Concerns over an overheating economy continue to grow. Interest rates are rising and poised to stay on an upward path. A new mega trend for bonds is beginning to emerge, explains Omar Ayales, editor of GoldChartsRUs.

During the next decades, don’t be surprised if we see large flows out of the bond market and into many other asset classes. Demand for assets across the board will continue to boost inflation.

Inflation has been showing up in different areas during the past few years, but it’s only within the recent year when inflation spilled into indicators closely watched by monetary policy makers across the world.

Consumer confidence is only now becoming more evident. The shift in global fiscal policy is starting to show potential; Main Street is doing good and the outlook is bright.

Renewed strength in the economy is set to develop further. Inflation is also likely to continue rising. Historically low interest rates are becoming a thing of the past. Notice the U.S. 10-year yield breaking key resistance levels and positioned for more upside going forward.

It has been my belief for the past 2 years that one of the best places to be invested in are in the resource and precious metal sectors. One main reason why is inflation itself.

The tectonic shift we’re witnessing is changing the way investments are made and portfolios balanced. It’ll also affect the way the economy develops, and the world re-integrates. A flight to gold as a hedge against inflation looks ready to grow. Demand for commodities will continue to grow too.

The bull market in the U.S. stock market looks to be near the eighth or ninth inning. And although many fear volatility near the highs being indicative of a massive top, there’s still several signs showing the stock market remains strong. Real growth driven demand is one of the main reasons. 

chart 1

But the best potential over the coming years points to the precious metals and resource sectors — metals and mining. This year the uninterrupted bull market in stocks is in its 9th year. The bull market in commodities, particularly the metals and resources, is still young with lots of upside potential and limited downside.

The following chart shows the gold price from its high in 2012, just prior to its collapse into a bear market, until the low in December 2015.

Since then, gold has been rising, coinciding with the rise in interest rates. The reasons being higher rates are indicative of inflation, or at least, inflation expectations.

chart 2

Notice gold forming a massive bullish ascending triangle with bullish support at its uptrend near $1280, and its resistance at the key multi-year resistance near $1380. A break above this key resistance will push gold into a stronger phase of its bull market.

The chart is also telling us a continued correction could still push gold to $1280, yet gold would still remain bullish within its massive pattern. Take advantage of declines and dips below $1300 to buy.

Gold shares are likely to benefit the most from a surge in gold. They’re bombed out and have lots of catching up to do. Gold shares have been forming a massive base above a key support level.

Many people dwell on the narrow sideways action gold shares were in during 2017. But that is actually bullish. You may remember gold shares exploded to the upside from late 2015 into 2016.

The HUI Gold Bugs Index more than doubled in a matter of months, rising from 111 to 231. Since then, gold shares entered into a consolidation phase showing new key lows and support areas.

The chart below shows the HUI since 2012 forming a massive head and shoulders bottom with a neckline breakout at 250.

This tells us HUI is poised to rise to test this level which is a 30% rise from current levels. And if HUI breaks the neckline resistance, a continued rise to the old highs would be likely. The upside potential is major and should not be overlooked.

chart 3

One of our favorite positions is Kirkland Lake Gold (KL). A growing mid-tier mining company showing strength within gold’s cyclical bull market, KL reached new highs and it’s positioned for more upside.

But not all that glitters is gold! Resources also embarked on a cyclical bull market in 2016. Growth driven demand continues to push resources higher. Our best trades and biggest winners in 2017 were in the resource sector, particularly in crude, copper and their producers.

Notice the chart of copper and its leading indicator since the cyclical bull market began in 2016. Notice copper holding at a major uptrend while its leading indicator bottoms at a low area. Technically, copper is positioned for more upside.

chart 4

Resource shares are also poised to continue gaining from growing demand in copper and others. Freeport McMoran (FCX) looks good.

Although it fell sharply reently, it’s a good company. It has more than doubled its business operation since last year and continues to pay off debt by the truck loads. It has brought its cost production of copper down by 40% too and has declared a dividend for only the second time in the past several years.

Growing inflation, a weakening U.S. dollar, a rise in growth driven demand with a bright outlook is giving resource and energy bulls solid arguments for more upside. 

Crude has yet another huge element that will keep it strong this year and probably well into 2019. OPEC nations are keeping production capped in spite of rising shale oil production due to healthy growth driven demand.

Energy shares are showing upside potential, particularly as energy prices remain lofty with an upside bias. We’ve recommended Energy Select Sector SPDR (XLE), an ETF holding the major senior energy shares. The ETF is recommended for more conservative traders.

In our presentation at the upcoming Las Vegas MoneyShow, we will explain in detail our reasoning and strategy. We’ll back it up with charts and fundamentals. We’ll have more stock picks for you. We want to make sure that you are well positioned for the next move.

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