Gold Price Action Signals Approaching Breakout

James West
|

Like long-awaited rain in a dry desert, the strength in the price of gold driven by CoronaVirus fears has seen a flood of new money come into the mining sector for companies seeking precious metals.

Historically, sustained rises in silver and gold prices can drive exponential gains in junior mining companies, but one has to be attuned to the events driving the gold price.

Take the CoronaVirus for example.

The market is pricing in concerns that the unknowns surrounding this novel outbreak could equate to a substantial reduction in world economic health. With pilots and air service personal beginning to advocate for a cessation of flights to and from China, that impact alone has obvious implication for airline stock performance and fuel supplies.

Gold is the beneficiary of such fears, and gold juniors too, once the gold price trend resolves firmly upward.

But if a vaccine were to become widely available in the near term, or the virus itself somehow exhausted its ability to spread, and the news cycle began to telegraph the all clear, chances are the price of gold would beat a hasty retreat, taking junior gold miners’ stock prices with it.

But that doesn’t take into consideration the longer term persistent drivers of the gold price; rampant capital and credit proliferation by the corrupt and out-of-control central banks have the effect of compressing gold demand with every dollar mustered from hocus pocus monetary policy.

Long term industry observers have been predicting an explosive breakout in the price of gold to the upside, which would coincide with the crossing some major inflection point in the central banking scheme that might herald an end to capital fabrication.

As is often pointed out, the Federal Reserve Bank of America – hands down the ringleader in the global central banking ponzi scheme – has painted itself into a corner. The illusion that they were in charge of the cartel was decidedly dashed when the banks mounted a mutiny in the overnight repo market, driving overnight rates to ten percent and above by withholding participation in the provision of cash to the system on an overnight basis.

That was back in September, and since then, the Fed has injected over $400 billion in what it says is “not quantitative easing”.

Its clever and typical of the white collar criminals who call themselves Fed governors to target an esoteric backwater of the monetary system that most everybody is clueless about and so unable to care.

But it’s by these unconventional and novel moves that the Fed is responding to the pressures created by Tier One banks who have themselves become addicted to the endless profit generated by the Free Money Machine.

At some point in the timeline, we will cross into the territory governed by mathematic reality where the rate of capital fabrication becomes known as “hyperinflation”, and when that happens, gold, silver and the rest of the valuable metals will become the haven that large capital pools flock to as they flee USD, Euro, Yen and Yuan.

But, having been waiting for that day to arrive for at least ten years, there’s no telling exactly where in the timeline that point exists. But it is definitely there.

James West

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
More Info...

[email protected] | |

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.