Gold: know where you are in the cycle

 

To a lot of younger investors/gamblers the gold market it an old fuddy duddy market that just churns around and does nothing.

Over the last several years it sure seems that way,  It seems that way now.

Of course if you got into gold in the early 2000's when it became clear that the Fed was hell bent on smoothing out every hiccup in the economy with a downward shift in rates and a macro easing of money gold has been an incredible exhilariting ride from around 400 dollars to 2000 dollars.  

But a perspective of a quarter century is tough when you're 25 years old.  Or even 35 or 40 years old.

But a funny thing happened over a quarter of a century.  The world shifted from globalization to DeGlobalization.

That shift is still going on and we're just in the infancy of feeling the effects which are Inflationary pressures in the global macro economoy rather thn deflationary pressure.

Meanwhite the US and Global economy has taken on historically massive debt - mostly denomitated in US dollars as even around the world much debt is denominated in the Euro Dollar market.  It seemed to make sense in a deflationary world.  Because rates were at zero and there was still no inflation.

Bur now Inflationary pressure and high debt has become a vile cocktail which no eonomy on eartth can combat.  If you can't see why you need to go study that.  That's like a fish asking: "What the hell is water."

Hint: Higher rates crush the economy through debt service.  Lower rates crush the economy through hyping inflation.  

You can't fight both.

This is the economic death spriral - and it is also the macro sweet spot for gold.

So why isn't gold higher?

It will be.  

Right now it isn't lower because all the central banks of the world outside the US are buying gold hand over fist to shore up their reserves for the coming storm.  They're not buying dollars, or silver, or bitcoin, or diamonds.  They're buying gold.  If you have to ask why see the cartoon above.

And gold isn't higher because here in the US a multiple expansion (and an incredibly loose fiscal policy) has taken the stock market to historic blowout highs.  But multiple expansions always revert to the mean.  "This time" is never ever different.  If you think "AI" makes it different, see the cartoon above.  And if you think we can support the markets simply by increasing debt forever see the cartoon above.

And soon - I can't tell you when - but soon enough in the whole scheme of things Americans will rediscover what the rest of the world has already discovered.  That is there is only one protection from the coming storm.  And then the Gold Price denominated in Dollars will move to the next level.

Here's the thing: when it moves,  gold moves violently.  When it goes up, the initial move could be 200 dollars in a week.  

Then, if you're not already in, how do you get in?