Yesterday, the US dollar faded after strong economic data came in. Why did the dollar drop? Because everyone knows that even though the economy is going to grow, inflation has begun, and the US deficit is exploding, that the Federal Reserve will not raise interest rates. Even though the CPI came in last week at a 2.6% annualized growth rate, which is a percentage higher than the current yield on the 10-year Treasury bond and higher than anything you can get on a CD, the Federal Reserve will do nothing. This is part of the Biden mandate, and frankly is exactly what the masses want the Federal Reserve to do. No one wants the financial speculative party to stop.
This means that if you buy “safe” bonds you lose money. So, gold goes up as an alternative.
The next big gold and silver rally is now starting with the gold close yesterday well above $1750 and the GDX above $35, the key levels traders have been eyeing to know that it is safe to get back in have been broken. This is a bust out that marks the defeat of gold bears.
You can see how the GDX gold ETF has now closed above the downtrend line that has acted as resistance on it going back to August of last year. This is a seven month long consolidation/correction that is ended and now we can expect mining stocks and gold to run to their highs of last year in the next few months.
Yesterday, I bought the SLV ETF in my Robinhood Account and did a video update on it you can find here.
Of course, the top mining stocks will go up more than the SLV ETF or GDX ETF can. Dave Skarica did an interview with the CEO of my top mining stock of the month you should watch. You can find it here.
-Mike
