Is it time to buy gold?

 I came across this person, Jim Rickards on an advertisement on youtube.com. He was very negative on USD and cautioned the viewers about the danger on digital currency where government will have complete control on the population leading to totalitarianism even in democratically elected countries. 

He pointed to the Canadian government stamping the trucker protest by freezing their bank accounts as an example and noted that with digital currency governments won't even need to go through the commercial banks. They can track all transactions through the central bank itself.

I did not go further in the advertisement. I believe he is pointing towards holding of assets as means of loophole to the digital currency. One of which is gold that he is quite positive of.

This reminds me of another proponent to gold, Robert Kiyosaki. He is also negative on the paper dollar as he believes that it does not contain value, which is why he prefers to hold asset, and gold is his preferred choice.

Here are some videos on them.

Considering our present situation where USD is rising while inflation is going through the roof. Is buying gold the right strategy?

I have an earlier article on gold The inflationary indicator, Gold, that was on the 10th of July 2022. At the time, gold was heading to the neckline with the projection of the zig zag. I also noted the possibility of a double top formation which at the time was incomplete. If neckline is broken, then we should be seeing a much lower value for gold in the future.

Fig 1. Gold Weekly Chart

Well, it has broken the neckline and is retesting its resistance. Moreover, Gold has now broken through all the moving averages, while testing the neckline, it is also retesting the 144-week moving average. 

with the double top formation, the next level of support based on expansion measurement is between 1,289 to 1,436.

It is to me really not the right time to buy gold, better to sell and wait for it to drop lower.

On a side note, as gold is an inflationary indicator, and it is coming down, does it not mean that we are having deflation? Then why are things still getting more expensive?

 

I believe the issue is USD. depreciation of gold is a result of appreciation of USD, it is therefore the inflation in US that is in control, the strengthening of USD only leads to it exporting its inflation to other countries. this includes the increase in borrowing cost due to higher interest, exchange losses due to stronger USD.

USD is really in a dangerous position right now. Should there be one day when other countries are reaching their tolerance limit, they may forego USD in favor of other forms of exchanges. Already, Saudi Arabia has already agreed with China to trade oil in CNY, and China-Russia trade not through USD.

By then we might really see the collapse of the USD.