The big rally in gold accelerated again on Friday, with the price powering through the key $2,000 level.
The next few days will be critical not only for gold investors, but for anyone with wealth at risk.
Consider that, over the past week, we've seen third quarter GDP come in at a stunning 4.9% growth rate.
That was the good news.
The bad news is that this growth was fueled almost exclusively by a blowout in consumer spending, with most of that spending on restaurants, travel... and Taylor Swift concerts.
More bad news: Along with the GDP report, it was announced that the savings rate had slipped to just 3.4%, less than half what it was just before the pandemic hit.
In short, as our friend Peter Boockvar just concluded, "the current pace of spending in Q3 is just not sustainable."
A Major Market Shift Is In Progress
Of course, the crisis in the Middle East is dominating headlines and driving all the markets over the short term.
News today that Israel was expanding its ground incursion into Gaza launched gold higher in afternoon trading. As we saw early on in the crisis, investors don't want to go into the weekend, and closed markets, without owning gold.
We've cleared $2,000 again — and are headed toward record highs — but this geopolitical crisis isn't the only factor at work.
Consider that, even before the violence erupted early this month, the rate-hike cycle had essentially peaked. Thus, whenever these troubles begin to fade away, we will either be in or approaching the downside of the cycle.
At the same time, the U.S. economy continues to strain under the burden of the harshest tightening cycle ever enacted by the Fed.
Bankruptcies are surging, and the lagging effects of the rate hikes are yet to be felt.
And perhaps the most compelling development in recent weeks? The growing realization that crazed deficit spending this year, combined with the massive growth of the federal debt in recent years and soaring interest rates, are delivering the kiss of death to the U.S. fiscal situation.
That investors now appreciate this fact is evident in a major market shift that has now unfolded:
Simply put, interest rates are soaring far beyond what Powell and his minions had intended. The so-called "bond vigilantes" are seizing control from the Fed at this very moment.
It all adds up to perhaps the most perilous investing environment we've seen in decades.
Yet, at the same time, it's ripe with opportunities... for those investors who prepare.
About the Author:
Brien Lundin is the publisher and editor of Gold Newsletter, the publication that has been the cornerstone of precious metals advisories since 1971. Mr. Lundin covers not only resource stocks but also the entire world of investing, from small-caps of every type to macroeconomics and geopolitical issues that ultimately affect every investor. He also hosts the annual New Orleans Investment Conference, the oldest and most respected investment event of its kind.