Will Gold hit $1900 in 2020?
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The price of gold appears to be making a jail break to the upside after consolidation in November.
Gold had a year high price of $1564 in 2019. In November gold remained trapped in a range from $1450 to $1481. After forming a compression triangle, with lower highs and higher lows, it broke out to the upside. After crossing $1500, it retraced over 50% of its return to $1564. Because of the Fibonacci sequence, there is a propensity projection for gold to take out the previous high of $1564.
Many believe the stock market is overbought and gold is oversold. E.B. Tucker, with Metallic Royalty & Streaming gold royalty, believes as long as the monetary base keeps growing, gold prices will keep rising. He is calling for gold to take out its old high of $1900 in 2020. Central Bank policy has encouraged the printing of $22 trillion in new credit since 2008. $17 trillion in bonds have a yield below zero. U.S. stock equities are at an all time high after the Federal Reserve pumped over $500 billion into to the Repo market to make the New Year turn. In January, 2020, $280 billion in temporary repurchase agreements mature. This will suck liquidity out of the banking system and the stock market. If equities drop the price of gold should spike. If the Fed shifts to permanent quantitative easing in 2020 one could conclude inflation and gold would spike. I am long Gold Resource Corp. (GORO).
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Federal Reserve officials expect to hike rates roughly six additional times this year, bringing its benchmark Fed Funds Rate to nearly 2%. In May the central bank raised the Fed Funds Rate by ½%. Can they reach their goal without a recession?
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One is wise to sell on the rumor of bad news and buy on the fact. Gold is approaching over a year of consolidation on the rumor of Fed tightening and a rate hike. Next week the Fed is expected to increase its bond purchase taper and hint of more aggressive rate hikes in 2022. However, there is almost a two year lag between money printing and inflation.
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Lincoln said, "You can fool all the people some time, you can fool some of the people all the time, but you cannot fool all the people all the time." Jerome Powell has stated the Fed will "began to taper QE and raise interest rates" and "inflation is temporary"
