Gold is fulfilling my predictions by soaring higher after the Fed’s tapering announcement.

November 8, 2021

Dear Fellow Investor,

When I “predicted” that gold would take off once the Fed began tapering QE, I worried that the prediction was based more on hope than analysis.

It was probably a mix of both, but the point is moot…because gold seems to be fulfilling that prediction.

Let’s recap what’s been going on.

Gold sold off early last Wednesday on positive ADP job numbers, and then actually gained some ground after the Fed policy statement was released announcing the beginning of the end for the latest round of quantitative easing.

Then came the fireworks.

The next day’s trading in gold and silver fully revealed the effect we’d been predicting and hoping for: Gold leaped $22.50 (1.27%) to close at $1,791.80. It was such a torrid move that even silver couldn’t keep up, as it rose “only” $0.27 (1.15%) to $23.76.

So why would the Fed’s announcement of QE tapering send gold higher?

My theory is that these tightening events release some of the shorting pressure on the metals. And now that we’ve seen what happened the last time the Fed actually tightened, investors look at these events as potential launching pads for the metals.

Consider that the Fed’s first post-2008 rate hike, in December 2015, marked the very bottom of the gold bear market. It’s been a halting ascent out of a rounding bottom since then, but there’s no doubt that the bear market ended almost exactly then.

As you know, my view has been that, because everything’s been moving much more quickly this time around, gold might begin rallying on the first taper rather than the first rate hike.

The evidence that this is happening has only built since Thursday’s big move in gold and silver. Friday also saw a nice gain, with gold gaining another $20 and silver adding about 1% to its price. And today both are up again, with gold adding about $5 and silver gaining yet another 1%.

As you can see, this latest rally has taken gold right back through both the 50-day and 200-day moving averages. Straight ahead is strong resistance in the $1,830-$1,835 range, where the last two rallies have failed.

Things are looking very encouraging for gold right now, but if we can get through this next level of resistance, then a major move higher should quickly ensue.

The good news for investors is that the mining stocks have been underperforming the metals and represent extraordinary values right now.

Interestingly, we just closed out one position in our Gold Newsletter junior mining portfolio at a 10X gain from our entry price. Now, this was a lithium play, but it serves as an example of how quickly and how far these junior mining plays can move when the winds are behind them.

And the wind seems to be turning in the favor of gold and silver at this very moment.

Our next issue of Gold Newsletter is coming out later this week, and in it I’m unveiling a new recommendation — one of the more exciting gold plays I’ve seen in many years.

If you’d like to be among the first to get all the details, you can subscribe to Gold Newsletter by clicking here.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference