Hey There Income Hunters,
The Fed is not going down without a fight … They won the first battle, as they managed to prevent the dollar being pounded down below $89 on the US Dollar Currency Index (Ticker: DXY):
We will see just how large shorts are in the dollar …
And if the dollar will be able to climb above its 50-day moving average (MA) at $92, or even make it above its April high of $93.40 to take a crack at $94 …
J-Pow definitely caught the market offside, and won the first battle … However, winning the war may be a bit tougher … It will be interesting to see how China and Russia retaliate …
Especially China, when we know their artillery (meaning dollar reserves) are plentiful …
I’d like to review the trades Andrew Giovinazzi and I presented last week … I also have some data to show that supports what I think happens next …
Uranium – Denison Mines (Ticker: DNN) & Boss Energy (Ticker: BQSSF)
- DNN – I liked the Jan. 2022 1-strike call spread priced at $0.60,and it’s currently between $0.55 – $0.60 … so essentially unchanged.
- BQSSF – I made an outright purchase of shares trading at $0.14. They’re currently trading at $0.14 — so also unchanged.
Gold – Van Vectors Gold Miners ETF (Ticker: GDX) & Sandstorm Gold (Ticker: SAND)
- GDX – I targeted the Jan. 22 39/50-strike call spread expiring on Jan. 22 for $2.60 … it’s currently trading at $1.45 … so down $1.15 … I am adding here at $1.45.
- SAND – Jan. 22 9-strike call purchased at $1.25, and currently trading at $1.15.
I like owning uranium because it is not highly correlated to other commodities, which provides diversification. Plus, there is limited supply, and the ramped-up interest due to the no-carbon emissions mandate provides excellent growth prospects for the miners …
The Macro Picture remains Intact…
- Out-of-control central bank printing of money around the world will continue to create demand for physical gold over time. You should approach corrections as an opportunity to add to your core portfolio.
- There is no way out for the Fed … short-term they can make tactical moves like they did on Wednesday, however, the end result will be a much weaker dollar and long-term inflation …
- Many of the US’s global partners have been preparing for a move away from dollars. This trend will only accelerate in the years ahead, as the new multi-currency monetary system evolves.
- Gold will play a major role in the new monetary system, and could be revalued much higher as a vehicle to devalue the debt of the reserve currency countries.
Gold versus Real Rates
The chart below illustrates a historically wide gap between the current gold price and the 10-year rate adjusted for inflation (Real Rate). The Gold/Real rate correlation has been the best predictor of gold’s price trend, and suggests gold is as cheap as it has been in years:
Here are the trades I’ve closed this month …
I closed long equity positions, and added commodities and metals to the portfolio:
I also close a put spread iShares Silver Trust (Ticker: SLV) hedge yesterday:
This hedge returned 175%, offsetting some of my drawdowns.
Here is my current portfolio:
Bring It Home
The Fed threw a curve ball at the market, and I really think it could have been a sneaky way to bail out the US and European banks as they attempt to unwind their gold derivative positions ahead of the June 28th deadline …
The Bank for International Settlements has suppressed the price of gold for the Fed for years, so it isn’t so far fetched. I’ll have to do some digging to see what I can find out …
Have a great Friday everyone, and until next time …
Live and Trade With Passion My Friends,