I Gregg welder here for a real vision and this is tech trader
We're gonna be discussing a big picture trade. We're gonna break it down into a couple of different ways
You might play it depending but futures of Canada trade the equities ETFs, whatever your preference might be
We're going to give you some options on this one, but it is big picture
We're gonna come back at you here on real vision with more of the big picture theme as to exactly why
Fundamentally, you need to be involved into precious metals. I mean, I wrote my book gold trading boot camp in 2006
We kind of called, you know monetary Armageddon which at that point was you know fed
Monetizing a treasury debt and printing money and having to bail out the consumer and someone and so forth stuff that was considered, you know
Unthinkable at the time was not only thinkable it was done
We see a similar situation
developing here times ten like that situation on steroids a lot of differences admittedly, but a lot of
Similarities the main one being if you have another wave of deflation risk
Central banks are in a much weaker position here in terms of trying to do something about it
But then that begets the question they always seem to have their backs against the wall and they come up with increasingly
You know creative ways to print money and to stimulate the economies and to reflate to consumer and to avoid a debt deflation
because it'll cost that's what central banks want to do right now is
Avoid a debt deflation and they're gonna be tested in the next 18 to 24 months. Really
within the next three to five years like gold was at four and a quarter in
2006 very cheap tripling quadrupling in price same thing here. I would say gold at
1,300 here 1,400 now is about as cheap as it was then at four and a quarter. We're gonna talk about
The market in terms of kind of the currency dynamic because this is really important
It's the ECB the central bank that is really on you know on the hot seat here sitting on the hot seat
I mean they have negative forty basis point of deposit right you really they're pricing in another cut to minus 20
The problem is you get more and more debt in Europe and with negative
Nominal Gill's and you're basically having you know consumers investors and savers paying governments to hold their money. This sucks money out of the
They can't let this stand the ECB is discussing. What would be a
unprecedented plan another revolutionary type of monetary situation, that would be
QE on steroids to deal with the deflation on steroids when you have economies that are really coming unglued quickly and you are
Despite the fact that you have all these negative yields. It's just not working. Something's got to change
Something's got to give and it will and the ECB is gonna be at the forefront
We're watching the euro and keeping in mind that what comes next
Outside of why we feel so strongly about precious metals could change the entire
dynamic for bond markets for currencies and for stock index futures
So we got to keep all that in mind and you know looking at that you look at the Euro
I mean kind of on the verge here you had a little bit a rally in the Euro ran into overhead resistance
Right where it should have and now it's threatening to break down again. You know when the ECB potentially makes
You know another kind of stellar or surprising pulls a rabbit out of the Hat monetary move
You really could see some fireworks in the Euro
frankly could be down first and then much higher even so we'll keep an eye on all that and
You kind of see the long-term picture
I mean a move below 111 in the quarter would be really negative for the Euro would easily set up a test of the
103 to 104 level
but really it comes down to gold because this is a situation where you know
The euro is higher than the euro was lower
the dollar was lower and now it is higher and at the end of the day gold is higher against all these
Currencies because gold and the dollar link has broken down and now gold is where he wants to be in its sweet spot
Appreciating against all paper currencies a rising concern about abilities of central banks to keep papering over these issues
Rising mistrust and uncertainty around any paper any IOU. Io u--'s currencies bonds
They're both how you use it's the same thing backed by nothing and in a sense of gold and euro breaking out
It's a long-term break out you can see this above 1237 euro now
You know pretending a move here at the very least to test the all-time highs set in 2012. If not violate them
Probably significantly. So at the same time the the dollar
Has kind of bounced again off the two year moving average
I mean boom there boom boom here
And you know and then again off the two year moving average and with this flattop of overhead resistance
The problem here for the dollar is really when it comes down to the rate of change
because right now you know
you're one year two year rate of change is about four and a half if you get this thing to break out and you get
Back up to 104, you know
the rate of change is going to accelerate and particularly the longer term rate of change the five year rate of change right now is
threatening 20% and if you get above this
ninety
eight and a half level and you accelerate up through 104 that's going to really extend the
Appreciation of the dollar to the point where it starts to weigh on commodities
it starts to bring emerging markets and currencies and bond markets and stock indexes back into the feds purvey as a
Potential risk you have had five fed regional bank presidents in the last sixty days
March out and they have all said the same phrase and that doesn't happen unless it's meant to happen and that phrase is they are
concerned about the credibility of their inflation target and if that is true
They cannot allow the dollar to break out because their inflation target is already somewhat
You know being called into question
With you know inflation
50 basis points below where they really could want it to be and now all of a sudden because inflation is falling, you know
They're not just neutral. They're actually tight
They're gonna have to cut rates just to stay neutral
So that you know is interesting
and
Really the reason we're if the dollar were to look like it was breaking out and whether this might even be a sign of some
Dollar debt issue globally turkey comes to mind almost immediately
that would be even more problematic because it would be on the Fed to
Be the one to act almost as the central banker to the world
Which is I think a dynamic that is slowly kind of beginning to evolve here, too
So in that case a dollar move up here would bring the Fed more aggressively into play
And of course that would be positive for gold
In terms of the ranee, of course
And we look at the three currencies euro dollar and NIMBY
But I mean again gold breaking out an Aussie dollar at record highs, you know breaking out against a lengthening list of currencies
Okay. Now the room in me, I mean the room nippy had a rally here and then it's had this big decline
I'll tell you what. I think the Chinese have played this trade situation
Just very very well
if their point here was we know we're going to cut a deal but if we walk
From the table we can get some depreciation in our currency and no one's gonna say a word and that's exactly what's happened
And when you get that depreciation and really it's about kind of squelching the appreciation
but if you look the appreciation of the renminbi
Over the last 12 months had reached a new all-time high
It was above 9% for a period of time on a rolling 12 month basis
That's problematic and in signing a trade deal then would have been equally problematic
Now they've taken this kind of walk away plan and likely to come back to the bargaining table
When they're written in be kind of calm, you know, it's depreciated to some degree
The bigger question is can the renminbi depreciate through this 698 level?
