The Inflation Mega-trend is Going Hyper! - Gold Price Trend Forecast Analysis Part1 Dear Reader Hope you have all had good August holidays despite the fast materialising Covid-19 second peaks across the world with the United States leading the way by galloping ahead of the rest. Though much of Europe has also taken it's eye off the ball and is fast seeing it's 2nd peaks materialising with the UK managing to fair better largely due to intelligence of it's citizens rather than any actions from our inept government. Though it is still on a rising trend trajectory as new cases continue to climb with the opening of schools and universities set to feed the covid-19 monster going forward. If the pandemic was not bad enough for August the UK has had atrocious weather to the extent where one wondered if it's better to lose the £1000 or so spent on bookings than to venture out in this miserable weather. The primary focus of this analysis is the prospects for the Gold price going into 2021 -
It has definitely been a good few months too be owning Gold and Silver! My immediate reaction to the new all time highs was that there is a lot of inflation coming down the road, a warning to further leverage oneself to the Inflation Mega-trend consequences of rampant government money printing in attempts at containing the economic consequences of the Chinese virus all as a consequences of gross negligence at the handling of the pandemic that I am sure those who have followed my analysis will be fully aware of, our governments have been NEGLIGENT on an EPIC SCALE! Just look to South Korea and Taiwan amongst many others as to how this Pandemic should have been handled and those are examples WITH the benefit of HINDSIGHT! A good 5 weeks ADVANCE warning of what should be done to contain the virus. Instead our moronic governments did NOTHING until it was TOO LATE! The Gold price traded to a new all time high to well beyond the $2000 milestone after having held in a trading range at just below $1800 for most of the post corona crash bounce. (Charts courtesy of stockcharts.com) June saw the gold price further lift it's trading range to $1840 before the fuse was lit and Gold preceded to bust through $1900, and soon above it's previous $1911 all time high, then $2000, finally coming within a whisker of hitting $2100 before turning lower to enter into a trading range of between $2025 and $1875. My last in-depth analysis of the Gold price was over 7 months ago in Mid January 2020 that concluded in forecast expectations for a trading range for the first few months of the year to give way to a strong bull run from Mid April to target a trend towards $1800 by the end of Summer 2020. 21st Jan 2020 - Gold Price Trend Forecast 2020 Gold Price Trend Forecast 2020 Conclusion My forecast conclusion is to expect a weak first 4 months or so of the year in preparations for another assault on resistance at $1630, that will likely see the Gold price break through to new highs for this bull market. Whilst downside looks limited to around $1520. How high could Gold go? I think $1800 / +18% could be pushing thing's a little too far, more likely is to see Gold trading to a high of around $1770 towards the end of Summer 2020. Risk to the Forecast: That I maybe under estimating how high the Gold price could go during 2020. Gold's bull run has been nothing short of spectacular, the most significant signal for which was When Gold price soon recovered to rally beyond it's pre corona crash high of $1788, with the latest signal being the break above $1830 that sparked the current phase of Gold's bull market that achieved my forecast target during June 2020. QE4EVER! Virtually everything that cannot be easily printed is rocketing higher which includes GOLD! It's not hard to see why as a consequence of rampant money printing by governments across the world in the wake of the Coronavirus Pandemic economic depression. For instance the UK alone looks set to print about £550 billion this year most of which will be monetized by the Bank of England so that the government can pay the wages of about 1/3rd of Britains workforce for a good 6 months with likely many more economic stimulus measures to follow over the next 6 months towards fighting the Pandemics dire economic consequences. Whilst the United States has printed $2.2 trillion of stimulus dollars to date with at least another $1.3 trillion to come, that's $3.5 trillion which dwarfs the 2008 financial crisis bailout of $720 billion. Funneling stimulus checks on an epic scale into the back pockets of every working age citizen. Printing money has REAL consequences which is REAL inflation hence what we have been witnessing in markets across the spectrum, and whist I have yet to take a peak at the housing markets, I would not be surprised if the UK housing market at least will start to experience a money printing inflationary boom over the coming year, this despite the fact that people have less disposable income to buy housing, but