Transcription
Since June 24th, gold prices have been fluctuating around the 4,000 level, swinging back and forth, causing many to feel uneasy. The question is, is this truly the bottom? If we jump in to buy now, will we be stuck in the middle? Today, I will provide answers that may go against common sentiment.
Whether gold prices have reached their bottom or not, we don't need to look at candlestick charts or daily news. The crucial point depends on one person you might not be paying attention to at all: the new Chairman of the US Federal Reserve, Mr. Powell. Why should you watch this video until the end? Because if you understand the logic behind this, you can protect your wealth from being harvested by global capital and know how to plan your gold investments most safely.
What's even more astonishing is this: everyone knows Trump has been calling for interest rate cuts daily and complaining that the dollar is too strong. But the result is that Mr. Powell, whom he personally chose, has a more hawkish stance than even Mr. Yellen. The first thing he did after taking office was to abolish forward guidance and announce that he would no longer use the dot plot. Furthermore, in his first appearance before Congress, he openly praised Mr. Volcker. Who is Mr. Volcker? He was the man in the 80s who dared to raise interest rates to 20% and made the global economy bow down to him.
Someone who publicly says they want lower interest rates but chooses the most hawkish person is not suffering from a personality disorder. This is a grand chessboard, and both you and I are pawns on this board. In today's program, I will break down the issue for everyone into three levels.
Level 1: What exactly is the Volcker path you are following? Why is the strong dollar policy a revealed plan, not a conspiracy theory?
Level 2: The ebb and flow of the dollar has already begun to reap benefits in Asia. The South Korean won has weakened to its lowest in 17 years. How bad is the real situation?
Level 3: What everyone is most interested in: Historically, what are the 6 signs indicating a major bottom in gold prices? Which signals are flashing now, and how should ordinary people like us plan?
In the previous episode, we discussed the gold settlement war between Hong Kong and Singapore, and at the end, I promised to summarize the common characteristics of major historical bottoms. Today, we will settle this account, and not just settle it, but I will deeply explain the underlying logic of why gold prices are still fluctuating around 4,000 right now, making it crystal clear for everyone.
Let's start with the most peculiar thing: Why did Trump choose Mr. Powell? Many people are puzzled. Trump scolds Powell daily for being too slow to cut rates, but in the end, he brings in someone even more aggressively hawkish. It's like complaining that the chef used too little salt and then hiring a salt vendor to cook. Does that make sense?
At first glance, it might seem absurd, but if you think deeply, it makes perfect sense. Because what Trump truly wants is not just a puppet who only cuts interest rates, but someone of his own who dares to take decisive action to protect the dollar at the most critical time. The shouting for rate cuts is for the voters to hear, but a strong dollar policy is what is necessary for the continued global dominance. Do one thing, do another behind the scenes. You have to maintain balance on both sides.
So, what signals has Mr. Powell sent? Let's look at the timeline I've summarized for you. Observe carefully: is this a gradual vaccination of the market, step by step?
It started with his confirmation hearing on April 21st. Mr. Powell sat there, not mentioning interest rate cuts or economic stimulus. What did he talk about throughout the hearing? He spoke about price stability, the mandate of the central bank, and returning to classic, fundamental functions. Those in the industry immediately frowned. The feeling was off. This had the clear scent of Volcker.
Then came the swearing-in ceremony on May 22nd. This small detail, 99% of people didn't notice. The swearing-in took place in the East Room of the White House. It had been 39 years since the last Fed Chairman was sworn in in the East Room: when Mr. Greenspan took office after Mr. Volcker in 1987. Do you think this was a random choice of location?
Wall Street experts know this is a ritual of respect, as if Mr. Powell stood on a stage and used the location to tell everyone: "I am here to succeed Volcker. The era of a strong dollar has returned."
By July 14th, his first appearance before Congress made it even clearer. He openly mentioned Mr. Volcker and brought up the lessons from the 1970s inflation. He said that what Mr. Volcker was forced to do then is why we must "strangle" the second wave of inflation in its cradle. From nomination to confirmation to his appearance in Congress, every step became clearer and more aggressive. This is not a sudden change of heart, but a well-written, continuous drama.
So, who is Mr. Volcker? Why does mentioning his name make markets tremble? Simply put, in the 1970s, the United States experienced stagflation with soaring prices. The credibility of the dollar was on the verge of collapse. When Mr. Volcker took office, he didn't waste time; he immediately raised the policy interest rate to 20%. What does that mean? Imagine depositing money today and getting 20% interest. Can you even conceive of it?
The consequence was a severe recession, unemployment soaring to 10%, and immense hardship for the people. But what was the ultimate outcome? Inflation was beaten into submission, the credibility of the dollar was restored, and the dollar's dominance for the next 40 years was built on what Mr. Volcker did.
