Why I'm buying Gold right now, but am not too optimistic
Member Report #4
Hello subscribers,
I found another very interesting setup in the commodity market. As you probably already read in the Weekly Report, Precious Metals had a huge breakout moment in the last week, after much hotter than expected inflation numbers were published.
Today I would like to explain to you my setup for Gold in detail, show you risks, opportunities and give you a roadmap of how I’m buying the metal right now - but also why I’m expecting a hard time for the metal over the next 2 years.
Quick facts about Gold
Estimates on global mine reserves of gold fluctuate slightly from year to year but are not much higher than 50,000 metric tons. The countries with the largest estimated reserves are Australia, Russia, and the United States. Approximately 3,200 metric tons of gold was produced worldwide in 2020. Currently, China is the world’s leading gold mining country, followed by Australia and Russia.
Historically Gold has been an excellent hedge against inflation because of its tendency to increase in value when the cost of living increases. In my opinion, other commodities like for example Oil are far better examples, but that’s not the topic of today’s report.
What is my thesis?
After Gold has remained in correction mode for over a year, Gold broke out of this range in my opinion in the last week. The aim is to use the momentum and continue to be active on the long side. BUT fundamental aspects speak only for a short period of Gold strength. I want to explain why in detail.
The Interest Rate and Tapering dilemma for Gold
This is the most important bearish aspect that I currently see for Gold. Here is a long-term chart of Gold. I highlighted the price action when the last taper tantrum was announced in May 2013. Gold prices hadn’t quite a good time in the months after that event.