more on that in a future article. My mantra for a good decade now has been that once QE money printing starts it NEVER STOPs, instead each subsequent crisis will likely result in an acceleration in the degree of money printing and so it has been the case with the current money printing phase. To save time I can just copy and paste what I wrote over a year ago and it will be just as valid today as when last posted. Stock Market Trend Forecast March to September 2019 So why has the the stock market soared, what is that the stock market knows that most commentators and economists fail to comprehend? We'll for one thing there are the dovish signals out of the Fed which go beyond a pause in their interest rate hiking cycle in response to a subdued inflation outlook. Similarly the worlds other major central banks have their own reasons to avoid rate hikes, most notable of which is the Bank of England that has been busy propagandising the prospects of a NO Deal Brexit Armageddon in attempts to scare Westminister into avoiding EXITING the European Union in anything other than an ultra soft BrExit. So on face value the stock market is clearly discounting not just a more accommodative interest rate environment but that QE REALLY IS FOREVER! Once it starts it DOES NOT STOP! As evidenced by the Fed's balance sheet first having exploded from about $800 billion to over $4.5 trillion, all to bailout the banking crime syndicate by inflating asset prices such as housing and stocks so as to generate artificial profits for the central bankers banking brethren. But none of this news, for I have written of it for a good 10 years now that QE will never stop as the worlds central banks will repeatedly expand QE to monetize government debt. So I would not be surprised that WHEN the next crisis or recession materialises, QE will resume, by the end of which the Fed balance sheet will likely have DOUBLED to at least $8 trillion. And it is this which the stock market is DISCOUNTING! Just as has been the case for the duration of this QE driven stocks bull market that clearly paused during 2018 in the wake of mild Fed unwinding of its balance sheet. So forget any lingering Fed propaganda for the continuing unwinding it's balance sheet, the actual rate of of which has slowed to a trickle and thus we are probably near the point when the Fed ceases unwinding it's balance sheet because as I have often voiced that once QE starts it does NOT STOP! So whatever form the NEXT crisis takes, the Fed will be at hand to print money and double its balance sheet, as it will periodically continue to supports asset prices such as housing which cannot be printed. We'll not until we see start seeing house building 3D printing drones emerge from the machine intelligence mega-trend that will fly around in swarms and erect designer houses anywhere on the planet. And here's the updated current state of the Fed's balance sheet, QE money printing primarily to monetize US government debt so that interest rates are artificially forced lower to give the illusion of price stability instead real inflation is rampant. You know what's coming next, $8 trillion, then 9, $10 trillion+ All to monetize US government debt. Ask yourselves what are the consequences of artificially depressing interest rates on $24 trillion of US federal debt by means of £7+ trillion of quantitative easing. The answer is accelerating the Inflation Mega-trend, something that I have been writing about since I first started the Market Oracle way back in 2006 and why the only way to survive rampant government money printing is to leverage one selves to assets that cannot be easily printed or that are leveraged to money printing such as housing and revenue growing stocks as illustrated by my January 2010 100 page ebook "The Inflation Mega-trend". Imagine reading it back then and then going on to buy Google at $300 and Microsoft at $25 amongst other leveraged to inflation tech stocks, and the next 10 years should yield similar returns, if not more. The Inflation Mega-trend is Going Hyper! So whilst the highly manipulated and phony official inflation indices won't show the true extent of inflationary consequences of rampant government money printing. However, everyone experiences real inflation when they go shopping either online or at the supermarkets as prices have GONE UP! This despite less spending, of course it's because there is LESS supply as factories are trundling along producing goods right across the world at well under capacity. So Gold os showing relative strength and is confirming that for 2020 at least Gold is LEVERAGED to one of the primary drivers of asset price inflation - the exponential Inflation Mega-trend as illustrated by inflation graphs that can be replicated for virtually every nation.. The bottom line is that masses have been brainwashed to think inflation is good for them when the exact opposite is true! Yes, it is good for you me, and all others who are savvy enough to invest