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Gold’s Near “Unlimited Upside”

Posted August 24, 2022

Matt Insley

By Matt Insley

Gold’s Near “Unlimited Upside”

“The big catalyst for precious metals and the markets this week,” says Kitco, “is Powell's speech at the Jackson Hole meeting on Friday, which only has a placeholder title for now – ‘Economic Outlook.’”

Right… This from the man who tried – for much of 2021 – to convince Americans that inflation was merely “transitory.”

Your Rundown for Wednesday, August 24, 2022...

“Asymmetric” Gold

Aside from Powell’s speech Friday, “the other factor giving life to gold prices is geopolitical uncertainty,” Jim continues.

“The crisis list is well-known, including supply chain breakdowns, higher tensions in Taiwan… the impact of economic sanctions resulting from the war, recession indicators (or outright recession) in Europe, Japan, China and the U.S. and looming elections.”

And one must not forget the ongoing war in Ukraine… which turned six-months old yesterday.

“The economic impact of the war in Ukraine has scarcely been felt relative to what’s coming,” Jim adds. “Both natural gas supplies and food supplies have been sustained by using up reserves accumulated either before the war or in the last harvest.

“With winter coming, the natural gas shortages will be severe. Germany will have to resort to rationing, which will leave assembly lines shut down and citizens wearing sweaters to bed.

“Food will be in short supply either due to failed harvests (in turn due to shortages of Russian fertilizer exports) or the inability to physically ship harvested crops due to sanctions or port activity disrupted by the war itself.

“This kind of energy and food disruption coming to the top of what is already a global recession will push the world economy into free fall,” Jim says. “A global liquidity crisis cannot be ruled out.

“All of this will move uncertainty higher and interest rates lower. For better or worse, that’s an environment in which the price of gold should surge…

“From a trading and investing perspective, we have a setup for an asymmetric trade in gold.

“That’s a situation where downside is limited because of a well-established floor” – $1,700 per ounce – “but upside is practically unlimited because of economic and geopolitical jokers in the deck.

“There’s no guarantee you will make money on gold, but… you can aim for the upside with limited downside. Those are the best kinds of trades to make.”

Market Rundown for Wednesday, Aug. 24, 2022

S&P 500 futures are nominally in the red at 4,130.

Oil is up 0.40% to $93.38 for a barrel of West Texas crude.

Gold is down 0.25% to $93.38 per ounce.

And Bitcoin is down 0.35% to $21,400.

Send your comments and questions to, TheRundownFeedback@StPaulResearch.com

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