Therefore, you can see that Mr. Powell following in Volcker's footsteps is essentially one sentence: use short-term pain for long-term dollar credibility. Why must we walk this path now? Because the dollar's status is truly being shaken. Central banks worldwide have been net buyers of gold for 20 consecutive months. Every country is quietly hoarding gold bars. Hong Kong activated its gold settlement system on July 7th, and Singapore will activate it by the end of the year. Calls to de-dollarize are growing louder from emerging market countries. If we don't prop up the dollar's credibility, in a few years, its dominance will truly be eroded.
This is like an old luxury goods store. If the brand is about to be ruined, what do you do? Absolutely no discounts or promotions, because that will only further devalue it. The correct way is to raise prices, cut product lines, and maintain the high-end image. Even if it declines in the short term, you must maintain the class level first. What the Federal Reserve is doing now is exactly this.
Alright, the first level of the revealed plan is complete. Let's move on to the second level. The ebb and flow of the dollar has already begun to reap benefits. What is the ebb and flow of the dollar? I will explain it in simple, everyday language.
The dollar is like the tide of global capital. When the Federal Reserve lowers interest rates, releasing water, the tide overflows, flowing into various emerging markets worldwide, pushing up the prices of all assets. Everyone seems happy and prosperous. This is called the "ebb tide." When the Federal Reserve raises interest rates, drawing water back, the tide begins to recede. Global dollar investments all flow back to America. The currencies of emerging markets collapse, and asset prices are stripped down to the bone. This is called the "ebb tide."
During the ebb and flow, America makes money in two ways: during the ebb tide, it buys your cheap assets; during the ebb tide, it waits for you to collapse and then buys at the bottom. This is the classic play of the dollar tide that has been reaping benefits worldwide for decades.
So, how far has this tide receded this time? I will give you a few figures so you can grasp how dire the real situation is. The South Korean won has fallen to 1,560, the worst in 17 years, just one step away from the bottom of the 2009 financial crisis. In the past year, it has depreciated by over 14%. The Japanese yen is even worse, returning to the same level as 34 years ago. The Bank of Japan has spent over 10 trillion yen to intervene in the market, but it has had no effect. It's like throwing money down the drain. The Indian rupee, Indonesian rupiah, and Philippine peso have all hit record lows. The Bank of Indonesia rapidly raised interest rates by 50 basis points on May 20th, bringing the policy rate to 5.25%. Is that beneficial? Not at all. The rupiah continues to fall. The severity of the situation is even worse than the 1997 Asian financial crisis.
Think about it: a country's central bank raises interest rates, yet it cannot stop its currency from depreciating. What does this indicate? It indicates that the speed of capital flight is faster than your speed of raising interest rates. It's like the tide receding, and the dam can't hold it back.
But friends, let's look at the trend of the Asian financial markets. While other countries are struggling amidst the ebb and flow of the dollar, Vietnam has shown remarkable resilience. Vietnam has not only successfully stabilized its exchange rate but has also attracted massive foreign direct investment. Its entire economic system is vibrant. Vietnam is like a safe harbor in this storm, truly a rare land of gold. Its economy is soaring continuously, a very prominent bright spot.
But when we turn back to South Korea, its foreign exchange market has been severely impacted. Foreign capital is fleeing the country. The financial market trend looks alarming. Many companies are facing the risk of their financial lifeline snapping. Why is this happening? Because foreign capital is running away. The South Korean government is trying to use its reserves to prop up the situation, but compared to the massive selling pressure, it's like using a glass of water to put out a large fire; it's not even enough to plug the leaks.
There is another catalyst in this situation: the Middle East. When tensions rise in the Strait of Hormuz, oil prices surge. When oil prices surge, inflation expectations rise. When inflation rises, the Federal Reserve has a reason to keep interest rates high or even raise them further. Let me ask you: is this a coincidence? The more chaotic the Middle East becomes, the more reason the Federal Reserve has to maintain high interest rates, the stronger the dollar becomes, and the more severe the capital outflow. How can such coincidences happen?
Of course, I'm not saying the US deliberately caused conflicts in the Middle East. We won't talk about such conspiracy theories. But the actual outcome is that every time there is a geopolitical conflict, the ones who pay the price in the end are the emerging markets, and the ones who benefit are the dollar. This rule has never changed for decades.
Alright, you've seen the tragic side of the receding tide. Next is the third level of the revealed plan, which is even more ruthless because it's a direct plea for money.
