I will be entering a swing long in Gold here.
It is somewhat risky given the downward pressure on Gold and the current correlation with equities but I believe the R/R to be very favorable here.
This is also based on my fundamental view of future monetary and fiscal policy.
The Fed has painted themselves into a corner where they are forced to employ ever more accomodating monetary policy.
This is unlikely to change given that they choose to ignore the obvious signs of inflation, pointing to the CPI which is clearly an inaccurate measure of actual inflation.
Furthermore, they have expressed that they are not really concerned about inflation anyways, and that maximum employment is their primary objective even if it comes with the cost of higher inflation.
The market seems to be pricing in a surprise increase in interest rates, but that's highly unlikely to happen given the reasons above and the fact that the Fed has said they will warn the markets before any rate hike is implemented.
What's more likely is that the Fed will continue their accomodative policy and buy bonds to force yields back down.
On the fiscal side, ever larger stimulus bills continue to be passed, primarily stimulating the demand side while the supply side is still shut down.
Even if we start opening up, it will take some time for the supply side to increase production sufficiently to cover the pent-up demand in the economy.
Based on these reasons I'm entering a swing long position with a wide stop in case there's a spike down to hunt stops.
Trade at you own risk.
It is somewhat risky given the downward pressure on Gold and the current correlation with equities but I believe the R/R to be very favorable here.
This is also based on my fundamental view of future monetary and fiscal policy.
The Fed has painted themselves into a corner where they are forced to employ ever more accomodating monetary policy.
This is unlikely to change given that they choose to ignore the obvious signs of inflation, pointing to the CPI which is clearly an inaccurate measure of actual inflation.
Furthermore, they have expressed that they are not really concerned about inflation anyways, and that maximum employment is their primary objective even if it comes with the cost of higher inflation.
The market seems to be pricing in a surprise increase in interest rates, but that's highly unlikely to happen given the reasons above and the fact that the Fed has said they will warn the markets before any rate hike is implemented.
What's more likely is that the Fed will continue their accomodative policy and buy bonds to force yields back down.
On the fiscal side, ever larger stimulus bills continue to be passed, primarily stimulating the demand side while the supply side is still shut down.
Even if we start opening up, it will take some time for the supply side to increase production sufficiently to cover the pent-up demand in the economy.
Based on these reasons I'm entering a swing long position with a wide stop in case there's a spike down to hunt stops.
Trade at you own risk.
Trade active