moeny is flowing. I know a good portion is going into Asia. Most likely Japan, China and South Korea.
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