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Friday, October 22, 2021

President Trump Vs Fed, Gold Wins


President Trump continues his relentless attacks against the Fed and their strong dollar Tuesday with his most recent Tweets: “This is because the Euro and other currencies are devalued against the dollar, putting US at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” he wrote on Twitter.

Since President Trump began his attacks of the Fed in August of last year, gold has risen 12%, from $1,190 to around $1,350 oz in recent trading.

  • June gold settled Tuesday’s session up $6.80 (+0.5%) at $1349.5 oz

Gold bulls are coming out of hiding inspired by the trade disputes, global slowdown, and the Fed pivot from it’s tightening cycle.

In just a few months the Fed changed course. In October last year their dot plot called for 4 25 basis point rate hikes by the end of Y 2020. Now the market has priced in 3 rate cuts.

What has gold bulls most excited is how effectively President Trump has played the Fed. He has continued his pressure deftly, attacking it and its strong USD policy in lots and lots of interviews and Tweets and has ramped up his attack recently.

President Trump is certain that other countries receive a huge advantage by devaluing their currencies that puts the United States in jeopardy.

His trade disputes are a direct result of this unfair advantage and rather than wait for the Fed to take action that helps the US economy, President Trump has taken matters into his own hands. The result is that the Fed is stuck, and will bend to Presidents Trump’s will, forced to cut rates now that the yield curve has inverted.

“Trump has been calling for a 100 point basis cut from the Fed and looks like his efforts are paying off. Trump understands the way the economy works. He understands that a weaker Dollar will launch us into a far more level and competitive playing field and has been calling out the Federal Reserve for nearly a decade for their bubble making policies that have hurt the real economy,” writes Adam Baratta, the author of the national best-selling book “Gold Is A Better Way.” He is one of the leading voices in the field of investments and precious metals today. Adam is the co-owner of Advantage Gold, the highest rated precious metal firms in the country, and the creator of an educational member site.

As a result, gold prices have been on a Bull run, and finds its price movement outperforming the highest flying stock market in history and is up more than 10% since President Trump began his attacks.

This now looks like the breakout moment that the Gold Bugs have been expecting. When both bond gurus like Jeffrey Gundlach, and Stanley Druckenmiller all calling for much higher gold prices it’s a sign that momentum has changed.

The confluence of slowing global growth, loosening Fed, and a powerful US President’s laser focus on finding ways to weaken the dollar against countries that have manipulated theirs lower, spells the perfect storm for much higher gold prices. This is the perfect set up for gold break out above it’s 5 year range ceiling at $1,360.

When it break’s out it could surge to $1,500 quickly, as President Trump will make every effort to devalue USD to regain a competitive advantage for the United States, and by doing so will Make America Great Again.

Gold investors are all watching to see how this will play out short term.

The FOMC meeting this week will determine the Fed’s next steps.

The Big Q: Will President Trump win and force their hand or will they continue to remain pat?

The Big A: The market is betting on President Trump and is pricing in 3-4 rate cuts before the end of the year.

One thing looks certain to us here at LTN, gold prices should continue North, as both a hedge against a downturn, and a tool to take advantage of the coming USD weakness on President Trump’s strength.

Gold futures are trading higher late Tuesday, but nearly at the mid-point of today’s range. The market surged early in the session when Treasury yields and the USD weakened. Gains were limited by a turnaround in USD after EUR plunged in reaction to dovish comments from European Central Bank President Mario Draghi.

At 17:45 GMT, August COMEX gold futures are trading $1349.90, + $6.90 or +0.52%. The high for the session is $1358.50.

Gains were further capped after a Tweet by President Trump raised hopes of a trade deal between the United States and China. This news triggered a steep rise in demand for risky assets, while driving up US Treasury yields.

Daily August Comex Gold

The main trend is North according to the daily swing chart. A trade through $1362.20 will signal a resumption of the uptrend. The main trend will change to down when sellers take out Key support at $1323.60.

The minor trend is also North. A trade through Key support $1336.60 will change the minor trend to down. This will shift momentum to the Southside.

The short-term range is $1323.60 to $1362.20. Its Fibo retracement zone at $1349.40 to $1352.40 is acting like resistance.

On the Southside, the long-term Fibo mark at $1332.60 is support.

Stay tuned…

Making and Keeping America Great!

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