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Jim Rickards: Don’t Watch the Circus in D.C., the Real News Is Gold

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Over the last few weeks, the media has fixated on whether or not firing FBI director James Comey and allegations of Russian collusion will turn into Donald Trump’s Watergate. But in a recent column, economic analyst Jim Rickards said that really isn’t the most significant thing that‘s happened.

While everyone is focused on the Washington circus this week, they’re missing what could be the real news — gold.”

On May 10, the media scarcely noticed when gold launched a decisive turnaround from its most recent dip. But that’s not the big news. We find it in a pattern that’s been establishing itself since the end of last year. As Rickards notes, since mid-December, we’ve seen the price of gold hit higher highs and higher lows.

Every retreat finds a footing higher than the one before and each new high reaches new, higher ground.”

Starting with the interim low of $1,128 on Dec. 15, we can see the pattern establishing itself. Since then, gold has hit the following highs before retreating,

  • $1,216/oz on Jan. 17
  • $1,256/oz on Feb. 24
  • $1,289/oz on April 18.

Each time gold retreated from those highs, it found a new bottom at a higher price than the time before. The recent low dip hit $1,218 on May 10. In the most recent surge, gold has rallied to $1,263 as of the morning of May 23.

If this pattern holds, the next stop is $1,300 or higher. A Fed rate hike on June 14 could be a catalyst for a move even higher, just as the last two rate hikes on Dec. 14, 2016, and March 15, 2017, were turning points for gold. No market moves up in a straight line, and gold won’t either. But what we’re seeing right now is very encouraging.”

A lot of people put faith in Trump to turn things around. But the circus surrounding his administration has begun to dampen those hopes. People are beginning to realize the continuing political drama will make it difficult for the president to get things done. Rickards said he doesn’t believe Trump will be impeached, but that doesn’t mean his troubles are over.

The opposition to Trump from Democrats, the media, the Resistance, the Deep State and many Republicans is not about to end. One allegation will replace another, and one investigation will lead to another — all fed by Deep State leaks, media spin, Resistance demonstrations and lack of Republican cohesion. And all this dysfunction in Washington will have real-world consequences for markets. Tax cuts, tax reform and massive infrastructure spending will not happen this year. Obamacare repeal may happen in some form, but that is the least impactful part of the Trump agenda in terms of economic growth.”

All things considered, Rickards might be right. Maybe the biggest news isn’t the circus. Maybe the biggest news is indeed gold.

Photograph © Andrew Dunn, 23 June 2005

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