Hey There Income Hunter,

If last week’s headline Consumer Price Index (CPI) of 7% – the highest since 1982 – was calculated as it was in the 1980s (the recipe has been tweaked over the years to tamp down percentages), it would have been worthy of inclusion in Ripley’s Believe It or Not! for inflation.

Regardless, what I thought was even more important about last week’s CPI report was gold’s performance in the aftermath. 

You see, in 2021 high inflation triggered massive selling of gold because the market believed the Fed’s transitory story and in the central bank’s ability to use tools at its disposal to squash inflation if necessary.

Power Income readers knew better and I consistently recommended commodity and energy stock purchases most of the year.

Why?

Because I knew gold would only soar once investors caught on to the Fed’s scheme to over-promise and under-deliver. 

Today, I’ll share data and charts that show it is Gold’s time to shine and 2022 will be THE year the tide comes in and the Fed is left totally exposed.

Short-Term Expectations for Gold

I expect headwinds for gold until traders realize that the Fed won’t be as aggressive in fighting inflation as currently expected. 

This is an opportunity to dollar cost average (investing a set amount at regular intervals over time) into quality gold mining stocks on weakness, because the credibility of the Fed is beginning to erode.

It will not be long before investors realize the dollar will be sacrificed in order for the Fed to continue postponing the inevitable bursting of the “everything” bubble. 

The US Dollar Is Key … 

Last week, the US Dollar index (Ticker: DXY) suffered a 1.7% drop even with the continued hawkish talk out of the Fed and the record CPI report. 

This signals that Fed credibility is weakening.

Now, I think the dollar will bounce, but if it fails to get above 95.60 the highs might be lower and the dollar may fall in the face of Fed tightening. 

Gold Stocks to Watch

With the sector looking this cheap, I don’t see any reason to buy individual miners.

Stay on the lookout for Van Eck Gold Miners ETF (Ticker: GDX). This is a deeply liquid senior gold miners ETF and when gold breaks above $1,830.00 GDX will rip higher.

I would get long GDX on a move down to $30.50 with a stop below $29.75. 

You don’t need to risk much down at these levels and the reward on a gold price breakout will be a multiple on returns.

A great place to get the exact details, updates and alerts on the trades I’m making? My Power Income Trader program is with you every step of the way – and it’s up 58% since September.

Bring It Home

2022 will be the year the Fed shows that it is willing to sacrifice the dollar to keep markets elevated for as long as possible.

But no matter what, this policy won’t work.

The US debt burden will only grow as support for the dollar and Treasury bonds from foreign investors is decreasing every month. Those investors realize the Fed will flip back to easing as soon as the economy shows signs of weakening. 

Accumulating gold while it is for sale will be a boon for your portfolio – it’s simply a matter of when.

Live and Trade With Passion My Friends,

Griff