Hey There Income Hunter,

 

Well, the only solution that Europe has come up with to address the most serious energy crisis in history is … 

 

Printing money.

 

The US will not be far behind as Western nations will be forced to make one last attempt to save their economies.

 

This past week:

 

• Incoming UK Prime Minister Truss drafted a massive $150 billion to freeze UK power bills.
• Next, Germany announced another $65bn energy stimulus.
• Then Switzerland and Finland came out and said trillions more in liquidity support will be needed.

 

The rest of Europe will certainly be joining in a coordinated cascading of new money needed to bail out energy companies and provide relief payments to customers.

 

On the flip side, Russia is so awash with cash it may need to cut bacon production to slow down their buildup of reserves …

 

Today, we’ll take a look at gold, which will be a major beneficiary of all this money printing and see if this is a golden opportunity.

 

The Pros for Buying Gold

 

One huge positive for gold is that sentiment has turned bearish as money funds have sold their long positions. 

 

That means the bullion bank dealers that have manipulated the paper gold market for decades have cut their short positions.

 

And that removes their incentive to push the market lower.

 

However, it doesn’t mean they can’t go net short. Notice the chart below showing the banks net short positions during 2018 right before gold soared to a new record high just two years later …

 

Another huge positive is the strong buying of gold last month from major US trading partners.

 

China is on a serious buying spree as they sell their US bonds and buy gold. This has been the trend for a while and certainly gold is much higher when priced in non-US currency.

 

 

Notice that some of the countries, like Saudi Arabia, Turkey, India and China are working with Russia to find non-dollar settlement structures for energy trades.

 

Longer-term, a new settlement vehicle for energy that includes some gold may be the most bullish driver of higher gold prices. 

 

The Cons for Buying Gold

 

Technically gold is still in a short-term down trend. Like most commodities the tightening policy among central banks to fight inflation has killed demand for most everything, precious metals included.

 

Notice the chart below showing a recent failed attempt at breaking out above the downtrend resistance. This is a bearish signal and we may see one more lower low.

 

 

I am extremely bullish on gold for the long run and the seasonals are bullish from October to January.

 

I’d like to see one more low but would also get aggressive on an upside breakout on good volume above 1780, and then add above 1820. 

 

Bring It Home

 

Another crazy bit of data to show the real situation in gold and silver is that buyers are paying incredible premiums to buy silver coins compared to the paper price of silver.

 

I was buying silver Maple Leaf coins that were 99.9% pure silver for a while, but the premiums just kept rising. Now you have to pay a 50% premium to buy physical silver.

 

Plus, Canada is already talking about universal income, which is hyper-inflationary and bullish for the yellow metal.

 

Lastl, gold gives you the added benefit of a revaluation if used within a neutral reserve currency basket for settlement of energy purchases. 

 

It is not a matter of if but when silver, gold and most commodity prices go much higher, thanks to central bankers’ obsession with the printing press. 

 

Have a great weekend and as always …

 

Live and Trade With Passion My Friend,

Griff