Techquity
Technology Investor, Fundamental Research
Gold looks like the safest place to go defensive now. Geopolitics are bad, the market is losing key support, inflation will be hard to avoid and rate cuts are less likely. Gold has had a breather and is back on support, while trends look broken on many other assets and do not reverse easily. Returns may not be the best, but this is a time when safety matters more. x.comÂ
Gold is extremely attractive now because rising market fear could make it a great hedge. It has fallen nearly 30% from its January all-time high and returned to the accumulation zone. If this level holds, expect a bounce soon. x.comÂ
Gold is hard to hold at a 0% yield while interest rates keep rising. @Mr_Derivatives notes gold's 3.93% drop at the close was the fifth-worst drawdown of the year, driven by rates. x.comÂ
Gold is set to take off as energy-driven stagflation traps the Fed and negative real rates favor it. Today's dovish hold was likely its last chance to hike: once the AI bubble bursts, the Fed loses that option, while current debt-to-GDP rules out Volcker-style hikes without fiscal insolvency. Per Macrotrends' chart, gold rose eightfold from its 1976 low to its 1980 high, equivalent to $32,000 gold over five years in today's terms. x.com x.com x.comÂ
Gold wins when policymakers pin yields and let inflation run, because real assets gain while cash loses. Gold is at all-time highs and bitcoin has drawn heavy inflows almost daily since Aug. 5 as institutions front-run the government's promise to prop up the market. Stanley Druckenmiller warns in the WSJ that this price management does not fix the debt, only decides who pays, and the bill lands on cash holders. Waiting means buying at higher prices what institutions already own. x.com x.comÂ
Gold tends to perform poorly when liquidity contracts, while it performs best during recoveries. Gold looks likely to fall next year. x.com x.comÂ
Gold and silver may benefit if yields ease a little further from their local high for a while longer. The FOMC meeting and minutes could be good for both. x.comÂ
Gold should benefit because the US Treasury and the Fed will do whatever it takes to bring long-term bond yields under control and save confidence in the dollar. That means de facto money printing through new short-term debt, swap lines to governments hurt by the Iran war and buying foreign currencies so holders don't sell US debt. These actions are inflationary, making crypto and gold the assets to own. Stocks can keep rising for a while but may not stay the fastest runner. x.comÂ
Gold has formed a multi-year top at $5.6K and won't return there before 2030. It is in a high-timeframe distribution phase, with trillions of dollars rotating out of gold into US equities, bitcoin and Chinese equities, fueling the next risk-on environment. Silver showed a classic blow-off top, and the same applies to gold. x.comÂ
Gold's dip on rate-driven opportunity costs is a buying opportunity, because higher rates force faster money-supply growth. The system is designed that way, since letting defaults ripple through it is politically unfeasible, and that pressure will intensify until the great monetary reset. x.comÂ