Armstrong explains that gold prices aren't just responding to inflation; they're reflecting a loss of trust in governments globally, driven by escalating debt and a push for militarization.
It’s important to understand that the real risk isn’t from China. It comes from American policymakers who continued to ignore the ramifications of their reckless policies and keep kicking the can down the road.
The gold standard offers a strict check against the inflationist tendencies of governments. In such a system, the government cannot create new units of money to finance its spending, so it must resort to taxation, which is notably unpopular.
The bottom line is the death of inflation was greatly exaggerated. Some might call it transitory. Meanwhile, economic growth slowed far more than expected in the first quarter.
Since the Fed has made plenty of idiotic moves all along, such as its naive choice to keep pumping money into the economy because it believed inflation was transitory, there is no reason to think it wouldn’t do something that will make its trouble worse.
Gold and mining stocks are overbought on a myriad of charts and “the world’s most predictable pause and pullback” is underway.
The market is marching down in price, at this point in time, the pattern was broken. You now have a higher high and lower low. Gold stepped out of an uptrend where the market had been fighting.
