S&P 500 Uncertainty: Will Inflation Reports Ignite a Bull Market? Gold Hits New Heights!

This week’s inflation reports may help stocks either surge forward or falter further.

For over two months, the S&P has been trading sideways, remaining at levels last seen in early December.

Source: TradingView

The situation may soon change.

Inflation Reports Ahead: A Possible Turning Point

The first significant inflation report arrives tomorrow, which could rejuvenate the stock market.

We’ll get the Consumer Price Index (CPI) data tomorrow, followed by the Producer Price Index (PPI) on Wednesday, and the Import/Export price report on Friday.

Of the three reports, the CPI holds the most weight in influencing market movements. Fortunately, our technology expert Luke Lango, editor of Innovation Investor, has analyzed the situation and finds reasons for optimism.

From Luke:

Real-time estimates from the Cleveland Fed suggest that this week’s CPI data may show a decline of 4 basis points in January’s headline inflation rate and an 11 basis point drop in the core rate. This would be the first instance since July 2024 where both rates fall.

February’s CPI report is forecast to reflect similar trends. Preliminary estimates indicate a headline CPI of 2.62% for February, a 23 basis point decrease, while core CPI is expected at 3.02%, down 11 basis points.

In essence, we are likely entering a period of declining inflation over the next two months, starting with January’s CPI findings. This trend is overwhelmingly positive for stocks.

Inflation concerns have plagued the stock market for several years. Whenever inflation rises, stocks tend to struggle, but when inflation falls, they usually rebound. If the current trend of disinflation continues, stocks may be poised for a substantial upswing.

Stay tuned for tomorrow’s CPI results, which we hope will spur a market rally.

Gold’s Exceptional Journey: Another Record High

Gold continues its remarkable trend, recently soaring above $2,900 for the first time, reaching a record of $2,942.70.

The chart below illustrates gold’s price surge, particularly noteworthy since last year.

Source: TradingView

The steep ascent in gold prices can be attributed to several factors. Let’s hear from our global macro expert, Eric Fry, editor of Investment Report:

The surge started a couple of weekends ago when President Donald Trump announced plans for tariffs on Canadian, Mexican, and Chinese goods. This news sent markets spiraling down before they resumed trading last Monday.

While Trump later paused tariffs on Canada and Mexico for 30 days, the China tariffs remained in effect, prompting China to retaliate with its own restrictions on exports to the U.S.

Amid this turmoil, gold prices surged to an all-time high of $2,910.60 per ounce last week, marking a 43% increase from one year prior.

Gold has further strengthened since then, with Eric predicting additional gains ahead.

Factors Driving Gold Prices Up

In his most recent edition of the free e-letter Smart Money, Eric pointed out typical contributing factors such as declining interest rates and rising geopolitical unrest.

However, he also emphasized an often overlooked driver – central banks.

From Eric:

Globally, central banks have significantly increased their gold purchases. In 2022, they bought over 1,000 metric tonnes of gold, accounting for more than 25% of the total global supply.

This buying trend from central banks alone may not cause a significant rally, but it supports an upward price trajectory.

Recent updates from the World Gold Council confirm that robust central bank activity has contributed to record demand for gold.

From Gold.org:

The World Gold Council’s Q4 and Full Year 2024 Gold Demand Trends report shows annual demand for gold (including OTC) reaching a record high of 4,974 tonnes, spurred by ongoing central bank purchases and increased investment interest.

Central banks continued to buy gold at…
“`

Central Banks Buy Gold in Record Numbers While Crypto Faces Headwinds

Central Bank Gold Purchases Hit 1,045t in 2024

In 2024, central banks continued their gold purchasing trend, acquiring more than 1,000 tons for the third consecutive year. The activity surged in the fourth quarter, with purchases totaling 333 tons, bringing the annual total to 1,045 tons.

It’s important to note that Eric isn’t suggesting investors go all-in on precious metals stocks. Instead, he recommends maintaining a sensible position that will help protect your overall portfolio from dollar instability or other unforeseen financial challenges.

Strategic Gold Options for Active Traders

Eric, through his trading service Leverage, suggested long-dated call options on the SPDR Gold Shares ETF (GLD) last March. His subscribers have seen impressive gains from this trade:

• A one-fourth position on April 18, 2024, yielding a 379% gain.
• A one-fourth position on September 19, 2024, resulting in a 94% gain.
• A one-fourth position on September 20, 2024, resulting in a 110% gain.
• The final one-fourth position on October 18, 2024, securing a 292% gain.

For subscribers who followed through with Eric’s official trade alerts, the overall gain amounts to 220%. In comparison, GLD only returned 32% during the same timeframe.

If you’re interested in optimizing your returns through long-dated options, Eric has prepared a free video explaining this trading strategy, which you can find here.

Crypto Struggles as Bitcoin Declines Below $97,000

Currently, crypto investors are feeling the pinch. After peaking at around $108,000 in December, Bitcoin has dipped and is trading just below $97,000. This downturn has affected many popular altcoins, with Dogecoin (DOGE) down 21%, Cardano (ADA) decreased by 22%, and Render (RNDR) has fallen 36% in the last month.

Despite these challenges, our crypto expert, Luke, believes the downturn won’t last. In his latest issue of Crypto Trader, he identified nine developing trends that could fuel a potential turnaround:

• Rising popularity
• More investment
• Deregulation
• Legislation
• Increased liquidity
• Positive money flows
• Heightened activity
• Positive commentary
• Strategic reserve advancements

Luke’s perspective is optimistic: he anticipates strong gains for the crypto market in February and beyond, viewing the current market stabilization as temporary. Although Bitcoin is gaining market dominance, indicating potential bearish trends for altcoins, he remains confident that Altcoin Season could return soon.

Last week, Luke hosted a free event titled Great American Crypto Project, where he discussed the potential for significant altcoin gains in 2024, reminiscent of the explosive growth seen in 2021 when many altcoins surged over 5,000% in a year.

A large part of this potential upside may be related to actions by President Trump, who is rapidly implementing changes via Executive Orders. Luke expects that Trump’s initiatives in the first 100 days could ignite a major crypto surge. He elaborated on this in the event’s replay.

Additionally, Luke showcased his team’s quantitative-based trading algorithm designed to spot patterns that predict rapid price increases for cryptocurrencies—potentially seeing gains of 10X, 50X, or even 100X within three months.

As news surrounding cooling inflation emerges, it is expected that the crypto market will respond positively. We look forward to the upcoming CPI report and the potential for a market rally in stocks and cryptocurrencies.

Have a good evening,

Jeff Remsburg