Thread by @LibertyBlitz

1/ Earlier, my friend @SantiagoAuFund asked me to expound on gold. I was a bit surprised by the interest the tweet generated, so I've decided to compose a thread on the topic and financial markets generally. There's a lot coming, so apologies to those with no interest.

https://twitter.com/SantiagoAuFund/status/1081074500056150023

2/ I've barely commented on traditional financial markets for the past several years. This was intentional and the result of several factors. First, around 2012 I started to notice I wasn't "getting it." I lost the feel and passion. I also lost quite a bit of money. So I stopped.

3/ As I realized the fraud and corruption I knew so well in the financial system was present throughout all areas of the economy/society/politics, I became interested in other topics. I also found Bitcoin in late 2012, and that immediately took over and became an obsession.

4/ So for around half a decade, I've paid little attention to traditional financial markets, as other things, including starting a family took priority. I rarely if ever wrote about it, and maybe did one or two trades a year. Small stuff too.

5/ I knew I wouldn't get interested again until we approached, or reached, the inflection point. In other words, that point in the cycle when things turn. That's when the nonsense of the past decade would finally come home to roost.

6/ I started to see signs that we were approaching this turn in the middle of last year, and became somewhat vocal again. Then I had to wait for confirmation that leadership, ie the "FAANGS" had died. I wrote a short thread.

https://twitter.com/LibertyBlitz/status/1012024687746928641

7/ A month later, I wrote an entire post on the tech giants explaining why I thought they were in real trouble. Here it is in case you missed it:
libertyblitzkrieg.com/2018/08/01/u-s…

8/ The reason I'm providing all this background is because a bull market in gold isn't really a bull market unless gold is outperforming equities by a large margin. Gold has been underperforming stocks since the fall of 2011 when the Dow/Gold ratio bottomed.

9/ U.S. equities have been in a historic bull market since then, and gold has done nothing but go down. I don't think the next bull market in gold can really get going until this central bank manufactured 10 year asset bubble begins to burst, and I think this is now happening.

10/ Now I want to summarize why I'm becoming increasingly confident a gold bull market is on the way.

1) Market cycles turning (discussed above).
2) Geopolitics, emerging multi-polar world order.
3) Sentiment.
4) Trading action.

11/ Let's now tackle #2. I've written a lot about this without directly discussing the gold thesis. I detailed some of it in my lengthy series "The Road to 2025"
Here's the most relevant post:
libertyblitzkrieg.com/2018/04/19/the…

12/ This isn't a "the USD will become worthless or irrelevant" call, rather it's a call that the USD will become much less relevant, and the catalyst for this is geopolitical tensions and the threatened use of USD as a weapon of war, even against allies.

13/ I believe the global economy as we know it (financialized globalization) is dead/dying and will not be coming back. I also think the idea of an emerging bifurcated global economy is more likely than many want to admit. Gold benefits from all this.
See: strategic-culture.org/news/2018/12/1…

14/ Then there's tension with China that I believe runs way deeper than a "trade war." In fact, I think moves to reduce emphasis on the Middle East is meant to focus like a laser on China. You can't compare stupid, vicious invasions in the ME to a more heated conflict with China.

15/ Increased animosity between China and the U.S. is a much, much bigger deal and good for gold prices as it increases the odds of a bifurcated global economy. I wrote a piece on this as well:
libertyblitzkrieg.com/2018/12/20/is-…

16/ Of course, there's the unpayable global debt bubble. There's been a fantasy that everyone's gonna just grow out of it. That's not happening. The sooner people realize this, the sooner gold gets going. With the cycle turning, people will have to face unpleasant truths soon.

17/ That's a summary of the fundamentals. I think @SantiagoAuFund agrees with most of those. The big difference between him and me seems to be timing. He doesn't think this cycle/equity bull market is over yet. That's the big difference I think.

18/ Sentiment has been a big thing for me in getting more bullish over the past several months. It's also why I started trading gold stuff from the long side in 4Q18 for the first time in years.

19/ Incredibly, as I saw fundamentals turn more bullish, I saw sentiment get more bearish. I couldn't find anyone very bullish gold. Some long-term gold bugs actually went bearish, and others are scared and cautious. Everyone else just thinks it's stupid.

20/ I think Bitcoin's unbelievable bull run last year was the final slap in the face and demoralized gold bulls beyond belief. That's the sort of thing I want to see before we flip. Apathy and dejection. I saw/see lots of that.

21/ There is nothing I like to see more than a combination of horrible sentiment and improving fundamentals. I see that now in gold.

22/ Lastly, in the recent small run-up I've noticed gold trading strong in a variety of scenarios. There have been several days where it refused to crater despite news that would've sent it plunging on other days with similar news over the past 7 years. The action seems different

23/ When you're younger, cockier and haven't been rekt yet, you try to fight the tape. You know you're right and the market is wrong, but if you're smart you learn the tape is always right. So if gold acts well on days it shouldn't, that's interesting to me.

24/ Now I want to outline my highest probability scenario over the next several years. I don't expect a rip-roaring PM bull market in 2019. I think this is the year a new bull is born. In other words, I expect to clear $1350-$1370 in 1H19 and close the year around $1,450-$1,600.

25/ I think 2020 will be the breakout year. I think we'll pass $2,000 that year and then get to $5,000 in the years that follow. 2019 is likely to be the hardest for bulls, we have plenty of price work to do before more people get interested.

26/ I want to address the @SantiagoAuFund outlook on markets real quick, and where I could be wrong. He thinks the dollar will rally strongly, U.S. stocks will hit new highs and gold will end 2019 lower. I feel pretty confident about my yearend directional forecast vs. his, but..

27/ His dollar call and its impact on gold price notion is worth addressing and considering. It could absolutely happen. We could get a huge rally in the DXY and it could slam gold to new lows for this bear market. I don't dispute this as a potential 2019 scenario.

28/ It's just not my highest probability scenario. Also, if that were to happen, that would be it imo and the rebound would be fast and massive. In other words, even if a huge dollar rally crushed gold to $1k, I still think we could see $2k in 2020.

29/ The key message I'm trying to convey is I'm comfortable going on the record saying the gold bear market is either over, or will be over within 12 months. That's how I'm treating things at this point. And I expect a huge bull market into 2025.

30/ Finally, I'm just a guy sharing his thoughts. I don't do this 24/7 anymore, I spend most of my days trolling nocoiners and changing diapers. So feel free to ignore everything I wrote.

31/ Thanks to @SantiagoAuFund for inspiring me to write about this stuff for the first time in years. I may turn this into a post. If Twitter decides to unperson me, it may get lost and I don't want to deprive anyone of the fun of poking fun at me when I'm wrong.

32/ If you enjoyed this thread and want me to write more about financial markets going forward let me know.
- The End