Short answer. Less inflation. At least for the remainder of 2023.
This idea is a continuation of the Gold study recently published, which you can find below. Gold price action is a fantastic leading indicator for forecasting inflationary / deflationary periods.
On the 3-month chart above Gold price action is shown on the upper chart and the lower half the current rate of inflation as recorded by the Bureau of Labour statistics.
On the lower chart inflation pivots are indicated by the coloured circles. Pivots @ 5% and below are highlighted in pink, above in yellow.
Looking left.. when spot gold is printing strong bearish divergence AND there is an inflation pivot at or above 5%, both inflation and spot gold fall together. This has happened every time since the 1950’s.
More significant is the ‘rate of change’. Inflation / deflation by itself over an elongated period of time is a non-issue. A rate of change over a shorter period is another matter, especially when inflation is high. The harder you rise the harder you fall.
What does all this mean? Significant corrections against inflated assets. Equities, housing, with the economy limping from one recession to the next just as was in the 80s.
For those of you that don’t remember:
“The United States entered recession in January 1980 and returned to growth six months later in July 1980. Although recovery took hold, the unemployment rate remained unchanged through the start of a second recession in July 1981. The downturn ended 16 months later, in November 1982.”
It is my opinion that if a rate of inflation reduces like the early 80’s then we’re almost certainly going to see that period repeat itself over the next 2-3 years.
Remember this idea is about the forecasting the direction of inflation not gold price action. However if you’re interested when gold prices shall increase then pay attention to a pivot with rising inflation (the red circles), that is the moment to be long gold, when exiting a recession not entering one.
Ww
Gold study
This idea is a continuation of the Gold study recently published, which you can find below. Gold price action is a fantastic leading indicator for forecasting inflationary / deflationary periods.
On the 3-month chart above Gold price action is shown on the upper chart and the lower half the current rate of inflation as recorded by the Bureau of Labour statistics.
On the lower chart inflation pivots are indicated by the coloured circles. Pivots @ 5% and below are highlighted in pink, above in yellow.
Looking left.. when spot gold is printing strong bearish divergence AND there is an inflation pivot at or above 5%, both inflation and spot gold fall together. This has happened every time since the 1950’s.
More significant is the ‘rate of change’. Inflation / deflation by itself over an elongated period of time is a non-issue. A rate of change over a shorter period is another matter, especially when inflation is high. The harder you rise the harder you fall.
What does all this mean? Significant corrections against inflated assets. Equities, housing, with the economy limping from one recession to the next just as was in the 80s.
For those of you that don’t remember:
“The United States entered recession in January 1980 and returned to growth six months later in July 1980. Although recovery took hold, the unemployment rate remained unchanged through the start of a second recession in July 1981. The downturn ended 16 months later, in November 1982.”
It is my opinion that if a rate of inflation reduces like the early 80’s then we’re almost certainly going to see that period repeat itself over the next 2-3 years.
Remember this idea is about the forecasting the direction of inflation not gold price action. However if you’re interested when gold prices shall increase then pay attention to a pivot with rising inflation (the red circles), that is the moment to be long gold, when exiting a recession not entering one.
Ww
Gold study
Trade active:
It is remarkable how well the correlations discussed above are playing out. Not only is inflation falling but the rate of which it is falling, that's the concern.
Now watch what happens when policy to reduce inflation via rapid rate increases meets an abundance of supply. They wanted demand destruction..
Now watch what happens when policy to reduce inflation via rapid rate increases meets an abundance of supply. They wanted demand destruction..
Trade active:
As per the above idea Gold is well on it's way to correcting 20% as the rate inflation drops.
The bear flag has confirmed.
For the bulls:
If you still believe higher highs are to come then you absolutely do not want to see a break of market structure @ 1800. A bounce should certainly be expected here, however look at the 2-week candle that has just printed, this is dramatic selling pressure.
For the bears:
Don’t assume 1600 is the floor. If 1600 does not offer support, 1200 is next. Incidentally 1200 would complete a nice cup n handle pattern. Even then don't assume 1200 is the floor. Miners continue to pay labourers around 800 dollars in costs to remove an ounce from the ground. Gold is a massive bubble.
This is brilliant:
“Costco gold bars are selling out”
“Costco, the wholesale retailer that offers everything from PlayStations to pizza slices, is now selling gold bars.”
Who needs TA when the crowd is behaving like this?
abcnews.go.com/...ying-fast/story?id=1037189...
2-week
The bear flag has confirmed.
For the bulls:
If you still believe higher highs are to come then you absolutely do not want to see a break of market structure @ 1800. A bounce should certainly be expected here, however look at the 2-week candle that has just printed, this is dramatic selling pressure.
For the bears:
Don’t assume 1600 is the floor. If 1600 does not offer support, 1200 is next. Incidentally 1200 would complete a nice cup n handle pattern. Even then don't assume 1200 is the floor. Miners continue to pay labourers around 800 dollars in costs to remove an ounce from the ground. Gold is a massive bubble.
This is brilliant:
“Costco gold bars are selling out”
“Costco, the wholesale retailer that offers everything from PlayStations to pizza slices, is now selling gold bars.”
Who needs TA when the crowd is behaving like this?
abcnews.go.com/...ying-fast/story?id=1037189...
2-week
Trade active:
I'm sure I can't be the only one looking at this bearish weekly hammer candle that has just printed.. What is about to happen:
1) Inflation report comes out on Tuesday with a below 3% rate. i.e 2. something percent.
2) Market goes crazy. The FED have done it! A soft landing. Recession is cancelled.
3) The rate of inflation keeps dropping and dropping all the way to 0% before becoming deflationary. I'm sure we're all aware of the deflationary period China has just entered.
4) FED panics and turns on the printing press as rate cuts do nothing.
5) During points (2) to (3), Gold crashes. I know it does not make sense, but when recessions bite people need money. And that is the whole purpose for holding gold. To convert to cash in tough times. Look left at every recession before this and you will see the same.
6) If you want to long gold, wait for $1600 at least as mentioned in earlier posts.
Ideally long as prices dip below <$1.2k
Weekly
1) Inflation report comes out on Tuesday with a below 3% rate. i.e 2. something percent.
2) Market goes crazy. The FED have done it! A soft landing. Recession is cancelled.
3) The rate of inflation keeps dropping and dropping all the way to 0% before becoming deflationary. I'm sure we're all aware of the deflationary period China has just entered.
4) FED panics and turns on the printing press as rate cuts do nothing.
5) During points (2) to (3), Gold crashes. I know it does not make sense, but when recessions bite people need money. And that is the whole purpose for holding gold. To convert to cash in tough times. Look left at every recession before this and you will see the same.
6) If you want to long gold, wait for $1600 at least as mentioned in earlier posts.
Ideally long as prices dip below <$1.2k
Weekly
BTC
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Allow 3-6 months on ideas. Not investment advice. DYOR
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Weblink: www.patreon.com/withoutworries
Allow 3-6 months on ideas. Not investment advice. DYOR
