Bullion Banks Appear Ready To Slam Gold Imminently

March 16, 2019

New York (Mar 16)  The big picture remains the same: When the Fed reverts to QE and the dollar tanks, gold and everything else will soar. I believe a return to QE is inevitable at this point.

If the stock market dump in the 4th quarter has taught us anything, it is that the markets cannot survive without the ever-increasing stimulus, just like any Ponzi scheme. Meanwhile, U.S. deficits and debt continue to soar, with unfunded liabilities about to hit en masse next year. At the same time, economic activity and tax receipts are falling. This means more and more treasury bonds are being issued when the Fed is still reducing its balance sheet and foreign buyers have gone on strike. There is only so much the domestic market can soak up before becoming saturated, forcing yields to rise and debt interest costs to explode. The Fed will be forced to revert to QE to prop up stocks and bonds (keep yields down) and will sacrifice the dollar in the process.

Looking at gold in the short term, starting from a technical perspective…

Technical Analysis

My primary scenario remains an ABC move lower to test the 200-day moving average at ~1,252 or the 200-week moving average at ~1,241. Wave A was the drop from 1,350 to 1,280. We reached 1,312 yesterday, which may be the high of Wave B, and now we're heading down in Wave C to the moving averages or possibly even lower.

Should gold break those moving averages, we could go as low as 1,172 on a "closing" basis in an ABC move down. Wave A being the drop from 1,360 to 1,184 from April to August last year. Wave B was the rally from 1,184 to 1,348 that ended on the 20th of February. Now, we're in the wave C, down to 1,172 where A = C or a double bottom at 1,184 closing or 1,167 intraday.


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