Own at least 20% of liquid assets in precious metals | 16 April 2021
Gold Price Forecast relative to
Long Term Monthly (LT-M) - Medium Term Weekly (MT-W) - Short Term Daily (ST-D) - and Hourly (not shown) data.
(Previous week in brackets)
|Au % Risk
Portfolio allocation 30% (35%)
Physical Gold: Nature's currency
16 April close: On the question 'Is gold ready to explode?', the answer of course is 'YES'. Especially as all financial markets are building a 'sky is the limit' atmosphere attracting millions of first time and often small investors towards the many low commission online brokerages and crypto exchanges. Our Gold and PM portfolio remains unchanged. And even though the portfolio has shed another 5% last week (from 35% to 30%) due to further crypto advances in the overall portfolio, Gold and Platinum and Silver are still our key pillars for full protection. No financial asset ever finds real equilibrium during a long period of time but they do always return to that long term price average if the deviation extends too far for too long and then usually also goes through that longer term price average. Where crypto and to a smaller extend equities have rapidly outpaced precious metals by a large factor during the past 12 months the divergence between the hotter assets and precious metals will at some point be rectified. We don't know when or how, but the most likely scenario is an implosion of all of the hyped assets running parallel to a strong increase in the real value of precious metals. A minimum of 20% invested in precious metals will then prove to become a near complete safety net and sure to protecting 80% or at least enough of your accumulated wealth. The current asset bubble however could easily extend for another 6 to 9 months or even longer. The longer the bubble lasts the more apparent will be consumer price inflation which is where gold always protects purchasing power. No Change.
Note: Stansberry Research' highly popular Youtube channel is moderating a potentially very interesting 'Bitcoin or Gold' debate between Michael Saylor (for Bitcoin) and Frank Guistra (for Gold), two very respected entrepreneurs. Whatever the outcome, which will be watched and broadly hashtagged by many major players in the financial industry, our above protection strategy prevails. Going all in on one single asset is a fools game of course. The Saylor/Guistra battle will air on Tuesday 21 April.
09 April close: Our Precious metals portfolio is for protection only as we have said from the very beginning. Our entry point is very low and we apply the simple 80:20 rule to our physical Gold, Silver and Platinum portfolio. Platinum is as good as gold and silver will either follow or lead gold as a rule of thumb. Gold still looks a little vulnerable looking at Monthly risk at 50% and down. Weekly appears to have bottomed but may have another spell of weakness. Our strategy is to be prepared for a rapid inflation burst probably sometime 2022 or earlier even. Markets typically pre-empt such events with strong reaction about 6 months before. Even though our crypto entries in 2019 and this year have overtaken our metals portfolio in size, those same crypto markets already represent a high risk inflationary and very speculative environment especially where the number of newly born trader participants are growing exponentially and as these markets continue to rally they will drive cpi higher until the bubble bursts. Bitcoin will NOT play that role (also see this week's crypto market comment). Gold remains a solid long term protection hold.
16 April comment
Our reading of the quarterly long term Gold/USD chart is actually quite bullish. New high peaks and higher risk lows as the price advances. This makes a more mixed reading of risk weight in the Daily to Monthly charts look more positive too. If you consider selling gold for a more powerful looking asset in crypto or equities, DON'T. Unless you already own well over 20% of your portfolio in precious metals. 20% should be the minimum today. What that also means is that if highly profitable non metal assets exceed 80% of total, move a percentage of profits into PM again.
Comment 09-April: Looking at this long term chart, which is pointing south, one would expect no different long term technical market behavior than in an hourly chart for instance. Hourly of course is more volatile with less stable volume. Protection confirmation will not arrive until we witness that very explosive market in real time and similar to what we see happening in crypto markets today. It is entirely possible, even likely, that a future scenario with a 10x or 100x or 1000x gold price buys only a bit more of the same product as it does today. It feels like that moment is getting ever closer and we should have healthy fear in owning metals, not trying to predict short term direction. History will repeat itself and most non productive assets will blow up in our faces.
Gold/Euro live price
16 April 2021: Gold/Euro looks slightly more bullish even but the risk picture is very similar to Gold/USD. Monthly risk is still in a down trend but could easily return to its primary uptrend within a few weeks. As we use a 14 period average to calculate a general trend in all time frames, May could create that turn already as then the downmonth of March 2020 will disappear from the calculation. 'Hold'.
9 April 2021: Euro strength versus USD has influenced a relatively weaker Gold price vs Euro in recent months. Otherwise the technical picture and reason for being protected is the same as for Gold/USD. 'HODL'
Gold/British Pound live price
16 April 2021: GBP strength of late has pushed long term risk into deeper low risk ranges in both Medium and Long term time scales. Holding onto Gold for GBP tax based investors is a must as well.
9 April 2021: GBP finally took a decent breather in currency markets and made gold look a little stronger. Even this pair may not have finished the downtrend, but as we have argued in the FX section, GBP is more vulnerable to erosion due to a much weaker economic position in the world market. UK's biggest risk is an even more negative impact from leaving the European Union and a massive struggle to defend its position in the financial services industry due to a paradigm shift in regulated borderless digital banking services. Gold is a strong long term hold for GBP tax based investors.