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In the short-term, the price of gold appears ready for a possible sharp pullback. This will definitely open up some excellent buying opportunities because my long-term outlook is as bullish as ever.
Remember, no market moves higher in a straight line, and corrections are healthy. We’ve seen them over and over during this long-term bull market in gold, and we’re sure to see them along the road going forward.
The bottom line is there are plenty of forces in play that will surely send the price of the yellow metal to new record highs.
One major force that will propel gold higher is a second stimulus package. The government is going to blast money at the economy like dollars being squirted from a fire hose. Is that bullish for gold? Oh, yeah!
The political theater played out in Washington is so predictable. First, Vice President Joe Biden comes out and says “the economy was worse than we thought.” Then the administration rushes out to say Joe was speaking out of turn, he didn’t mean to say that, yada-yada.
Then an advisor to President Obama comes out to say that the U.S. needs a second stimulus package. While saying this, the advisor slips in the aside that the budget shortfall is “likely to be worse” than the equivalent of 12 percent of gross domestic product that the administration forecast for 2009 and the 8 percent to 9 percent it projected for next year.
Worse than the administration’s own forecasts? Who could have figured that?!
Well, anybody who doesn’t take what Washington politicians say at face value could have figured that. Unfortunately, that rules out about 95 percent of the newsreading Barbie and Ken dolls on TV.
Here’s my take …
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I believe we will have a second stimulus package — a BIG one. I expect that to be finalized, oh … probably around October. That’s a guess, so don’t hold me to it.
But Washington needs the money to start the gears moving to get people to work way in advance of the 2010 elections. The plan will be to get at least a year’s worth of stimulus to carry us through the 2010 elections.
Then the politicians will be safely secured in power. Also, they hope by then, that the global economy will recover.
I think they may be wrong about a 2010 recovery, but I can see why they’re so scared.
Here are a few things that must have the people whose jobs depend on an economic recovery shaking in their boots …
Source: St. Louis Fed
About 70 percent of America’s economy is consumer spending, and as you can see from this chart, consumer spending is falling off a cliff. We’ve seen consumers pull in their horns in previous recessions (marked in gray on the chart) but nothing like this.
The problem is that consumers are in debt up to their eyeballs. Household debt peaked at $13.9 trillion last year. Consumers have since lowered debt levels by $100 billion, which sounds like a lot, except that brings total consumer debt levels down to $13.8 trillion.
Meanwhile, consumers are feeling a LOT poorer. The implosion of the housing and stock markets has destroyed more than $12 trillion in wealth since 2007.
Consumers might spend more if they weren’t worried about losing their jobs. We probably won’t see consumer spending improve until the unemployment rate improves. Let’s see how that is doing …
Source: Bureau of Labor Statistics
The U.S. unemployment rate rose to the highest in almost 26 years in June. Payrolls fell by 467,000 last month, meaning June was even worse than May.
And that’s just the measured unemployment rate, which excludes all sorts of people — folks who have abandoned their job searches, or are part-time because they can’t find full-time work, and other “marginal” workers. If you add those people in, the real unemployment rate is closer to 18.7 percent.
In fact, according to data from the Economic Policy Institute, the United States has lost the equivalent of every job created in the past nine years. That’s every job since the last year of the dot-com bubble, and the real estate and consumer boom that followed — gone!
You can see why the folks in Washington are freaking out. So what do you think the chances are of a new, BIGGER, stimulus package? I’d say those odds are pretty darned good.
The markets will rally in advance of the second stimulus package being passed. Since recent history shows us that the dollar goes down when the markets go up, I’d expect the same thing to happen this time.
Guess what else goes up when the dollar goes down? That’s right — gold! Take a look at this chart …
Source: StockCharts.com
Gold is priced in dollars, so the more dollars the Treasury creates, the better investment gold looks to be.
And if the White House rolls out a second, BIGGER stimulus package the way I think it will, that’s going to be a lot more dollars flooding into the system. Gold is probably going to get a lot more expensive.
This is in addition to all the other forces that should drive gold higher — forces I’ve been pounding the table about — surging investor demand, shrinking mine supply and more!
So, I think I published my Gold Fever report at a good time. We may see gold go down a bit more — as I explained in the report, gold stocks often decline in July. But that sets up a great buying opportunity. Those stocks should do very well, as should other gold positions I’ve recommended or will recommend soon.
Dollar is rising in the short-term, but …
Gold has enjoyed a pretty good couple of weeks, sending gold and silver lower, but precious metals are probably near an important bottom — and with other forces in their favor, they could soon springboard through overhead resistance.
If you aren’t positioned in gold before that happens, you’ll be left on the dock when that ship sails.
Now, you could just buy the SPDR Gold Shares (GLD) — an exchange-traded fund that holds physical gold and tracks the price of the yellow metal. And there’s nothing wrong with that.
OR … you could check out the five sizzling stocks and two red-hot funds that I recommend in my new report.
My exclusive special report, plus a minimum of three follow-ups over the course of the year, is normally priced at $295. It would be cheap at twice the price. You can buy it now or wish you had a few months from now.
Are profits guaranteed? Of course not. As with any investment, you CAN lose money. But I’m convinced each of my picks is loaded with value and on the verge of blast-off.
Don’t miss out on this opportunity of Gold Fever — to $1,300 and Beyond today.
Yours for trading profits,
Sean
P.S. Call 1-800-291-8545. Just say you want Gold Fever, plus all my follow-up reports on all my picks. Or CLICK HERE.
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