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Policy Error Committed, Gold Bubble Ahead

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The Fed went ahead and did it. The Fed’s Policy Error has indeed cometh. The yield curve is already inverting.

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This virtually guarantees a recession or depression. The beginning of the end of the bull market in stocks and real estate has begun, and the dawn has come for the pending bubble in precious metals.

I just did this search on Twitter: "@globalprotrader policy error", and I have been warning about this consistently since July 2021.

From August 6:

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We got the expected drop in stocks, now we're seeing a bounce on "sell the rumor, buy the fact", but I don't believe we've seen the low yet. I said in my 2022 forecasts posted in December that stocks would be flat for the year. The Fed’s actions yesterday reinforce that expectation, imho, unless they reverse course sooner than anticipated. When they do reverse course, we’ll get a final melt-up in stocks prior to the total collapse of everything. This is most likely to occur next year—latest 2024, in my opinion. The WEF’s risk survey reinforces this expectation, calling for an “Asset Bubble Burst” some time between 2023 to 2025.

What does all this mean for Gold and Silver? The sky is the limit.

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Timeframes matter. With the Banks record short, the risk is that we head lower first, either straight down or following a negatively divergent record high. I would lean more to the latter if it plays out because everyone and their dog will be bullish metals and miners at that point.

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Alternatively, the bottom is in for the complex and we’re going straight up to record highs, above 2300+ in Gold and perhaps even 50 in Silver.

I can already hear the naysayers commenting on how I’m stating the obvious: “Gold can go up or down! Great insight!” (Sarcasm intended.) But as I’ve said before, I’ll share the roadmap to determine which one is coming to fruition.

  1. Straight down: Break of 1900.

  2. Negatively divergent higher high, then down: Break 2089, or more importantly, close above 2069, then we fall back below those levels within days, followed by a break below 1900.

  3. Straight up: Break 2089 and close above 2069, then continue up to 2100 plus and beyond.

As I shared above, my preference is for a negatively divergent higher high then lower due to the record short position held by the Bullion Banks and the extreme overbought and bullish conditions at new record highs. This will be like taking candy from a baby for the Bullion Banks. The temptation to squeeze out all of the weak longs would likely be too great.

That said, I won’t be shorting metals or miners. As I’ve been doing since December, I’ll be buying any and all material dips because the inevitable march higher to new record highs is coming, imho. Any pullbacks, no matter how big, will just be a detour before the rocket launch. Different route, same destination.

The glory days of new record highs in the stock market and home prices rising 20, 30, 50% per year are coming to an end. The bubble in precious metals is about to begin, and it will last for decades, imho.

Don’t miss a golden opportunity.

Now that you’ve gained a deeper understanding about gold, it’s time to browse our selection of gold bars, coins, or exclusive Sprott Gold wafers.

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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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