Transcript of Gold Warning: This Week Could Change Everything
TraderNick
0:00Coming up this week, we have a huge Fed0:02meeting. And to make things more0:04complex, we also have a huge surge in0:06oil prices after Friday's fall. We've0:09got oil jumping up 3.9% here. Precious0:12metals, at least at the time of0:14recording this, are lower on the day by0:161.78%0:18as well as silver down 2.4%. Meanwhile,0:22you have the dollar firm making a push0:24higher here. And to maybe no one's0:27surprise, yields continue to march0:30higher. And this week, we're going to be0:32talking a lot about whether or not the0:34Fed is going to issue, well, I think0:36they're going to hike a hike the rates0:37this week. The question more so is are0:40they going to signal further rate hikes0:42in the following meetings or are we0:44going to get sort of a oneanddone vibe?0:46That has huge ramifications for precious0:49metals. If you're someone watching gold,0:50for example, the market is currently0:52already priced in to get one hike this0:54week. The real question is, are we going0:56to get one hike and then not really too1:00much more signaled or are we going to1:01get one hike and then progressively1:03seeing more hikes coming after that?1:06That is the big question. More hikes1:08send gold lower, less hikes basically1:10send gold higher because right now1:12markets already positioned for one hike.1:14So one hike does not really do much. one1:16hike and signaling of further or less is1:19what will get price to really move. So,1:21we're going to break that down in1:22today's video because we have more stuff1:24to talk about as well.1:27The AI trade is under a lot of scrutiny1:29right now because stocks are tumbling1:31this morning after AI leaders Daario and1:34the um the open AI CEO Elon Musk like1:38they're all kind of coming together on1:39this interestingly and saying that there1:41is a industry need to actually slow1:45things down uh because that there is1:47some serious risks on the frontier of AI1:50and what it could actually do to1:52mankind. And I mean, this is some crazy1:54stuff going on. And I think naturally1:55when you see this or hear this, you1:57think to yourself, okay, if the smartest1:59people, the forefront people on this2:01story, the AI leaders are saying, hey,2:04you know, this thing, we need to put2:05some checks and balances on it. Um, that2:08could be a little bit of a concerning2:09thing. However, I have a little bit of a2:11conspiracy theory with the timing of2:13this that I think we need to talk about.2:15Stay tuned on that. And finally, the2:17Middle East stuff is continuing to rage2:19on. probably a big chunk of the reason2:21why obviously oil continues to stay uh2:24elevated at this time. Doesn't seem like2:26there's any quieting down going on at2:28least for now. Okay, so let's start with2:30my conspiracy theory. I think that there2:32is now and again I'm just throwing this2:34out here. [snorts] The timing of this AI2:37needs to slow down announcement coming2:40just days before the Fed is expected to2:42hike interest rates is really curious to2:45me because let's reverse engineer this2:47for a second. The AI leaders, they know2:50as well as if I'm talking about it, they2:52certainly know it, too. If borrowing2:54costs keep going up and up and up, it's2:57a disaster waiting to happen for the AI2:59trade. If borrowing costs keep going3:01higher and which they're so important3:04because debt is massively fueling the AI3:06buildout, these data centers and all the3:08investments and research and technology3:10and all this stuff requires a ton of3:12debt and borrowing. Well, if debt keeps3:14getting more expensive, and by the way,3:16the Fed hiking interest rates could3:17contribute to that getting more3:19expensive, the AI leaders are going to3:21not love that. However, here's something3:24to think about. the AI leaders uh the3:27the CEOs of these companies um also know3:31that if the Fed sees the AI story3:35breaking down in a negative way as AI is3:38somewhere between 1/3 to 23 of all GDP3:43growth in the United States. If the AI3:46trade threatens and wobbles and starts3:49showing signs of not so good numbers and3:52not so good growth for the economy,3:53that'll get the Fed's attention real3:55quick. Jobs data could severely worsen3:57if you know the AI whether you know I4:00know a lot of people are like, "Oh, AI4:01is taking jobs." Well, to be fair, it's4:04causing a ton of investment across the4:06entire ecosystem of the United States.4:08If AI slows dramatically, suddenly we4:10have a jobs situation on our hands. And4:13so my question is, is there a4:15possibility that this is a bit of a ploy4:18or a little bit of a timed announcement4:21to sort of get the attention of the Fed4:22and say, "Hey, you know what? If4:23borrowing costs do get ratcheted higher,4:25you're going to put pressure on4:26something that's already got pressure on4:28it." That being said, in the meantime,4:29the NASDAQ is lower here today, but4:32watch how this candle closes today.4:33Because if we are sitting here at4:35support and we actually hold just fine4:37today, um my thesis is that this is a4:40little bit of FUD