Traders are now expecting a 0.75% interest rate hike tomorrow by the Federal Reserve. They have also started discounting a 0.50% interest rate hike in July, September, November and December meetings of Federal Reserve.
There is panic
- There is a panic on the aggressive pace of interest rate hikes by central banks.
- There is panic of a sustained recession.
- There is a panic about the continued rise in debt payments and mortgage payments.
- There is panic about long-term cryptocurrency investment for the first time since 2020.
- There is panic about long-term stock investment.
- There is panic about the unstoppable rise of food prices and energy price.
- There is panic about moving into poverty.
Panic reduces oxygen supplies to the brain. This results in making investment decisions out of fear. Rational thinking and prudent thinking go for a toss. The end result is hyper-extreme price moves in different asset classes. A fifteen fall from key long-term support while maintaining the long-term bullish trend happens when world panics.
The big question now is “Will there be a relief rally in stocks, base metals and precious metals after the FOMC meeting i.e., on Thursday and Friday. If global stock markets continue to fall on Thursday and Friday, then they will reach Marina Trench (lowest point on earth in the Pacific Ocean), very quickly and further towards the earth’s core. My reasoning is that central banks want a continued slide in global financial markets if stocks do not see a relief rally on Thursday and Friday. We are just pawns at the hand of central bank chiefs. Gold and only physical gold is the best hedge against central bank manipulative decision-making.
Key core issues have never been addressed by central banks. I started Insignia Consultants in 2003. Since 2003 and even before, every central bank has just used monetary tools like interest rate changes, to address growth and inflation. The focus is never to address key manufacturing issues and self-sufficiency issues. Extreme bubbles will be there as long as central banks keep on ignoring core economic issues away from money supply. The difference today is that people are asking themselves as to how long the recession or slowdown will continue. Masses are not prepared for even twelve months of stagflation. There will be riots and other forms of mass unrest world over, if food and energy prices continue to rise on or from fourth quarter. Once again physical gold is the best hedge against such an extreme but possible scenario in the world.
The direction of the US stock future will be the key. Another big sell off in cryptocurrencies (if any) will prevent gold and silver from moving into a short-term bullish trend. Crude oil and natural gas are a punters zone.
COMEX GOLD AUGUST 2022 (current market price $1826.20)
- 200 day MA: $1850.90
- 50 week MA: $1837.90
- Key support: $1822.40
- Key resistance: $1850.90
- Gold has to trade over $1822.40 today to rise to $1850.90 and more.
- Gold will crash if it trades below $1822.40 to $1812.60 and $1780.90 and $1760.40.