Renewed Currency Debasement Is The Magic Elixir For Gold

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Includes: AAAU, BAR, DGL, DGLD, DGP, DGZ, DZZ, GLD, GLDI, GLDM, GLDW, GLL, IAU, IAUF, OUNZ, PHYS, QGLDX, SGOL, UBG, UGL, UGLD
by: Gordon Long
Summary

ECB's Mario Draghi may have unintentionally reignited smoldering currency wars with his Sintra, Portugal, comments.

President Donald Trump was immediate in his reaction and conclusion that this was a currency shot across the US economic bow.

Gold Technicals are currently strong, and a catalyst like competitive devaluation could awake gold from its long dormant hibernation.

ECB's Mario Draghi may have just unintentionally reignited a smoldering currency war.

On Tuesday 06-18-19, Draghi outlined during the ECB's annual conference in Sintra, Portugal, that the ECB is highly likely to soon begin its form of easing, which amounts to many as formalized stealth currency debasement.

President Donald Trump was immediate in his reaction and conclusion when he immediately took to tweeting:

As Sven Henrich surmised: "Welcome to the monetary wars, the ultimate race to the bottom".

When President Trump becomes focused on something, he is like a "locked in" guided missile. Indications are he smells "currency wars" and "competitive currency devaluations," which has the serious potential of destabilizing his re-election platform, built on a stronger US economy than other developed nations. Though bad for Trump and his trade war strategy (like China currently devaluing the yuan), competitive currency debasement can only be good for gold!

Strong Gold Technicals Waiting On Catalyst

The timing is interesting since it has been a long time since Gold technicals have looked stronger:

  • A Bullish "Ascending Triangle"
  • A Completed "Cup & Handle"
  • An "Inverse Head & Shoulders"

Technicals can be wrong, so don't go betting the farm like famed investor Paul Tudor Jones, but it is definitely time to start watching gold again. The hibernation may be over.

The technicals suggest that $1,650/Oz is a strong likelihood with any triggering catalyst.

As Tom Luongo writes:

This isn't a recession that has the markets spooked. It's something far larger. Draghi's admitted defeat, joining Kuroda at the Bank of Japan. All that's left is Powell. If he surprises with a rate cut expect gold to explode and the dollar to briefly sell off before turning higher as the smart money understands what it really means.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.