and I'm fear4:43uncertainty is and doubt is what that4:44stands for. My thought process on this4:46is yes, I think AI does need checks, but4:49I don't fully believe that the major4:52beneficiaries of it are going to be the4:54ones really calling for it uh uniformly4:57all right before the Fed meeting. my5:00opinion. Little phone call was had. Hey,5:02uh let's uh let's work together on this5:04because we all need our IPOs to go5:06really well. That's my thesis. Anyways,5:08let me know if you agree with me or5:09disagree with me on that thesis. But uh5:11my thought is that the AI trade is not5:13going to stop that there is going to be5:14little to no response to this in actual5:17terms and that even the stuff about oh5:20data centers in our backyard, we hate5:21this and all the political, you know,5:23back and forth. I think ultimately the5:25AI race is not between the US government5:28and the people. It is between the US and5:31China and there is absolutely no way5:34that either side is going to back down5:36because that gives the other side an5:38advantage. So in my opinion AI race is5:40ongoing. There is no in my view reason5:43to get ultra bearish on AI stocks at5:45this time. um unless unless we get5:50something this week uh that I think5:52could cause some problems and that would5:54be the distinction between whether or5:56not we are going to get a hawkish hike5:58or a dovish hike. Which one are we going6:02to get this week? And I want to ask you6:04guys in the chat, help me out or in the6:05comment section which one comment. Do6:08you think it's going to be a hawkish6:09hike? Do you think the Fed's going to6:10hike interest rates and guide for more6:12hikes, saying that inflation needs to be6:13squashed now? or do you think it's going6:15to be a doubbish hike? And please share6:18your answers down below in the comments.6:19It would be great to just get a little6:20bit of a pulse check from the community6:22on this, but I am more in this camp. I6:24think that the Fed is likely to hike6:25interest rates this week one time and to6:28leave the door open one direction or the6:30other as opposed to when we saw Jerome6:32Pal hike interest rates dramatically in6:342022, 2023, which we were coming off6:37zero by the way. Interest rates were at6:38zero following the pandemic and the Fed6:40was able to hike hike hike hike hike.6:42But now I don't think we're going to get6:44a huge uptrend in hikes in the coming6:47year. Maybe I'm wrong. I certainly could6:49be wrong. And I think acknowledging that6:50you can be wrong is important, but I6:52actually think that the Fed is currently6:54expected to hike interest rates. But I6:56lean more in the direction that it's6:58going to be a hike delivered with the7:00narrative being still doubbish. And I7:03think that the AI race is critical not7:05just to the administration, not just to7:07the left or the right or political. I7:09think it's important for America as a7:11whole. And I think the Fed doesn't want7:13to mess that up either. Even even if7:15they won't say it on the on the surface,7:16they'll say something else. I think that7:18the AI trade is actually critical to7:20economic growth in the United States and7:22a loss of economic growth in a big way7:24would be disastrous. So, I'm still long7:27gold and I want to talk about this7:29because right now I'm threatening7:31potentially getting out of this trade7:33because price action is no bueno. It's7:35not looking good, right? our support7:37level is sort of breaking down and we're7:39really at the last line of defense for7:40my technical bullish thesis which is7:42this 61.8% retracement. It's very7:44possible that in the next day or two I7:46get stopped out of this position and7:48re-evaluate things because while I have7:50been bullish on gold, some things have7:52really changed in the meantime that make7:54me think uh gold really could go either7:57direction. And this Fed week I I7:59generally think that yes, the Fed I8:01think will be hiking with a dovish tone.8:04But I could be wrong on that. And if I8:06am wrong on that, there's nothing to8:07defend this, right? I have to get out of8:09the trade. The thesis is wrong. I'm8:11gone, right? And there is nothing wrong8:14with being wrong when it comes to8:15trading. What is going to get people in8:18trouble is when they are wrong and8:19refuse to acknowledge that they are8:21wrong. If I can get out of this trade8:23with a with a controlled loss, like it's8:25not going to destroy my account by any8:26means, and I can reset and rethink and8:29find the next opportunity, that is a8:31different mind frame than someone who's8:33long and strong. And when it doesn't8:35work out, they get long and they get8:37long and they get long and they move the8:39stop and they, you know, add on leverage8:41and they go into a disaster scenario8:43where that one time where they are8:45incredibly wrong and refuse to8:46acknowledge it turns very ugly. Right?8:49That's what I'm not going to do because8:50I've been doing this for a long time and8:51I realize for my personal trading, I've8:54been a lot more successful when I admit8:55that I'm wrong and move on to the next8:57idea. I've been less successful uh or9:00far less successful when I refuse to9:02acknowledge when I was wrong on a9:04thesis. Today's video is sponsored by9:06Ola Prime. 