Even though the market has lost direction ahead of the Federal Reserve’s monetary policy meeting in September, the gold price will make a move, according to Michael Lee, founder of Michael Lee Strategy. The strategist predicts that gold will reach the level of 5 thousand dollars in three years.
There is a problem with the data on which the market bases its predictions!
cryptokoin.comAs you follow from , the gold price continues its horizontal course. This lull in gold’s movement is partly due to the strength of the US dollar and the market’s interest rate expectations. But according to Lee, the macro data on which the market bases its forecasts appears to have been manipulated or flawed by design. In this context, Lee makes the following statement:
Much of the US is already in recession. You’ve already seen a major deterioration in the labor market, although it’s not reported as such. Each time the report came out this year, it was subsequently revised lower. It’s been like this every month this year. This is a 12 sigma deviation event. So you’re more likely to be struck by lightning five times on your way to work than to have that happen. You have to ask yourself, is this government bureaucracy, is this a flawed model, or is the Bureau of Labor Statistics cooking the books to favor the Biden administration?
Lee also expects a jump in inflation at the end of the year due to high oil prices. In this regard, he said, “We should not ignore that this will force the Fed to make a new increase. But I think it would be a mistake,” he says.
Economic collapse will resemble the 2001 recession!
Michael Lee argues that a recession in the US is inevitable. He also notes that the first thing that will hit the economy will be a wave of defaults. Based on this, the strategist makes the following comment:
This wave of defaults will lead us to the next recession. I see credit tightening and capital being constrained in the economy to set off a wave of defaults. It usually takes about 18 months for the yield curve to invert. This takes us towards the end of this year. We have never experienced a reversal like this without some form of recession. The economic collapse will look more like the 2001 recession than the one seen in 2008.
The Fed plays a crucial role in every recession cycle
The strategist criticizes the US central bank’s willingness to bail out troubled banks. In this context, Lee says the Fed plays a crucial role in every recession cycle. He expresses his views on this subject as follows:
When the labor market begins to deteriorate, spending decreases. It would also cause more defaults until the Fed finally cuts back. Then we start all over again, and you need these default cycles to clean out the bad companies. This way you don’t end up with a bunch of zombie companies. The Fed is making mistakes with its bank liquidity programs. Because the whole purpose of this interest rate hike cycle was to clear out the excesses.
Why is the gold price still below $2,000?
Michael Lee questions why the gold price is still below the key psychological $2,000 level. It also parallels reports of price suppression in the silver market. The strategist expresses his evaluations on this issue as follows:
Considering the amount of purchases that BRICS countries are currently making, one has to wonder how gold has not risen above $2,000. In silver, you finally see some JPMorgan traders going to jail for what they did to control silver prices 15 years ago. Is something similar being done in the gold markets to artificially lower the price? When all these stars align and the price of something has to be much higher, your mind goes to these conspiracy theories. Because a lot of it has come true in the last few years.
The gold price is waiting for a catalyst to rise!
According to Lee, considering this recession, it is inevitable that the gold price will move higher. The strategist points to China and Europe as the first two triggers for the rally. “At some point, there will be a flight to safety,” Lee said. If we have another breakout event like Silicon Valley Bank, you’re suddenly above $2,000. “So you start to actually move,” he says.
Lee also identifies the most important move for the gold price in the next few years. He says this is a US deficit and will play a role in pushing up the gold price.
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