Gold, Tiny Stocks, and Big ‘Re rates’

Friday, 12 March 2021
Melbourne, Australia
By James Woodburn

[3 min read]

Dear Reader,

Gold’s been a big topic this week.

For starters, it was the subject of Wednesday’s Bullion & Bourbon Hour podcast we record every other month or so for Rock Stock Insider lifetime members.

Up until the night before, gold’s correction kept on correcting. And then, it popped up. Why? And will it last?

This is the focus of today’s discussion with algo trader and former Morgan Stanley VP, Tom Meyer.

But first, big news to report with my old mate Callum Newman…

The Flag Finder 2021 event — sign up now

Callum’s been busy lately. He’s probably been the most active among our editors, firing off trade after trade for subscribers of his Catalyst Trader service.

Seriously…it seems like I get an email pop up every other day. Not with reams and reams of words. But succinct and to-the-point instructions and trade updates.

What separates Callum from our other editors is that he is not interested in holding or ‘owning’ stocks.

The goal is to identify, anticipate, and trade big reratings…in tiny stocks. Then get out, hopefully with a profit, and find the next stock. And if the trade doesn’t go as planned, Cal gets you out of it fast.

And like I said, there’s no shortage of recommended trades. Right now, he’s averaging around three a month.

So, if you’re looking for a simple, fast-paced stock trading strategy where you can swing for big wins, without always having to tie up your cash for months at a time…

…and you don’t want to spend your precious time hunting around the market every day, looking for the best prospects or studying stock charts until you go cross-eyed…

…get your name down HERE.

There’s no charge to attend ‘Flag Finder 2021’, but you do need to register.

Sign up (it’s free). It’s as exciting as trading gets. And you’ll also get a compelling free trade from Callum on the night. It’ll be worth it for that alone, trust me.

For now though, it’s back to the gold market…

Conventional wisdom tells us that gold is an excellent hedge against rising interest rates and inflation.

Everybody seems to think that.

But what if the truism is wrong? What if the opposite is true?

What if gold is NOT a good hedge against inflation?

Would that change how you view gold (if you have one)?

Here’s a chart that we shared with Algo Trend Trader subscribers at the start of the week.

It compares the price of gold in USD with the US 30-year T-Bond interest rates.

The price of gold is in red and the interest rates are in blue.


Source: Tom Meyer

[Click to open in a new window]

Look closely.

When interest rates dropped, the price of gold moved higher. And when interest rates rose, the price of gold dropped.

This is the opposite of what conventional wisdom says!

For the 10 years, interest rates ended lower…and the price of gold ended higher.

So what happens if we get moderate inflation and interest rates move up just a little more?

Do you think that gold is going to move higher or continue following the current path of moving opposite of interest rates?

I don’t know the answer to this. That’s why I refer to Tom Meyer.

There’s a lot of talk about massive inflation. Whether it’s here. Whether it’s coming.

If you look at the data though, we’ve certainly not seen runaway inflation for at least a few decades.

That doesn’t mean it won’t come eventually, or even soon.

50 years ago the price of gold moved from less than $100 to more than $800 per ounce. So we know that gold can move higher in those conditions.

The real question you should be asking is this: ‘Why should I guess what’s going to happen? I can wait to see the trends and get the signals to be on the right side of the gold market.’

We began publishing Algo Trend Trader in May 2019.

In that time, we’ve been on the bullish side of gold and registered gains of 15.25% and 16.54% in our selected ETF. Our largest losses were -4.11% and -3.66%. The gains have greatly outperformed the losses and we’re sitting on another nice gain with the current bearish trade.

According to Tom’s algorithms, gold is very close to being in an oversold condition. Anyway, we discuss all this and more on the video below. Hope you find it useful.

 

Have a great weekend, and if you haven’t already…get your name down for Callum’s trading event, right here!

Cheers,
Woody