{"id":19419,"date":"2022-02-15T07:30:44","date_gmt":"2022-02-15T12:30:44","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19419"},"modified":"2022-02-15T07:30:44","modified_gmt":"2022-02-15T12:30:44","slug":"war-related-headlines-are-just-a-convenient-backdrop","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/war-related-headlines-are-just-a-convenient-backdrop\/","title":{"rendered":"War-Related Headlines Are Just a Convenient Backdrop"},"content":{"rendered":"

Every now and then, there’s an event that leaves investors shaking their heads and lamenting, “Why didn’t I buy gold?”<\/p>\n

Well, the latest occurrence took place last Friday.<\/p>\n

As headlines flooded in that Russia is about to take over Ukraine, gold exploded 2% in a matter of minutes.<\/p>\n

That’s because geopolitical risk is good for gold prices.<\/p>\n

But right now, geopolitical risk is just a convenient backdrop…<\/p>\n

What’s more important is the macroeconomic<\/em> backdrop.<\/p>\n

Gold and War-Related Headlines<\/h2>\n

This isn’t the first time that gold took off on war-related headlines.<\/p>\n

Take a look at gold prices in 2014 when Russia annexed Crimea…<\/p>\n

\"Chart\"<\/div>\n

The initial reaction sent gold up 15%, only to end down<\/em> 1.4% for the year.<\/p>\n

Or take the first Gulf War from August 2, 1990 to February 28, 1991…<\/p>\n

\"Chart\"<\/div>\n

We see the same initial spike followed by gold ending the year down.<\/p>\n

These war-time headlines merely produced a blip in an otherwise long-term downtrend.<\/p>\n

Deflation Versus Inflation<\/h2>\n

The market in 2014 was largely a deflationary<\/em> period, with commodities only at the very beginning of their decade-long bear<\/a> market.<\/p>\n

Looking back, it’s almost funny how the Fed was trying it’s hardest to manufacture inflation any way it could at the time. Meaning, deflationary periods are like a wet cloth to fire – stifling growth.<\/p>\n

Now the economic backdrop is completely different.<\/p>\n

If possible, the Fed would trade 2014’s deflation with 2022’s inflation in a heartbeat.<\/p>\n

Commodities continue to not just outperform equities, but they’re outperforming in a way that could be recessionary – meaning too much.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The economy can only handle so much inflation before it starts to bite into growth.<\/p>\n

Furthermore, the old adage, “Gold falls when interest rates rise” has a lot of folks in macro trading circles scratching their heads.<\/p>\n

Because as I stated before<\/a>, gold and <\/em>rates have been moving up together this year and will continue to do so.<\/p>\n

Right now, the bigger picture for gold is centered around inflation.<\/p>\n

And it’s the type that could cause currency debasement if things get further out of control.<\/p>\n

If that happens, then those sitting on the sidelines will really<\/em> be shaking their heads and lamenting a multi-generational opportunity that has passed them by.<\/p>\n

So, this war-related price reaction won’t be just a blip… it’ll help accelerate gold prices higher.<\/p>\n

They were going up with or without Russia. It could be that Friday’s news was just a wake-up call to investors.<\/p>\n

Gold has been lagging – or more accurately lurking<\/em> – behind other commodities during this rally that we predicted would happen last February<\/a>.<\/p>\n

I suspect gold is ready to take center stage.<\/p>\n

So, look for any pullback from last Friday’s gains as an invite to buy more.<\/p>\n

After all, this economic backdrop is the only trend that matters and (as always) headlines are just a convenient excuse.<\/p>\n

Regards,<\/p>\n

Eric Shamilov
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

Reader Mailbag<\/h2>\n

Have you been buying gold during these unpredictable times, or are you focused more on commodities?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

This risk is good for gold prices. <\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[13],"newsletter-type":[],"ticker":[],"class_list":["post-19419","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-eric-shamilov"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19419"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19419\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19419"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19419"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19419"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19419"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19419"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}