in assets that are leveraged to inflation. But it is DEFINETLY NOT GOOD FOR MOST FOLKS! WARNING - BIG INFLATION IS COMING! Even the dodgy inflation indices won't be able to contain the inflation that's just around the corner, it's obvious it's coming for how else can the governments erode the value of their huge debt mountains all whilst the crooks at the central banks depress interest rates. The nature of the crime is High Inflation coupled with Low (negative) Interest rates so that the governments can steal the value of savings and earnings. Is Capitalism as we Know it Ending? If one looks at the facts of rampant government money printing to monetize government debt, permanent deficit spending on an epic scale, debt to GDP north of 100% all to finance social projects such as the UK government paying 80% of furloughed employee salaries, with similar or even greater government interventions in nations such as Germany. We'll this begs the question, how can our economies still be labeled as capitalist? We are not living in capitalist nations, the slogans might be all about free market economies, capitalism, and theories preached of the boom bust cycle in the financial press and taught at universities, instead we tend to have the booms without the busts! Because we are NOT really living in capitalist economies! Then what are we living in? PERMANENT SOCIALIST BUBBLE ECONOMIES! NEW BUBBLES that are continuously being inflated just as the previous one bursts and starts to deflate. Which is why we NEVER GET DEFLATION! Instead we are permanently immersed in an exponential Inflation Mega-trend which confirms that investors should NOT PANIC when BUBBLES burst because the next one that is already being inflated and will be BIGGER than the one before! What we are experiencing is HYPER INFLATION in ASSET PRICES! Not all asset prices of course, it all depends on the degree to which the assets are leveraged to Inflation. Where the best leverage are those with inflating revenues i.e. corporations that actually produce something that is both limited in supply and high in demand and not easily replicated, in step our AI tech stocks! Our AI tech stocks are HYPER INFLATING IN PRICE! Which means that valuations will inflate far beyond that which investors consider to be reasonable and thus my expectations for instance for Google is to increase in price 6 fold before the next big tech bubble mania crunch transpires, and this will likely turn out to be an under estimation. Same goes for other assets such as housing i.e. unaffordable housing will continue to become LESS affordable, all whilst the academic economists and clueless journalists bang on about how the bull run in house prices are unsustainable due to not being affordable all whilst failing to see the big picture of the mega-trends at work, that of the exponential inflation mega-trend courtesy of central bank socialism. This also means where the 2020 US presidential election is concerned both Biden and Trump are SOCIALISTS! Not the Carl Marx variety for that theory is dead given the demand for workers is evaporating! The bottom line is that socialism of sorts is inevitable because AI and automation is going to make most workers obsolete, which means we could be looking at some sort of global revolution incorporating the likes of a universal basic income and literally an end to work for most people. This might seem far fetched today but that is the path we have been on for some time, as I don't think the masses are going to put up with relying on charity and food banks in ever increasing numbers due to no diminishing demand for their labour. So just as was the case with the Black Death, Covid is acting as an accelerant towards the making of a post capitalist work world i.e. the government will soon permanently start paying citizens effectively not to work. What does this mean for our tech stocks? We'll as I have already touched on several times over the years, at the very least they are going to be taxed on what today are largely untaxed profits so as to finance payments to the unemployable masses, and if the corporations don't comply, well socialism has a solution for that - NATIONALISATION. The rest of this extensive analysis whose primary focus ia a Gold Price trend forecast has first been made available to Patrons who support my work - Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020?
So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat. And access exclusive to Patrons only content: How to Get Rich Investing in Stocks by Riding the Electron Wave. Not to mention trend forecasts such as - Machine Intelligence Quantum AI Stocks Mega-Trend Forecast 2020 to 2035!. Nadeem Walayat Copyright © 2005-2020 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved. Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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Monday, 14 September 2020
The Inflation Mega-trend is Going Hyper! - Gold Price Trend Forecast Analysis Part1
