Gold — along with every other asset — has been bouncing all over in reaction to the flow of news from Ukraine.

In all the confusion, there are two primary realities that metals investors need to focus on now.

March 11, 2022

Dear Fellow Investor,

The markets have been on roller-coaster rides in reaction to the Russian invasion of Ukraine and the heart-rending humanitarian crisis that has resulted.

It seems callous to address the financial markets in the face of such death and misery, but it’s our job…and the repercussions of Putin’s ambitions are something the entire world must deal with on some level.

For gold, the roller-coaster ride has been particularly white-knuckled, with the metal’s price rocketing to an intra-day record high on Tuesday, only to give back all of those gains and more the very next day.

The driver of these moves, of course, has been the ebb and flow of events from Ukraine.

When sanctions on Russia are clamped further down, such as the removal of the Swift payment system, gold soars and stocks dive. When there’s news of talks between Russia and Ukraine, gold dives and stocks soar.

Yesterday’s moves, no matter how powerful or what market, seem to be cancelled the next day. I would certainly not be surprised if Putin didn’t have a trading desk taking advantage of all this volatility.

As you can see from this Kitco chart, gold has been whipsawed over the last few days. Look at Wednesday’s decline (the blue line at top) where Tuesday’s big run was cancelled. The next day, gold rebounded back up to the $2,000 area, but lost ground again today.

Today alone is a study in volatility. Gold dropped severely this morning when Putin noted “certain positive developments” in the negotiations with Ukraine officials, but then the yellow metal recaptured most of those losses after President Biden announced the revocation of most favored nation status for Russia.

So how is a gold investor to make any sense out of all this?

Keep It Simple:
Focus On These Two Realities

No one knows how or when the situation in Ukraine will be resolved. But there are two very likely developments that we can feel fairly certain of…and that we need to prepare for.

1) Gold will drop once tensions calm down.

There seems little doubt that we’re going to see a very significant correction in gold once there’s some sort of a resolution to this crisis.

However, considering how far we’ve gone in gold, and how many resistance levels we’ve broken through, I think we’ll end up at significantly higher price levels than from before the invasion.

I believe we’ll stay above $1,900 or, if we fall below that level, get right back above it in pretty quick order. That’s because of the second factor at play….

2) The monetary drivers will take hold once again.

The fact is, gold was already enjoying a steady uptrend before Putin started rattling his sabers, much less the invasion. That price rally was based on the impending Fed rate hike next week.

As I’ve pointed out before, history shows that the initial rate hike in a Fed tightening cycle typically marks the beginning of a substantial gold rally.

And in this case, there’s another factor at play: The Fed won’t be able to tighten very much at all.

The Federal debt is so large today that any significant increase in interest rates will send debt service costs through the roof. And well before the Fed hits that brick wall, the financial markets will almost assuredly start crashing and force Powell & Co. to reverse course.

Gold will absolutely soar when that happens. And remember, it all begins next week.

So once we get past the Ukraine crisis, the markets will once again return to these fundamentals…all wildly bullish for gold…and the metal will renew its run higher.

Make Sure You’re Ready

With rare exceptions, the upcoming post-crisis correction in gold means that you shouldn’t buy anything right now.

But when we do see that correction, you’ll need to jump on it quickly.

In any event, you should be well-positioned in metals and mining shares by now.

And if you aren’t already a subscriber to Gold Newsletter, you should rectify that situation immediately.

For one thing, I cover all the issues I addressed above in more detail in our recently-released March issue of Gold Newsletter.

But I also cover lots of exciting opportunities in junior mining stocks, including a couple of new recommendations.

Even more exciting, just yesterday I issued an interim Gold Newsletter update on all the volatility in the metals markets…and unveiled an exciting new recommendation. This junior gold explorer is about to essentially twin some extraordinary drill holes from years ago…

…Holes that delivered results like over 200 meters of nearly 3 g/t gold that would absolutely shock today’s market.

But back when those holes were drilled, they were part of a joint venture with the world’s largest gold mining company. The news was essentially buried.

In the days ahead, though, the new drill holes on this project — 100% owned by the junior company I revealed yesterday — will be eagerly greeted by today’s market.

The bottom line is that you need to read Gold Newsletter to take advantage of these kinds of opportunities, ones that will be turbo-charged by the gold and silver bull market now in progress.

CLICK HERE to subscribe to Gold Newsletter now.

In the meantime, we’ll continue to wish the best for the good people of Ukraine, and hope they can put this misery behind them soon.

All the best,

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