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Paolo Monda's avatar

Excellent exposition, thank you. When stocks break down, historically gold is also badly hit but it is the first to recover, but with central banks propping gold up and an increasingly worrisome geopolitical outlook gold may be less hard hit than in the past. It will be a very interesting year...

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Jesse Colombo's avatar

Thanks, Paolo! Yes, gold will sometimes fall in the initial stages of a bear market due to liquidation of nearly all assets, but it then recovers and then surges due to capital rotation and pricing in monetary easing (lower interest rates and QE).

But it's important to note that gold never really fell in the early-2000s as the dot-com bubble was unraveling, so that may be a model for the current cycle rather than late-2008 when gold took a bit of a hit initially during the credit crunch.

I'm hoping to write about that soon.

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Paolo Monda's avatar

Yes I agree Jesse, also the fact gold rose on Friday after a blow out jobs report suggests institutional buying of some sort. Futures need to jump over the downsloping trend line, backrest and carry on up and then we're good to go. Inauguration may shake things up a bit... Thanks for all your posts!

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Paolo Monda's avatar

Backtest not backrest...!

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Jesse Colombo's avatar

My thoughts exactly, Paolo.

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Tito Alberto Peroni's avatar

Excellent article! Not complicated to understand, doesn’t misguide or confuse my criteria at the time to take a decision.

Thank you and please keep commenting your thoughts.

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Jesse Colombo's avatar

Thanks for reading it!

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David Macrory's avatar

Thank-you Jesse. This is most helpful, and very clearly explained.

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Jesse Colombo's avatar

Thanks for reading it!

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The Contrarian Capitalist's avatar

I think that that is a very good approach to take with the stock market

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Jesse Colombo's avatar

Thank you :)

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Jan 12Edited
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Jesse Colombo's avatar

Once we are confirmed to be more deeply in a recession, the Fed will have to act, but its hands are tied by the stubbornly high inflation we have.

We are basically in a stagflationary scenario similar to the 1970s, which was very bullish for gold, oil, and mining stocks in general.

I am planning to write a report about today's stagflation (which I expect to get worse) and why it is very bullish for commodities.

I agree with your outlook, but believe that those who are informed and properly positioned will thrive in the years to come.

Thank you for signing up for my newsletter and welcome aboard! :)

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