🔴 What Extreme Monetary Policy Means for Gold (w/ Greg Weldon)

🔴 What Extreme Monetary Policy Means for Gold (w/ Greg Weldon)


Now it’s one thing and one thing only pain avoidance the deepest pain a debt deflation
Europe potentially staring down the barrel of that gun right now. So what do they do?
Well, what if they were to actually raise interest rates?
Oh my god, you get say a hundred a 200 basis point deposit rate
Now all of a sudden fixed income is fixed income again
You’re paying investors, you’re paying depositors to put money in the bank and on the flip side
the ECB using the LTRO
Program is able to establish a borrowing rate for banks that say minus 100 or minus 200
Say you had a symmetrical minus 200 plus 200 two-tiered system
You know a deposit rate against the borrowing rate for banks
Now the thought process goes so far as to suggest what would happen is that this would facilitate?
banks making loans to consumers and businesses at minus 50 basis points
essentially
Paying consumers paying businesses to borrow more money
I mean negative interest rates the thought process was that’s going to be a you know
A penalty dynamic that will force consumers to go out and spend money. It’s not how it’s happened
It sucked money out of the system. So in this case this kind of setup while
dramatic while
Huy on steroids would have some desired impact if your desired impact is to kind of push for a reflation
But at the same time, yeah
You know on the back end of that, you might get some severe reversals in some of the markets like the deposit rate futures
Which are pricing and rate cuts?
If you hike rates
You’re gonna have a massive opportunity to be short those contracts
Something like the bonds would probably get hit too and yields would start to rise
The flip side would be stock markets would probably love this idea
you know at least for some time period it would be a honeymoon for the stock markets and
Really when you come back down to it. This might be the most bullish thing
I’ve heard potentially if it were to ever come to fruition
The most bullish thing for gold and I’ve heard in 35 years of doing this against that backdrop
The view on gold is very positive and it’s even positive to the degree that the last six to nine months
haven’t been negative because if you look at the dollar and the dollars trading
And a half the dollar is bidding to kind of break out here in a short-term basis and get back to the highs from 2016
Closer to 104 on the dollar index the trade weighted dollar index is he’d been even stronger and against that backdrop
Gold has not cracked
If you overlay these things gold would be trading more rolling the lines of 1100 maybe as low as 1050 given where the dollar is
that D linkage is
Huge because what it tells you is if the dollar is the strongest currency out there and gold is appreciating in dollar terms
That means gold is appreciating against all paper currencies. That’s the sweet spot for gold
That’s what you have right now
in fact the gold
Adjusted value of the dollar index simply the dollar divided by gold really not rocket science is on the verge of a major
Breakdown into what has already been a secular breakdown
So it would be a fresh leg down here which would mean, you know, obviously Gold’s already broken out above this
1375 level that was key resistance and if you lay out the technical structure on the long term basis even going back to
1971 when Nixon delinked gold, you know from the dollar officially
This has kind of been a four wave setup. All right wave one two wave three was into the
2011 high the most recent correction to the lows around 10:50 lo and behold it’s almost a perfect
50% retracement of the entire blue move from 1971 to the 2011 high and I remember specifically
You know just watching this very closely back when gold was under pressure into you know
Late 2014 and into the 2015 low the number of days that you got below that
50% retracement and then closed back above it
The number of kind of tailed reversals like on a candlestick chart that you might see
Below this 50% retracement level just belied so much demand there
It was uncanny to watch the math and to watch how it played out
You know in the manifestations of the market movements to where it held that level more recently
There was some questions around gold
You know was maybe gonna break 1260 again and could have had a real another significant hundred 150 $200 decline and it didn’t
Do that so
When you throw all this into the mix let alone you take places like Angola
Pakistan Colombia Uruguay lose Becca Stan
Kazakhstan, I mean gold in these currencies
record highs in almost every case
so a lengthening list of currencies against which gold is at record highs including the Aussie dollar for example
Including you know some major currencies Swiss Swedish
Krona will be another example and then you look at the you know
The dynamic around how the dollar is playing out in this context again
You know you kind of go back to if the ECB is gonna pull some you know
QE on steroids rabbit out of a hat here. Okay, wouldn’t it make sense?
that gold is kind of appreciating at all paper currencies because
Essentially what you really have going on here at the end of the day the most base case at the instinctive level is a growing
uncertainty fear and even mistrust around all paper
They’re just gonna keep printing more and more paper. Every time there’s an issue around dis inflation deflation
Well, you know at some point there is a level of uncertainty and anxiety around all that paper and it is io u–‘s currencies sovereign
Debt, it’s all saying it’s an IOU and you know
It’s kind of cliche but it is powerful and it’s true the dynamic around gold
Being kind of an offset to all of this paper that they just keep printing

7 thoughts on “🔴 What Extreme Monetary Policy Means for Gold (w/ Greg Weldon)

  1. Gold does not APPRECIATE. The debt notes, counterfeit currency, computer credits, depreciate. Debt notes, computer credits, are not money. Only gold is money. All else is credit. J.P. Morgan. 1907.

  2. Great incites into gold's Fibonacci retracement in 2013/14 and how it plays into the fundamentals we see on the economic front. Thank you Greg.

  3. Great stuff. I hope commentator read these comments and respond!

    Wonder what should be investment vehicle/s for gold?

  4. The Fed cannot expand credit year after year without default and correction. Will it be the consumers or the business that crack this time or will it be both at once? Either way, during the write offs and recession, gold is the asset to hold.

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