On July 16th, the Korea Times revealed a major piece of news: in June, US Deputy Trade Representative Mr. Thomsen spoke with South Korean Trade Minister Mr. Yoo Myung-hee and made a direct request: the United States should have a share in the excess profits that South Korean tech giants make from AI chips. The reason? He said US companies are the largest buyers of South Korean chips. If suppliers and subcontractors in South Korea receive a share of the profits, then the US, as the largest buyer, should also get a share.
Listen to this: what kind of logic is this? I buy from you, and when you make a profit, I still have to get a share? Isn't this openly demanding protection money?
Don't think this is something new. This play has been staged before, over 40 years ago. In the 1980s, Japanese semiconductors were making huge profits worldwide, capturing a massive market share. US companies were defeated. What happened next? The US cited national security, forced Japan to sign semiconductor agreements, demanded market opening, restricted exports, and even shared profits. With one fell swoop, Japanese semiconductors faltered and never recovered. Now, the same knife is being held to South Korea's throat.
South Korea is currently making enormous profits in the AI hardware industry chain. When the US sees that the time is right, it's time to collect protection money. And consider this: using the dollar tide to pressure South Korea's financial markets to collapse further strengthens its bargaining position at the negotiating table. Your currency is collapsing, your economy is under high pressure, and I'm increasing the pressure on you. Will you agree? If not, then prepare for an even worse situation.
Therefore, you can see that the dollar's dominance is never just about printing money. It's a comprehensive system that uses the ebb and flow to harvest financially, uses industrial profit sharing, and uses geopolitics for military pressure. Everything is interconnected.
But I still want to give you two separate pieces of good news related to timing. After discussing the revealed plan for harvesting benefits and dominance, let's return to the question everyone is most interested in: Has gold reached its bottom? Is 4,000 a good entry point? The answer is very simple. We are currently in a base-building phase, or scraping for the bottom, but it's not yet time for a true reversal. Why scrape back and forth? Because Mr. Powell's strong dollar plan is a mountain pressing down on gold prices. As long as this mountain exists, gold prices cannot fly. But no matter how high the mountain is, it must eventually be crossed. And history tells us that the end of every dollar tide cycle is usually a major bottom for gold prices.
Today, we will finish what we promised last time. The historical bottoms of gold prices have 6 common characteristics. Let's go through them one by one.
Before we count the signals, we need to correct a common misconception. A major bottom is not just a single point, but an area. Many people think a bottom is an exact number, like 3,000 or 1,980 is the bottom, and 4,020 is not. That's a mistake. A true bottom is like the bottom of a wok when we stir-fry. It's not a sharp point, but a flat, wide area. Prices will be rubbed back and forth in this area, rubbing back and forth to shake out the weak-hearted investors from the ride, and then it will surge upwards. All historical bottoms have never been a V-shaped reversal, shooting up immediately. Every time, it has been a gradual, grinding base-building process. Let's align this thinking first, and then we can look at the signals.
Signal 1: Flat base building, not a sharp bottom. We just discussed this. It's when prices swing back and forth at a low level, refusing to go up or down, intentionally wearing down your patience. It's said to be falling, but it doesn't fall deeply. It's said to be rising, but it can't rise. You watch the price every day, wanting to give up and sell but can't bring yourself to do it, wanting to buy more but fearing it will fall further. It tortures traders to the brink of despair. Does the area around 4,000 feel like this now? Swinging back and forth for almost a month, right? So, the first signal is flashing.
Signal 2: Drying up trading volume. What does this mean? It means trading volume is decreasing. Those who should sell have already sold. Those who are panicking have already left. The selling pressure has diminished. When there's no one left, the price can't fall anymore. It's like a market stall having a clearance sale. At first, everyone rushes to lower prices, selling for less and less. But when it reaches a point where those who want to leave have already left, and only the stubborn ones remain who refuse to sell, the price will stabilize on its own.
Now, this signal is half-flashing. The volume has shrunk significantly from its peak, but it hasn't reached the point of being completely dry. We need to wait a bit longer.
Signal 3: The bear trap. This is interesting and classic. What is a bear trap? It's when prices deliberately break through key support levels, like round numbers or annual moving averages, making everyone feel like it's over, the support is broken, and it will surely fall heavily. Then, those who set stop-loss orders are wiped out. Those who like to chase sales rush in. And what happens? As soon as the support is broken, prices are quickly pulled back up, so fast you can't react. When this happens, those who cut losses end up selling at the bottom, while those who chased sales get caught in a trap, slapped in the face simultaneously. This is what's called a bear trap, squeezing those who play the selling side to death. Will the round number support at 4,000 follow this script now? It's hard to say. But if there's a scenario of intentionally breaking support and then quickly pulling back, that will be the confirmation signal of the bottom. Now, this signal is not yet flashing. Let's wait and watch the drama.
