Michael Oliver on Bond Worries and Gold

In his latest weekly article posted at Goldmoney.com, titled, Bond worries and gold, Alasdair Macleod stated the following: “There is evidence that US Treasury bond yields may continue to rise, exposing the debt trap in which the US government finds itself. Market participants don’t realize it yet, but the dollar-based monetary system is spinning out of control. This will become obvious as the crisis stage of the credit cycle, which we now appear to be entering, becomes evident. 

“The outlook for monetary inflation is dire. Not only will governments fund themselves through QE, but central banks will be forced to inflate even more to pay for government deficits significantly greater than currently forecast. And when markets stop taking government statistics on inflation as the Gospel Truth, the interest cost of government funding will rise and rise, reflecting an increasing rate of time preference for fiat currencies which will be losing their purchasing power at an accelerating rate. 

“In a world where all fiat currencies will face enormous challenges, using yardsticks such as trade weighted indices will be misleading. The best gauges of the slide in fiat currencies will be commodities, particularly commodity monies, gold and silver.” 

Next, I remind you of Michael Oliver’s recent comments in which he discusses the two very sleepy but very major markets that he believes will signal the next major move in gold. Those markets are the dollar index market and the entire commodity complex as measured by the Bloomberg Commodity Index (BCOM). Michael’s Momentum and Structural Analysis points to the following key numbers, which if achieved by the end of this month would signal major directional changes for those markets and would most likely trigger the next major move in gold:

  • If the BCOM rises above 79.35, it would signal that a major rise in the entire commodity complex is underway.
  • If the US Dollar Index fell below 97.27, it would signal a major decline in the value of the dollar, vis-à-vis the euro (57.6%), yen (13.6%), pound sterling (11.9%), Canadian dollar (9.1%), and the Swedish krona (4.2%).

With just two trading days left in the month and in 2019, both of those “lines in the sand” have been violated. It’s entirely possible the last two days of this month will see those values reversed but it seems unlikely at this time. As such, it seems likely that Michael Oliver’s work is once again pointing us toward an important turning point that may not be good for America but should be very good for gold. And what this also indicates is that Michael’s work once again appears to be in sync with that of Alasdair Macleod’s. So you see, there is a reason these two men are my most frequent guests on my radio show.

Last week on my radio show I interviewed Bob Moriarty, Brent Cook, Gwen Preston, and Greg McCoach. Bob and Gwen both chose GFG resources as one of their two top picks. Bob also recommended Hannan Metals, which I believe is on to a major copper-silver discovery in Peru. I purchased both GFG and Hannan Metals this week for my personal account and this week I am commencing coverage of Hannan Metals in this issue. To help fund those purchases I trimmed back a bit of my Irving Resources. I should mention that my belief that we are heading toward an increasing inflation problem is part of the reason I chose to add Hannan to my personal portfolio and to commence coverage. But with both Hannan and GFG, I like both of them very much because of their potential for major discoveries. Also, over the past couple of years, I have become much more active in buying and selling stocks covered in this letter for my personal accounts, to try to use my limited resources as efficiently as possible. I have taken a chapter out of Chen Lin’s book to try to own stocks before news events and not to sit with them for prolonged quiet periods. It has paid off for me, with my personal portfolio up over 57% this year with only two trading days left. This week I am starting an annual review of all the stocks covered in this letter. As we enter a new year, I am very bullish on the mine exploration sector. That’s not necessarily good news, because rising inflation and rising gold prices often point to social troubles. But better to be prepared than not.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.