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If you're interested in10:26exploring Ola Prime, use the link below10:28and take your time to review all of the10:30different terms and conditions to make10:31sure this is the right prop firm for you10:33and your trading style. Thank you to Ola10:35Prime for sponsoring today's video. Now,10:37back to the content. That being said,10:39I've got my stop loss in a particular10:40spot for a particular reason. This is a10:43huge level of support looking left. This10:4461.8% 8% retracement marks a major zone10:48on this chart that I'm looking for a10:50pretty immediate response here from. And10:52if I don't get it, I need to get out of10:54the trade. Let's talk a little bit about10:55EdgeFinder reading for gold at this10:57time, which is a plus two. Very modest,11:00nothing crazy. But let's talk a little11:02bit about what's gone on. Institutions11:04are super bullish on gold, which makes11:06me want to hold on to the thesis here a11:10little bit, but I'm not going to go down11:11with the ship because institutions could11:13also be potentially getting closer to11:15unwinding gold longs if the Fed starts11:18getting super hawkish here, meaning11:19hawkish hikes this week, meaning more11:22hikes expected, that sort of thing. Um,11:25not not what I mean is like dramatically11:27more hikes, like three or four hikes in11:29the next 6 months, 12 months, etc. And I11:32don't think we're quite there yet. And I11:33personally don't think we're going to be11:35there. But if my thinking there is11:37wrong, I got to acknowledge it, right? I11:40think many people have probably some11:42YouTube fatigue where they've seen11:43traders or you know, content creators11:45that are in the trading space talking11:46about um you know, a thesis on a stock11:49or or gold or whatever and just sort of11:53doubling down whenever they're wrong.11:55And I find that to be a really dangerous11:56way of thinking. And it works on YouTube11:59because there are people who watch these12:01videos, my videos, who are always12:03bullish on gold or always bearish on12:05gold or always bullish on stocks.12:06There's people who it jives better when12:09I talk consistently all the time about12:11one directional bias. There a dime a12:13dozen channels that are every single day12:15gold's going to go higher, gold's going12:16to go higher, gold's going to go higher.12:18Right?12:19My opinion is it's important to sort of12:20as a trader, not as a passive buy and12:23hold investor to acknowledge, hey, you12:25know, we could potentially see this12:28thing go lower on the announcement of a12:30hawkish hike from the Federal Reserve.12:33And I think also a lot of people have12:34their eyes on this 4200 level. I do12:36think that's another critical level of12:37support, but I wouldn't just buy it just12:40cuz it gets there, right? I've got to12:41see what if this thing cracks lower and12:44we take a loss on this one. Um, then I12:46need to kind of look at this and be12:47like, all right, well, what makes me12:49bullish about this level? Certainly not12:50just a technical level is going to be12:52enough. It's going to be maybe some kind12:55of economic data, some pivot from the12:57Federal Reserve, some change in the12:59story in the Middle East. Something's13:01got to happen here. And I have no shame13:03in the idea of like if this happens and13:05we actually have a tangible new reason,13:07I'll just join the move again, right?13:09But I'm less dependent on what price13:11action is doing and more reaction13:13reactionary to what is actually going on13:14in the macro. So right now I'm pretty13:16neutral in terms of adding new13:18positions. I won't do so unless I have a13:20good uh reason here both on the13:22technicals sentiment and macroeconomics13:24side. By the way, if you want to try out13:26EdgeFinder, I'll leave a link down below13:27in the description to where you can find13:29out more information about our product13:30here. Our tools help traders to scan13:32both macro and crowd sentiment as well13:34as institutional activity in markets13:36that we care about. So, if you're a gold13:38trader or a currency trader or if you13:41trade indices, our tools have a ton of13:43resources to help you find better13:46trading opportunities. We have thousands13:48of traders around the world using our13:49stuff. So, if you want to check us out,13:51all the links can be found in the13:52description down below to explore our13:54products to see if they'd be a good fit13:55to help take your trading to the next13:57level. So, now let's talk a little bit13:58about the dollar. So, from a price14:00action perspective, we [clears throat]14:01have some interesting stuff going on14:03here with the DXY. The DXY is making a14:06sharp move higher here today and14:08threatening to break out a little bit of14:10this resistance that we've seen in the14:12last 1015 days or so. And as you would14:14probably imagine, if the Fed guides for14:16multiple hikes going forward, yeah, the14:19dollar