2021-08-18

Gold Fakeout or Breakdown?

A lot of gold miners are near support or have broken support. Below are a list of stocks that are worth putting on a buy list. I still think there could be one more flush lower when the Federal Reserve announces its taper. As I understand Powell's convoluted language, they will announce that they will later announce a taper, followed by announcing the actual taper date, followed by the start of the taper. Maybe the first two of those will be combined, but I don't expect that. What I do expect is a repeat of the taper tantrum. Last time, rates increase from the tantrum in May 2013 until the start in January 2014. China almost immediately hit a slowdown that would culminate in yuan depreciation and a final bottom for commodities in Januray 2016, led by gold bottom in December 2015. I'm not sure the economy can handle a 2-year slowdown at this time though. The question for a gold investor is whether the Federal Reserve reverses course sooner rather than later. There's still a long way to the bottom if the Fed unleashes another deflationary wave, but how long will it last? Have a buy list ready for whatever assets you would buy in a panic drop or a short, brutal correction similar to October to December drop in 2018.

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