- There are no good or bad stocks - only rising and falling stocks.
- Nicolas Darvas
King $Dollar
We expressed our concern about the dollar many times. We advised you to keep an eye on it. Have you? Well, it recently broke its support level at $104.99. It also broke its up trendline and on strong volume. This is big. The underlying problem for the dollar is debt. We all know the stated inbalance of revenues and expenditures. The government says that our debt stands at $31.46 trillion as of May 2023. Dear Reader, it is triple that figure. The debt report does not include benefits like social security and medicare. There are countless off the books billions to the military and other clandestine activities. There is also the little discussed fact that with higher interests rates, the compound total of debt multiplies rapidly. The Federal Reserve has put us in a dangerous position.
Furthermore, we read that China is seeking to develop an alternative to the dollar in global trading. The BRICKS are real even though their efforts have not dented the dollar's strength and value in trading. However, it shows opposition. It shows change. To overlook threats is like Marie Antoinette, "Let them eat cake!" The poor in France had no bread and could not afford what was available. History has more than one reference to complaints by citizens about their government and their standard of living. The Czar in Russia. King George 111 in England with the American colonies. Our present leaders put the threats out of the news and on the back burner. We don't. There are many others who share our concerns. Central banks have been buyers of gold to have a reserve if something disturbs the market and the dollar. We know what could cause that disturbance. It is debt.
Gold
It is in our constitution. The greedy and corrupt got us off the gold standard and away from the ideas and values of our founding fathers. The short sighted military leaders (read Pentagon) influenced presidents to appease allies to use our nation as a dumping ground for their exports. They threw a bone to producers by allowing outsourcing. Deficits became normal. After all, we are the reserve currency for the world. There is nothing to worry about. Ask the idiot, Dick Cheney, "Deficits don't matter."
We have abused the privilege. However, there is one refuge for our economic well being. It is the pecious metals. All the negatives about our foreign policy and deficit spending are pointing to a moment. Whatever happens, one thing is for sure, the staus quo will do anything to maintain power and gold will hold its value. It is not just that. It will return to prominence. It will rise in value. With that said, how does it stand with Darvas's quote?
Consolidation
Gold rises and then, it falls. Why, you ask? Because the fiat forces conspire against it. It is a constant battle that forms a lid on gold's advances in price. We always fear when JP Morgan Chase says, "That gold's time to shine is now." They just declared that. There brother in fiat arms is Goldman Sacks. They buy gold to use it later in a shorting process. This is their playbook. They sell the gold that they purchased and at the same time, short the precious metals.
Update Alert: Last weekend the overnight price action in gold burst to a new all-time high. When gold opened in New York, it immediately fell by $50 bucks. This is fiat attacking gold before it gets into everyone's radar.
It will not work this time. The charts tell us that gold has broken out of a four year consolidation pattern. We also know that the longer the consolidation, the greater the breakout. When you combine this data with the recent price drop in the dollar, we see a floor in the price of gold. We also see a relationship in the falling dollar to the rising price in gold. It appears for each one point drop in the dollar, gold rises $100 dollars. Keep an eye on this coorelation. If we are corrct, the dollar should test its next resistance point at $101.5. If it does, gold should break to a new all-time high around $2290.
If you cannot afford the bullion, we like Barrick Gold (GOLD) Wheaton Precious Metals (WPM) and a inexpensive, small miner, Argonaut Gold (ARNGF),
While this may be great for us as investors, I worry about ordinary cirizens. Folks, whether the market rises or falls, people need to make ends meet. A falling dollar will put inflation back into our lives. It will make poor people fall to poverty. The rich like Marie cannot grasp the conditions of the poor until they protest on the street. It could be too late by that time. Peace.