Signal 4: RSI enters oversold territory and generates a bullish divergence. This is a bit technical. I'll explain briefly. RSI is the Relative Strength Index. If it falls below 30, it's called oversold, indicating it has fallen too much. And what is divergence? It's when the price makes a new low, but the RSI does not make a new low, indicating that the downward momentum is weakening. When these two combine, it's a classic technical signal indicating a bottom. Has this happened yet? Everyone can open a chart and see for themselves. I won't give specific numbers because everyone uses different timeframes, and the conclusions will vary.
Signal 5: The US Federal Reserve's policy shift. This is the most important fundamental signal. It's when the Federal Reserve shifts from hawkish to dovish, changing from raising interest rates to lowering them, or at least its hawkish stance has peaked and is starting to soften. Currently, Mr. Powell is at the peak of his hawkishness. He has just started following the Volcker path, abolished forward guidance, no longer uses the dot plot, and acts as if he will fight inflation to the end. Therefore, this signal is not yet flashing. But remember this sentence: when everything reaches its extreme, it will reverse. Extreme hawkishness is the starting point of a reversal. When everyone believes the Federal Reserve will be hawkish forever, it's often the time when the turning point is about to appear.
Signal 6: US Treasury yields hit their peak and begin to decline. What is gold's biggest competitor? It's not the dollar, but US Treasury bonds, because bonds offer interest, while gold does not. When US Treasury yields surge, everyone prefers to buy bonds to earn interest rather than buy gold. Gold prices are naturally suppressed. Only when the 10-year US Treasury yield hits its peak and begins to decline will the pressure on gold be released, and it will often be the time when the market starts to move forward.
What are the current yields? They are still fluctuating at high levels. There is no clear signal that they have reached their peak. Therefore, signal 6 is also not yet flashing.
The base-building pattern is flashing. Trading volume is half-flashing. The remaining four signals—bear trap, RSI divergence, Fed policy shift, and peak Treasury yields—are either not flashing or still require confirmation.
Six signals have worked 1.5. Do you think this is a major bottom? It's the bottom area, but it's not yet time to confirm a reversal. We still need to grind it out, still need to wait.
Now, many people will ask, what should we do now? Just sit and wait? Of course not. What is the most prominent characteristic of the bottom area? You know it's at the bottom, but you don't know when it will start to surge. So, you can't just sit and wait, and you can't go all-in. The best approach is to gradually allocate investments in rounds.
I propose a three-level position-building concept. It's easy to understand and practical to follow.
Level 1: Now, around 4,000, invest to build a base. Don't invest too much. Put in 1-2 parts of your planned capital. Why? Because you don't know if it will suddenly surge upwards. If it doesn't crash down to create a pit and then drag up, you'll be at a disadvantage if your portfolio is empty. You won't be able to catch up.
Level 2: If it truly crashes down, creating a bear trap, such as breaking the previous low and then quickly pulling back, then add another 3 parts. The pit that was created by the crash is an opportunity to be given money. Don't be afraid to buy.
Level 3: Wait until the US Federal Reserve's policy shift signal appears clearly, or Treasury yields confirm their peak, then add another 3 parts. By then, even if the price is higher than now, the certainty will be much higher, and you will sleep soundly.
Build a three-level position: the more it falls, the more you buy, but never buy to fill your entire portfolio. Attack and retreat. Why not fill the portfolio? The reason is simple: no matter what, you must always leave yourself an escape route.
But knowing how to build a position is only part of the strategy. There is another important principle: real things are more important than paper. What does this mean? It means the proportion of physical gold bars should be higher than paper gold or gold ETFs. Why? Because we've talked so much about revealed plans and de-dollarization. In the end, what is truly reliable is the gold you can hold in your hands. The numbers in an account, frankly speaking, are the credibility of the counterparty. If a truly dire situation arises, whose credibility is best? It's physical gold, of course. This is true hard currency. No matter how ruthless Mr. Powell's strong dollar plan is, it cannot change the fundamental logic of gold. Every time the dollar harvests benefits worldwide, its credibility is overdrawn once. The more central banks buy gold, the stronger gold's currency properties become. The major trend of de-dollarization is not something that just one or two Fed chairmen can reverse.
The strong dollar is a revealed plan. Scraping for the bottom is a process. And the value of gold is the destination.
So, what do you think? Where will this round's gold bottom stop? Will 4,000 hold, or will it be hammered down into a deep pit?
Finally, I reiterate that all content is for market observation and information sharing only, not investment advice. This is Gold Wealth. I wish all of you the strength to stand firm and preserve your wealth amidst the turbulent waves of capitalism, to welcome the golden era that belongs to you. See you in the next video. Goodbye.