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Keep Your Powder Dry…There May Be A Great Opportunity Coming In Gold

October 21, 2014

I have both good news and bad news for Gold bugs.

The bad news is that the US Dollar is rallying hard. In fact it just broke out of a multi-year wedge pattern. This is extremely bullish for the US Dollar… which will prove bearish for commodities, Gold included.

You see, with interest rates so low, financial institutions around the globe have been borrowing hundreds of billions if not trillions in US Dollars and plowing this money into everything from emerging market stocks to commodities.

The problem with this is that any US Dollar rally can trigger liquidations in the commodity sector. And this can hurt Gold as liquidations tend to be indescriminant.

Gold, on some level, knows this, which is why it’s recently taken out a long-term bullish trendline (the green line below).

That’s the bad news. The good news is that this breakdown will likely result in Gold falling to $1000 or even lower in the coming months… which gives us the opportunity to buy the precious metal on the cheap.

Gold investors are not like stock investors. They don’t buy Gold simply to speculate. They buy it to hedge against catastrophe. And given that the financial system is now even MORE leveraged than it was in 2007, the opportunity to buy Gold at sub-$1000 courtesy of liquidations in the commodity sector would be one HECK of an opportunity.

After all, the next financial crisis is already beckoning around the globe. And when the Central Banks hit “panic” this time around, Gold will absolutely EXPLODE higher.

It’s coming. So keep that dry powder handy.

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Best Regards

Graham Summers

Phoenix Capital Research

Graham Summers is Chief Market Strategist for Phoenix Capital Research, an independent investment research firm based in the Washington DC-metro area with clients in 56 countries around the world.

Graham’s clients include over 20,000 retail investors as well as strategists at some of the largest financial institutions in the world (Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, and Raymond James to name a few). His views on business and investing has been featured in RollingStone magazine, The New York Post, CNN Money, Crain’s New York Business, the National Review, Thomson Reuters, the Glenn Beck Show and more.