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End Game Approaches

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GOLD

Gold chart

Gold is trying for a higher high above 1833. But even if we get there, we still need to take out resistance between 1860-80. Support is at 1780 and below there 1760. Essentially, Gold continues to trade around the moving averages.

SILVER

Silver

Seeing more-or-less the same thing in Silver with the 50-day moving average continuing to cap any move up. Above there, the 200-day moving average awaits. Support is at ~22.

No need to go through GDX and SILJ; they’re in the same boat too. Today I prefer to look at what the bigger markets are signaling.

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S&P

S&P

The S&P remains in a big bear flag pattern that allows for either another negatively higher high before lower again or a move straight down on a break of 4580. I’m still looking for a drop to the 200-day moving average or slightly lower whichever scenario plays out. Then I expect the Fed to dump its hawkish stance and switch back to QE on steroids, leading to the final melt-up in stocks before the Greatest Depression begins in earnest next year.

10-Year Treasury Bond Yield

10-Year Treasury Bond Yield

With the pullback in the 10Y yield, we now have a near perfect set-up for a negatively divergent higher high in yields around 1.90-2.00% for the next dump to ~0.40%, the low in March 2020. This will likely coincide with the dump in stocks. Case in point, the symbiotic dump in both stocks and yields in March 2020:

tnx

The Global Financial Crisis from 2007 to 2009 is an even better example:

tnx

Why do yields fall along with stocks? Because cash flows run out of stocks as people sell and look for safety by buying bonds, pushing down yields.

Once the Fed steps in to reinflate stocks for the final time, yields will go back up but they’ll be capped at 2% or lower in the 10-Year. Massive dollar printing in an already high inflation environment is akin to pouring gasoline on a fire. With nominal bond yields capped and inflation skyrocketing, what happens to real yields? They crash. What moves inversely to real yields? Precious metals and miners.

OIL

OIL

Just like bond yields, oil has the perfect set-up for a negatively divergent higher high before falling to my target zone of 58-63. This would be another deflationary event compounding that provided by the dump in stocks and reinforce my expectations for far lower bond yields. Once the Fed steps in with massive liquidity, oil is heading up to triple digits prior to the crash in 2023, imho.

DXY

Lastly, but certainly not the least, the dollar…

DXY

To say that there is plenty of room for a negatively divergent higher high in the DXY (dollar index) is putting it mildly. In fact, it may have already topped out.

In March 2020, the dollar spiked higher as stocks crashed. But once the Fed intervened by slashing interest rates to zero and pouring $3 trillion in stimulus onto the markets, down the DXY went:

DXY

There’s little reason to expect it to be any different this time around. In summary, one more higher high is still a risk should stocks dump, but thereafter, 89-91 for the dollar and new record highs for Gold.

CONCLUSION

The big markets, bond yields, stocks, oil, and the dollar are all signaling a strong probability of new highs before they dump collectively ahead of the Fed’s final ride to the rescue. At the risk of repeating myself, Gold will either go down with the ship initially and then take off or pull another October 2008 and just go straight up in anticipation of the Fed’s intervention. Either way, 2300+ for Gold and spectacular gains in the metals and miners ahead. All ahead of the Greatest Depression beginning in 2023 (2024 latest), imho.

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About the Author

David Brady has worked for major banks and corporate multinationals in Europe and the U.S. He has close to thirty years of experience managing multi-billion dollar portfolios including foreign currency, cash, bonds, equities, and commodities. David is also a CFA charter holder since 2004.

Using his extensive experience, he developed his own process utilizing multiple tools such as fundamental analysis, inter-market analysis, positioning, Elliott Wave Theory, sentiment, classical technical analysis, and trends. This approach has improved his forecasting capability, especially when they all point in the same direction.

His track record in forecasting Gold and Silver prices since has made him one of the top analysts in the precious metals sector, widely followed on Twitter and a regular contributor to the Sprott Money Blog.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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