This comes in stark contrast to the truly mind boggling actions seen over the last few years in the broader markets, whose gains were based largely on illusions, huge injections of fiat money, debt creation and all around tomfoolery.
It is going to take time for people to adjust to this reality, to understand that this rally in both gold and silver bullion are based on overwhelmingly strong fundamentals, as it has been so long since the financial world has operated in such a manner, however, once this change in mindset occurs, we are going to experience one of the greatest bull markets this world has ever seen, with precious metals taking off to what some would believe unobtainable levels based on today's pricing.
(Chart Sources, goldprice.org)
This weeks trading action in the metals was a just a sample of what is to come, with both of the metals leaping to new levels, as I predicted they would after breaking through key resistance levels just a few short weeks ago, carried higher first by true fundamentals, then propelled even further by the Wall Street algorithms, with both feeding upon the other in a revolving cycle.
However, as stated last week and as we are seeing in today's trading action, pull backs are going to occur and this is a good thing. We do not want a runaway break out, a straight up parabolic rise such as that seen during the Bitcoin mania, as that leads to weak hands and an inevitable crash lower.
A steady, healthy increase higher, with new "floors" being set is what we want to see, as that will ultimately result in long term, more sustainable gains, with stronger hands staying with precious metals as they inevitably climb higher.
This pull back in precious metal prices comes on the heels of a strong payroll numbers report being released, as 1.76 million jobs were added, according to officially reported figures by the Bureau of Labor Statistics.
However, this data is lagging and may be short lived, as already more and more States are imposing renewed lockdown due to the resurgence of COVID-19 in many locations.
Even so, a return to a strong work force, which is coming, will not change the fundamentals for precious metals in a meaningful way in the long term, as the historic amount of debt creation and fiat money printing that we have experienced since the pandemic began is not simply going to erase itself.
(Chart Source, Federal Reserve)
This newly created "money" is out there and is not going way. Gold and silver bullion are accounting for this and they are ultimately going much higher as a result.
This is not going to change and is only going to accelerate as we move forward and as more and more institutional investors join the ranks of Central Banks, buying gold hand over fist moving forward, hopping aboard the train, hoping to ride the strong fundamentals of precious metals higher until a true blow off top occurs.
The Next Catalyst For Precious Metals Moving Higher
Another upcoming event that I keep pointing out and of which seemingly many are simply discounting is the extreme unrest within the United States that is coming in November of this year, following the results of the Presidential Elections.
The DNC seems hell bent on sending Joe Biden out to a massacre, which is baffling a large amount of people on the left, right and those staunchly in the center, the latter of which I consider myself a part of.
This is even more odd, given the fact that the Democratic party seems to be taking a full blown campaign strategy, based purely on "orange man bad", choosing to hide Biden from the public eye almost entirely, likely due to the fact that when allowed to speak, he appears disorientated and confused, showing as many have pointed out, clear signs of cognitive decline.
This is made even more concerning given the fact that Biden himself has stated that "he is being constantly tested", which is an odd thing to say, but yet, will not release the results of those tests, as previous Presidential candidates have done.
Even the mainstream media, who predominately hates Trump, has even started to take notice and point these issues out.
I personally don't agree with everything President Trump has done, or stated while in office, however, I cannot see how Joe Biden is expected to go toe to toe with President Trump on the debate stage, without it resulting in a complete disaster for the Democrats.
Perhaps this is why the DNC is attempting to get the number of Presidential debates reduced, while the RNC is looking to get more debates scheduled.
Even though the official polls have Biden leading slightly over Trump if the election were to take place today, as we saw in the 2016 elections, these polls are far from accurate and typically are largely skewed towards the candidate who is deemed "socially" acceptable in the mainstream narratives eyes. Given the fact that many believe they cannot openly voice their support for President Trump, or risk being ridiculed, persecuted or worse.
I believe that ultimately, unless the DNC changes course and chooses to throw Biden under the bus and nominate a different candidate of their choosing, forgoing the primary results (something they can actually do, although unlikely), then I believe it very likely that Donald Trump is going to win re-election by a slight margin, leading to one of the most contested elections ever given the current circumstances ongoing within the United States and given the fact that many States are choosing to go the mail-in ballot route.
This is going to lead to massive unrest and social upheaval, regardless of who is going to win, as I believe neither the far left, nor the far right are going to simply accept the results at face value.
Chaos will be the name of the game, with precious metals moving higher to adjust and account for this increased risk to the system, adding even further to an already rapidly accelerating bull market.
Don't believe me? Just wait and see. Time will reveal all.
Until then, stay safe and as always, keep stacking.
- Source, Nathan McDonald via the Sprott Money Blog