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♟ What's Going on With Gold?

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"The case for owning gold over the long term is stronger than ever."

Karim Rahemtulla, Co-Founder, Monument Traders Alliance

Karim Rahemtulla

Dear Reader,

We are at war.

The global geo-political system is more unstable than at any other time in the past decade as a massive energy shock is at the world's doorstep.

Our allies aren't cooperating. The U.S. is blaming the Israelis for bombing a major natural gas field - of all things. That certainly wasn't on the bingo card.

Yet, while oil is spiking higher - up more than 60% on Brent since the war began - gold is down almost $800 per ounce. Silver was already in a freefall after hitting $115 per ounce. Now it's barely treading water.

Still, it seems counterintuitive for gold of all things to be heading lower during a time of massive uncertainty and global conflict.

But it is heading lower.

Here are a few reasons why it's happening... and what you should be doing about it.

  1. Inflation is back on the horizon. That is good for gold over the long term but not so good over the short term. Inflation is not here yet, but the counterparties are already moving.
  2. The U.S. dollar is getting stronger and interest rates are rising. Both are countermoves to gold as it is priced in dollars (the stronger the dollar, the weaker the price of gold in the short term). Rising interest rates make interest-paying assets more attractive than gold, which pays no interest.
  3. Gold already ran from $2,000 to over $5,500 in two years. A lot of optimism and pessimism was already built in. A pullback is normal.
  4. Gold's massive move also makes it a source of cash. As stocks sell off and debts come due, investors sell what is valuable to cover present and future expenses.

Silver is in even worse position as it is an industrial metal as well. War means uncertainty. Uncertainty with higher energy prices is a recipe for recession if this war does not end soon.

A recession hurts demand for industrial metals like silver. That's a double whammy, which could cause silver to go even lower than gold on a percentage basis.

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How to Trade Gold and Silver Right Now

With crisis comes opportunity. I would buy gold at lower levels, especially under $4,000. The case for owning gold over the long term is stronger than ever.

The U.S. dollar is going to head back down at some point - there is no other option. The war is adding to our already bloated $39 trillion in debt, and there is no effort being made to lower that number.

The rest of the world is looking for a dollar exit as the U.S. is no longer viewed as a predicable partner... but all other currencies with the exception of the Swiss franc are just as bad... if not worse.

That leaves gold as the alternative.

A couple of months ago I predicted that gold could lose $1,000 per ounce from its highs. It has.

I also predicted silver would fall $40 or more overnight. It did.

Are you listening to me now?

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YOUR ACTION PLAN

Investors should focus on accumulating gold under $4,000 per ounce, with more buys under $3,000 (should it get there)... and back up the truck if it goes below $2,000.

Silver is also a buy under $40 per ounce. But consider it a purely speculative investment that will outpace gold at times on the way up BUT also crash harder on the way down.

Invest in gold - speculate in silver.

Energy is another sector that's been affected by the current geopolitical situation. Oil prices have been surging, reaching their highest levels since 2022. And there's one tech company that's well-positioned to drive the latest energy demand.

As a trader for over 30 years, I've simply never seen a situation this unique… and with this much upside potential.

Click here to see what I'm convinced is the "greatest stock story ever told."

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FUN FACT FRIDAY

Gold and war go way back: During World War II, gold became a strategic power as it was used to pay for weapons and alliances. In fact, the U.S. dollar became backed by gold after the Bretton Woods Agreement.

During the Vietnam War, gold exploded after war spending led to inflation.

However, in a modern situation like the Ukraine/Russia war in 2022, gold spiked but then became choppy as it competed with a strong dollar and aggressive gold buying.

This shows that while war has a history of triggering a gold bull run, sometimes war isn't enough. Gold can actually fall during war… like we're seeing right now.


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