Gold Breaks Out!

by: SchiffGold

Gold pushed through the $1,300 mark Monday, shattering a key psychological barrier. The yellow metal closed around $1,310 and then continued to move higher. As of Tuesday morning, gold was trading at over $1,320 per ounce.

Now is the time to buy gold.

As Peter explained in his latest Gold VideoCast, gold has been flirting with $1,300 for months, but an overabundance of supply has kept it from breaking through. On Monday, demand was finally sufficient to overwhelm supply and clear out all of the sellers at $1,300.

I believe that this was a key resistance level, and as a result, I think the way has been cleared for the price of gold to move much higher, much quicker.

As Peter pointed out in his most recent podcast, gold is on a broad-based rally.

Gold now is not only rising in terms of dollars, but it's finally rising in terms of everything. Gold is now going up in yen terms. It's going up in Swiss franc terms, even though those currencies are rising as well. This is a key factor. And I think now that we have cleared out that resistance - there are a lot of people who thought there was no upside in gold. Well, they're about to find out just how much upside there was.

All eyes have been on the stock market in recent months. The Dow Jones has hit record highs. But most people don't realize gold has actually outperformed the market this year, as Peter noted in his podcast.

Everybody wants to talk about how great the stock market is. It's not even close to the performance of gold.

As we reported last week, analysts say there are a number of factors in place that could sustain a gold bull run. Military tensions continue to increase, with North Korea reportedly launching a missile over Japan. Many analysts now see major geopolitical risks right here at home, with growing doubt that Trump has the political clout to push his broader economic agenda of tax cuts, infrastructure spending and regulatory reform through.

On top of that, there is increasing worry about whether Congress will be able to come up with a plan to raise the debt ceiling in time to avert a government shutdown. And, as Peter pointed out, the devastating flooding in Texas in the wake of Hurricane Harvey will likely put more strain on the US budget as the government shovels deeper into debt for disaster relief.

Meanwhile, the dollar continued its weakness. As Peter said, this is one of the reasons gold continues to be strong. The dollar index made new lows Monday, down to around 92.20. The dollar is on track to clock the weakest year since 1985.

The dollar is now a risk asset. People don't buy the dollar when they're worried. They sell the dollar when they're worried.

Peter said he's convinced this is going to end in a currency crisis.

It's not going to be the type of crisis we had in 2008 where the dollar goes up. It's going to be the type of crisis where the dollar tanks. The dollar is going to be the crisis. And it's not just mortgages that are going to be going down. It's US Treasuries. That's the debt that everybody's going to be dumping. That's what people are going to realize - that our debt is subprime. That we're broke. That we can't afford to repay our debt in money that still has purchasing power. So it's going to be a sovereign debt crisis. It's going to be a currency crisis.

All of these factors have combined to finally push gold above the $1,300, and the stage appears to be set for a major breakout.