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Asian Metals Market Update: Stimulus, or free money, is Inflationary

The recent range trade in gold, crude oil and silver will be broken soon and a new range will be formed. Everyone knows that gold, silver and crude oil are bullish. Judging the pace of rise is the key. Short term investment demand will be dependent on the pace of rise and not the actual rise. Gold is now behaving like any other investment which rises and sinks along with all asset classes. This is just a temporary phenomenon.

There has been an inverse correlation between crude oil and natural gas. Negative crude oil price this year has resulted in lot of hard core crude oil traders switching in natural gas. I personally believe that future lies in natural gas and not in crude oil. Global natural gas prices should double in less than three years. Buying some far dated natural gas call options should be a part of your long term investment.

Everyone is now thinking what next as Trump recovers from covid, fomc and fomc minutes are over, and even various US jobs numbers have been released. I will be investing in gold and silver to have a Merry Christmas and great 2021. China, USA and other nations will give more stimulus to people. Stimulus, or free money, is inflationary. Free money+hyperinflation = gold continuing its historical rise till next year. The amount of stimulus will depend on sustained spread of covid in each nation. Already there is fear that winters in northern hemisphere will result in phase three of coronavirus. This fear will result in gold investment demand rising every fortnight.

Trump on Tuesday night tweeted that there will be not be a stimulus package for Americans. On Wednesday Trump reversed his position by tweeting that there will be sector wise stimulus package or bailout package instead for a general stimulus for all unemployed Americans. This is a political move aimed at voters which are his vote bank. This is pure vote bank politics. As an Indians I understand this better. In India politicians organize communal riots and do every anti national things before the smallest elections in India just to win. Trump and his vote bank politics should be overall bullish for gold. The pace of rise will be slower than the second quarter.

Day traders and jobbers have to trade very carefully.

COMEX GOLD DECEMBER 2020 – current price $1889.20

  • Gold will break free from $1840-$1900-$1940 wider trading range and form a new range anytime.
  • Today gold needs to trade over $1873 to rise to $1917 and $1930.
  • Gold will crash only below $1873.

COMEX COPPER DECEMBER 2020 – current price $302.00

  • Copper needs to trade over $303.00 to rise to $309.60 and $313.40.
  • Copper will crash if it trades below $296.70.
  • In the past copper has failed to break $313-$319 zone.
  • There are chances of a very sharp correction in copper (once again) in case copper does not break and trade over $313.40 in the next two weeks.

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