Mike Swanson: FED Policy Turns Bullish For Gold
Mike was expecting a market pullback last year, however the Trump election caused him to go long on the market. Initially these administration changes could have driven the markets and stimulated the economy. He doesn’t think that Trump will get much done on these fronts and most of his promises are probably not going to materialize.
We appear to be entering a phase similar to the summer of 2015 where most stocks are simply drifting around and going sideways with only a select few moving up.
We are in a tightening cycle with the Federal Reserve, as was indicated by the Trump administration that there would be a series of higher rate adjustments this year. While there is a planned rate hike in June, additional rate hikes are looking increasingly unlikely. The Fed is getting scared as they want to keep stocks up. Eventually there will be a correction. This is a good reason to buy gold and mining stocks since interest rates are likely to remain near these levels.
While the technical indicators may look poor for gold, when this market trades sideways for a long period that is often quite bullish.
He thinks the miners that are not part of ETF’s may break out as weakness in ETF performance are not representative of many mining stocks, particularly juniors.
He discusses a couple of resource companies that are undervalued and why they may be good picks.