And you know, I think the answer to that longer term is yes
But that means a higher dollar but this is really where you start not to care in terms of gold
Because gold is rallying against all these currencies. Okay, the renminbi is up. The renminbi is down
What is up and for short breaking out?
It's gold priced in Chinese renminbi and you see that here and you see that here on the long-term basis
Where it's you know above this 9,000 a rim
Maybe a per ounce level and basically now targeting it's all record highs around 12,000 room. NIMBY
Now as it relates back to the dollar here is where it gets most interesting because the dollar has D linked from gold
More importantly gold has D linked from the dollar and we see that in the sense that the dollar is almost that new highs here
Almost breaking out. It's appreciating 5% over the last two years
When in the same time if the correlations had held gold would be between 1050 and $1100
It's not it's 1,400 and it's breaking out and when you look at the gold adjusted value of the dollar index
Which is very simply the dollar index divided by goal
No rocket science here, but very telling is kind of a gauge of monetary policy and you can see you know
A Fed got a little too tight in here dollar in gold terms was rallying it is now reversed
It's on the verge of a major breakdown the longer-term trend to the upside
violated retested and now reviling and this tells us that the feds move here towards a easing bias is you know
For real and they're gonna you know, they're gonna have to keep up with the timeline lay down the Fed Funds futures market
But that's a whole nother trade for another time. Bottom line here is dollar adjust
My goal is breaking down on a long-term basis and is now down almost 10% on the 52-week basis
That's huge and very bullish in the backdrop. And we look at the long-term moving averages on the same dynamic
You just crossed bearishly you want to talk tech trader. This is just pitiful stuff for long term tech trading
You take the we have the two-year five-year and 10-year moving averages of the gold
adjusted value of the dollar and
This just rolled over to where the two-year move back below the five-year in May end of May
So we're talking five weeks ago
major long-term secular stuff doesn't whipsaw a lot now turning in favor of gold and against the dollar and
Again, nice Yogi. Berra would be proud of Stasia vu all over again
You know bottom line is the dollar has been it is now and will be even more
So in the future the relief out, it's just the way it is as the world reserve currency
And now is that the Fed was among a few central banks actually
Created some room for themselves to cut rates by raising rates that opportunity ECB really missed in the beginning of 2018
You know leaves this to the Fed and I think that this is really part and parcel of what's happening in terms of gold breaking
out despite the fact that the dollar is on the verge of its own breakout that couldn't be more telling the
Long-term picture here is very bullish for gold from a technical structure when you're talking about the secular trends
All right this decline I remember the days we were tracking when gold was flirting with
10:50 and you had this level the 50% retracement from the
1976 low the entire run from $100 to almost 2000 dollars
You know right around as you might suspect the 50% level was 1050
How many days in a row on the candlestick chart on the daily candlestick?
Did you have move below the 50% retracement during the day and it closed above it?
It was uncanny how many days that happened and watching the market every day
It's such a tell there's demand for gold below 10:15
My guess would be the Chinese were you know?
Eating it up there and of course the statistics later on proved it was the Chinese that were buying they're very astute traders
So the long-term picture is then here's your correction. You had ABC Fibonacci and you're rolling back the upside
Well, this is basically one two, three, four five
Typical Elliott Wave dynamic more wave five has just been ignited, you know, we talked about ignition and here we have liftoff in gold
So how do we want to play that well, if you're not long any retracement down into this?