index may have a little bit of a14:21frenzy to the upside. So, I'm14:23open-minded to that. That would likely14:24lead to my gold trade getting stopped14:26out. However, I did take profits on my14:28Aussie dollar trade, and I'm very glad14:30that I did. took profits up here and was14:32able to close out a gain before this14:33thing completely cratered to the14:35downside. And actually in a fascinating14:37turn here, we actually have bullish14:39readings on EdgeFinder's US dollar score14:42right now. Inflation was higher than14:44expected last week. The 2-year yield14:46continues to trend higher. Non-farm14:48payroll was strong and services PMIs14:50were strong. At the same time,14:51institutions have actually stayed very14:53bullish on the dollar. So as strange as14:57it might sound, there is a possibility14:59that if data keeps coming in this way,15:01if we see like for example, retail sales15:02numbers are expected to come out pretty15:04soon. We have this little uh asterk15:06which signals that new data is expected.15:08So we have new data coming in, if retail15:10sales are strong, for example, there's a15:12possibility that I flip more in the bull15:14camp of the US dollar, which would be a15:17turn for me. But at the end of the day,15:19again, I think it's important to just15:21sort of stay open-minded. And what I'd15:23be looking at from a technical15:24perspective, would be something like15:26this. If we get a break, you know,15:28follow through and some data, perhaps a15:30hawkish Fed, etc. I'm not opposed to15:33joining the other side. At the end of15:34the day, I'm on the side of trying to15:36stick to my system and make money in15:38markets. I'm not on the side of being a15:40permanent bull or bear on any particular15:42market. I'm a trader. And there's a15:44difference between being a trader and an15:45investor. Now, just to clarify, I know15:48people are going to like start to get15:49like angry about this, like, "Wait,15:51Nick, you're talking about bullish the15:52dollar. That means you think gold's15:53going to move lower." Not necessarily.15:55Not necessarily. You can be bullish gold15:57and dollar at the same time if15:59conditions are uh correct. Um, they16:02don't necessarily move one to one16:04inversely to one another. And just to16:06show you that in actual terms here, I've16:08added a correlation coefficient tool16:10here on uh this chart, which is16:13comparing. Let's actually just pull this16:15up. You can see that I'm comparing the16:16current chart XUSD to DXY. What's16:20interesting here is notice that many16:21traders think gold up, dollar down, gold16:24down, dollar up. It's sometimes the16:27case, but it's not always the in fact, I16:29would say most of the time it is the16:30case to be fair, but it's not all the16:32time. If you had a perfect inverse16:35correlation, you would expect this thing16:36to be pretty negative all the time,16:38right? Like gold moves up, dollar down.16:41Well, what this actually shows you is16:43that generally there is a inverse16:45correlation, but it's not perfectly one16:47to one. There are plenty of scenarios in16:49which the dollar can rise and gold can16:51rise or the dollar can fall and gold can16:53fall. And this is simply because the DXY16:55is not a measurement of purchasing16:56power. It is a measure of the dollar16:59versus its peers in the currency world.17:01So, it is possible that the dollar17:03outperforms its peers while also losing17:05to gold. And in that case, both dollar17:07and gold can move higher. Taking a look17:09at the S&P 500, we're sitting at support17:11here decently well, holding this for17:13now. And again, I would just kind of17:15stay uh for the record in the camp of17:18thinking that the AI trade is in no way17:20going too slow, that it is17:21missionritical. We heard the president17:23also kind of immediately say no to this17:25thesis. I don't know if you guys caught17:27that, but he was like immediately in17:29response to all these AI CEOs being17:31like, you know, we need to put some17:32checks on checks and balances. There was17:34a big fat no from the White House. And17:37that is because it shows the cards of17:39you know well not even a question it's17:41it's un un he by the own president's17:44kind of speech he was like basically it17:46is mission critical like we h if we17:48don't win the AI race and China does17:51it's over and um that shows you the17:53narrative to me that continues to17:55support why the debasement trade um is17:58sort of my my consensus on what I think18:01is going to happen. What is the18:02debasement trade you may ask? Well,18:04basically the idea that I think that uh18:06spending is in no way going to slow. If18:09anything, I think it's going to18:09accelerate. Um government spending uh18:12investing into stocks, I think, is is18:15even more attractive because currency18:19debasement is going on. They're going to18:20continue to print this thing like crazy18:22to to fuel the AI race. Um go into debt,18:25you know, massive leverage on it uh to18:28win it. It's a it's mission critical. If18:30that is truly the the vibe, then the18:33thesis would be fiat currency