A big hardship for gold bulls

Gold extended the bounce from six-week lows on Tuesday, finishing Wednesday,  with moderate gains well above the $1850 level. On Wednesday, the yellow metal gathered pace to test the $1872 hurdle ahead of US CPI reports.

Gold prices fell back again in London trade Tuesday, retreating $20 from a rally to $1863 per ounce before steadying as Western stock markets fell once more against a backdrop of worsening Covid infection and death rates, supply-chain issues with mass vaccinations, but also a rise in longer-term interest rates in the bond market ahead of the "trillions" in new borrowing due from incoming US President Joe Biden's spending plans.

Following last Wednesday's violent attack on the US Congress by a mob backing Donald Trump, a 'source' at the FBI warned of further protests and terrorism by pro-Trump supporters at next week's inauguration of Biden as President.

Trump is being pressured to resign and yet there is no response from him. However as mentioned, Biden has reassured that there would be additional stimulus coming in. A Fed Government stated good US growth prospect and bond purchase program. 

A much larger financial package of $2 trillion is possible as per the early reports suggest by Biden on taking full charge. On the other hand, US 50 states under server alert during Biden’s oath ceremony on 20th January, as President Trump is defiant and put up only a small remark for his supporters. 

Gold drifted higher in quiet mid-week trading, with the $1850 looking like the support level – at least for now. It was up $3 at $1860 during Thursday’s trading session. Generally speaking, the markets are in the quiet mode this morning, with nothing standing out save the latest chapter in the unfolding saga in Washington.

Gold came into a difficult phase as it comes to $1830-$1835 final support. Since bond yields are staying positive and USD again attempting 90.4, it’s a big hardship for gold bulls. This sentiment was echoed by many top gold dealers in India. 

For traders it’s imperative to hold $1822.9. A final stop and support bands of $1830-$1836, once it’s done, gold will fast move to $1855-1865.

Right now, gold has a strong support at $1,820 and that is because the expected stimulus package will increase the inflation rate which is significantly important for gold prices.

2021 starts with a choppy ride

2021 began with a choppy ride for the US and EU markets. The Dow and S&P opened with a new life high and later cracked by 2.5-3% from the highs. But later reduced their losses to half.

Gold after hitting a precise $1962.5 targets, crashed for $1902 to fill the gap. The USD index stayed lower at around 89.4 but the bonds yield made massive 10-15% gains on Wednesday. Gold after gaining $50 on Monday and losing $50 on Wednesday, showed significant volatility. These fluctuations are expected to continue as there would be a line up of significant global news from vaccine to new mutations, from stimulus to geopolitical worries.

Currently, there are two worries that would be vexing investors in the precious metals sector in recent weeks believes the RSBL analysts.

One is that gold and silver won’t rise much because big banks like JP Morgan will cap it by dumping onto the paper market. The key point to keep in mind is that gold is “real money” and this being so,  the idea that a currency like the dollar can collapse towards zero and gold won’t go up because the banks will be selling it on the paper market is both absurd and ridiculous – what would happen is that an untenable massive gap would develop between the price on the paper market and the price on the physical market, and the paper market would become rapidly irrelevant and obsolete, so we don’t have to worry about that. In fact, to the extent that they are actually suppressing the gold price, all they are doing is creating a “pressure cooker” effect that will lead to a massive upside explosion, but you certainly don’t want to wait for that to happen before you take positions across the sector.

 The other is that Cryptos are stealing “gold’s thunder” and siphoning off funs that would otherwise go into the precious metals. One reason that Cryptos are going ballistic now is that the NWO (New World Order) plan to use Cryptos as the vehicle to pay the Universal General Allowance (UGI) to the dispossessed serfs who are permitted to live in their new system. In order to qualify for this they will have to be fully compliant with all the dictates of their Masters which will of course include being vaccinated.

There is also a misplaced belief that you are “outside the system” when you buy Cryptos, but you won’t be outside the system if they decide to “pull the plug” on the internet, a possibility raised in this dystopian short film Dark Winter, which they may do because the internet is the only way to find out the truth about what is going on. The NWO are believed to be developing and perfecting their own Cryptos, and when it suits them they will simply outlaw or block all of the others, or make ownership of them punishable by a jail sentence – don’t forget they are above the law and can do anything they like, like the current lockdowns which are illegal. At least with the Precious Metals you can physically own them and they will not disappear if banks close their doors or the internet is taken down believes the top gold dealer in India RiddiSiddhi Bullions Limited.

Gold has already punched through its 2011 highs last year, but has since reacted back below them which are thought to be a normal reaction prior to renewed advance. A big concern with a pattern like this is that it could stall out for a long time marking out a Handle to complement the Cup before continuing higher, but this doesn’t look likely on this occasion because the dollar looks like it is on the verge of collapse with the Fed set to continue attacking it relentlessly.

We now have a very rare setup for gold which is in position to “go ballistic” as the dollar collapses. The dollar is being intentionally destroyed by the Fed which is creating dollars in vast unprecedented quantities in order to buy up distressed assets on the cheap and in order to pave way for the new “digital dollar”. We are in the last stages of the fiat endgame where money creation goes vertical, quickly leading to becoming worthless, as happened in Venezuela and Zimbabwe.