I mean you guys you get below
1300 you get like a 1295 print it's a kid from the gold gods. You got to back the truck up in that case
I don't know that you're gonna see that. I don't think you'll get much below 12
65 to 1260 if you get a dip, I mean because this is a longer term break down breakout
I mean so you know 13 45 would be kind of a last guest on the downside and then frankly
I mean you get below 1290 then we're wrong and then 1266 that risk, but I really don't see it happening
Not when I see stuff like this and here we get to the trade final. Yes right to the trade
All right, the GDX gold mining
ETF really like this here. I mean it is now breaking out. Look at this pattern. I mean it makes new lows
This low is so unconcerned by any technical, you know momentum indicator
You want to throw in you got the breakout you got the retest of the trendline that was violated
I love this pattern 30 years in doing this
I'm telling you one of the most reliable
patterns when you get a long-term
Trend breakout and it kind of seems like it's running out of steam and it comes down
It might even make a lower low, but it holds above the violated trendline
That's huge that retest on the backside particularly when it lays out right in the zone between the 50 and 61%
Fibonacci retracements in the meantime you get back over the two year moving average
Which is now accelerating the upside and making a new high in line with price a very bullish dynamic and this is long-term stuff
Man here look at the 52-week and the and the two year moving averages crossing over here as well. Very bullish
The GDX would be the trade here
You know in the in terms of what trade we're putting on here
one of them
GDX would be would be an option and Franco you just plow right in here because the risk/reward is still quite favorable what I love
About this too is gotta have confirmation that the GTX could potentially outperform. That's the whole reason for buying it
And in this case the GDX breaking out against the price of gold
This is huge
Not only in terms of this, you know from the micro standpoint of this trade
But for the sector as a whole it's something we have not seen since 2016 and we have a long-term
Retest that on the back end love that pattern
break out in gold GTX mining against the spot price and
not only that there's a bonus here and we said this a few weeks ago in one of our daily reports that
This would set up to wherever you you would actually get some rotation in the next phase of fed
moving towards an ease within the stock market itself out of trend of the high-flying tech now that some of the top performers
You know over the last 10 years
And into the precious metals mining shares and you're seeing it because you're on the verge of a breakout in the GDX against the S&P
500 that would be massive
Junior gold mining same thing looking at a breakout here a breakout here really confirming as of yesterday. We're filming here on the 12th of
July and you can see the action here on
Thursday the 11th was very positive for the junior gold mining for the weekly chart to close above 3500 for that would be an option
to I'd just like to straight GDX for now and
In terms of then potentially, you know number the brave
I mean you want a triple leveraged and you treat this like a call option be willing to
basically risk every dollar you put in here because these things are notoriously volatile and you know,
Whipsaw and there's all kinds of different, you know crosswinds going on here
But the nugget the nu GT would be kind of a call option or you know for risk capital you say none but the brave
for the adventurous you would buy the nugget because this would give you great upside potential if you are willing to lever up and
Understand the risk here understand the risk the risk here is you know
basically as
Much as you're gonna buy this thing for it just have to look at it that way
It's the best way to manage the risk and then we come to silver because this really may be the opportunity
We haven't had participation from silver. It's reflected in the fact that the silver the gold silver ratios at a
27-year high, okay silver is on the verge of a breakout. It hasn't performed
But that's okay because this hasn't been a monetary thing until kind of now
So in that case we're looking at 1555 and then you got 1565 the two year moving average
These would be potential breakout pivots and certainly above 1620 that would constitute liftoff for silver which is sitting on the launching pad
I mean look at this pattern you have a four year and making you know
Multi-touch low below $14 between you really 1350 and 14 and a quarter. You even go back five years
coiled and look at the look at the
volatility, I mean that's where it really gets interesting and the volatility and silver is that
multi-decade lows in the long-term perspective the historic volatility which suggests call options could be a
Strategic opportunity here as would be the si el the si el above. 28:19 would be a breakout and
From that perspective above 28 night. 28:20 would be a long-term breakout with massive
Bullish divergence a great technical setup here for the si el and our final bonus
Okay
We heard maybe
You know our pick
Silver miners breaking out against silver really keen want to see the mining shares outperformed the metals in both cases
I haven't seen that in a long time. All right, after a new low that was completely unconcerned
Very rare on my trend kind of trend oscillator with the bottom line here is first majestic
We picked first majestic as our top pick when we did our fourth quarter 2015 piece actually before this, you know
Third leg to the downside and that was the out performer. We see the set up similar. It's already broken out
it's still in a good risk reward position here at $10 your risk 850 and you have potential upside to $20 or higher the
The F are traded in Canada. So gold - guru.com is the new website. We're debuting
Just to try and you know help people take advantage of this really what I see is kind of a you know
Once in a ten-year potential opportunity here in the precious metals. That's it for today. Greg welded for real vision
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