purchasing18:35power should decline dramatically. It's18:37part of the reason I do like from a18:39thematic standpoint gold and also good18:43cash flow producing companies uh to the18:46upside. You know, it's why I think that,18:48you know, trying to bet against that18:50pile of money getting thrown at this is18:53very tricky. It's also why I think18:54longer term yields have limited18:56downside, right? like yields. Um,19:00obviously people being willing to lend19:03money to the government, they're going19:04to continue to demand a lot because19:05expectations of currency loss in19:07valuation is is pretty anticipated. Look19:10at that 5% as we speak on the 10-year19:12yield. Crazy. And I and I don't19:14necessarily think that has to be a19:15ceiling for yields. Euro dollar is also19:17moving sharply lower here today. Dollar19:19is quite strong against the euro. Same19:21thing with the pound dollar. And my19:22thesis on some of these ones, again,19:24pretty mixed. Let's actually go take a19:26look at some of our top setups readings19:28here today. And just selecting for major19:30currency pairs that have a bias. We can19:32add neutrals in here just cuz it's a19:34pretty finite list here. Um we've got19:36some interesting stuff here. We have on19:38the bearish side Euro dollar, Kiwi19:40dollar, and dollar yen. This is19:42interesting because dollar yen is19:43getting a bearish reading which is a19:45bearish dollar thesis while Euro dollar19:46is getting a bearish reading which is a19:48bullish dollar thesis. So, uh, I19:50actually think that the yen is quite an19:53interesting one to watch this week as19:55well. If we just pull up dollar yen, see19:57what's going on there. You can see it is19:58having a nice day to the upside. Uh, the20:00question is, as you come up into these20:02levels of resistance, do sellers step20:04back in and actually continue to take it20:06down lower. Uh, continuing to show um20:10that yen strength and Euro dollar20:12starting to lose some structure here is20:13kind of interesting. I think if you20:15really lose like this level here, the20:1761.8% 8% uh then I think that the20:19downtrend is a lot more intact right20:21now. You've got a huge move lower. If20:22you're bearish on Euro Dollar, maybe20:24you're watching levels like this, this20:26breakout here that we've seen to the20:28downside, right? A retest into this20:29area. If you are bearish on Euro Dollar,20:31maybe you're watching that. So, I'll be20:33watching it myself here for a potential20:35sell to rally on Euro dollar going into20:37this week. And if you're newer to my20:38videos, this top setups indicator just20:40looks at a collection of technical20:42sentiment, economic growth, inflation,20:44and jobs market statistics. and it20:46measures them all out and it tells us20:47generally speaking how EdgeFinder is20:49feeling about a particular currency pair20:51or commodity. Uh I know I'm showing just20:53currency pairs here, but we have a ton20:55of markets in here that we are tracking20:57to basically create a powerful watch20:59list each and every day for traders.21:01What I like to do is take out the21:03neutral readings here. If I just go21:04non-neutrals, we have a ton of stuff to21:06click through. So off video, what I'll21:08do is basically go through all of these21:10different things and look for setups21:12that I like. And if I agree with the21:13idea, then I may actually take a21:15position and uh know that I generally21:17have the the confidence here of21:19edgefinders readings uh behind the trade21:22that I'm looking at. You can see21:23Japanese yen is getting super very21:25bullish readings right now. Really21:27interesting. Trading fundamentals can be21:29a lot of hard work, but we actually made21:32a pretty cool free Telegram channel21:34where we are publishing constantly21:36[music] updates on what is going on from21:38a macro fundamentals perspective. And21:40no, it's not AI. It's not written by a21:42robot. It's written by a real person on21:44our team. His name is Allan. He puts21:46together a report each day on what is21:48going on on things like gold, currency21:50pairs, commodities, indices, etc. on a21:53global financial fundamental analysis21:55basis. It's a really cool newsletter21:57where you can basically stay on top of21:59things by reading for like a minute per22:01day. if that would be interesting to you22:03to join the [music] free telegram22:04channel. There is a link in the22:06description down below on this video22:08that you can join and get into the22:10action [music] there. We also offer22:12special discount perks for our products22:14as well as for funded accounts and for22:17brokerages etc. And we also do some22:19giveaways as well. So definitely take a22:21second to join the telegram channel in22:23the description down below. I also want22:25to take a second to just genuinely thank22:26you for supporting my content here. Make22:29sure to subscribe and hit the thumbs up22:30button if you have not already. And I do22:32hope that more videos in the future will22:34continue to help you on your trading22:35journey. Good luck.
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