Gold & Precious Metals

  1. In late 2013, I predicted the Fed would taper its QE program to zero, and the first taper would cause gold to rally, stunning the Western gold community. I also predicted the taper would turn the US stock market into a “wet noodle”. That’s what happened.
  2. In 2015, I expect the Fed to hike rates sooner than most analysts expect, and I’m predicting that gold rallies on these rate hikes, and global stock markets take a horrific beating. I expect the stock markets of India and China to recover from that beating, but not the American market.
  3. Despite yesterday’s mini-crash, I don’t think the American stock market is pricing in the reality of the coming rate hikes. 
  4. Please  click here now. That’s the daily Dow chart, and it’s off to a terrible start this year.
  5. The “January indicator” that I use focuses on the first week of trading during each year. If the Dow ends that first week on the downside, it can indicate the entire year will be negative.
  6. That’s because how the Dow trades during the first week of January is a very good barometer of how institutional money managers are adding or withdrawing risk capital, with a one year outlook. So far, their outlook is very negative.
  7. Please  click here now. That’s the monthly Dow chart. I would not be a buyer of the US stock market, unless the Dow declined to the 14,000 area, and even then I’d only be a light buyer.
  8. Please  click here now. I’ve argued for years that the US government is more interested in the corporate stock market than the real unemployment rate, because large corporations provide a lot of money to get politicians elected. Those corporations benefit from higher stock prices. Some analysts believe the stock market can only crash when the public is heavily involved, but I would argue that the hedge funds are the “new era” public, just as robots and computers are becoming the workers of the new era.
  9. Rig counts are beginning to drop in US oil fields, and large layoffs are likely coming, yet the government continues to boast that more restaurant jobs are being created. Clearly, America is in no condition to endure an economic downturn, yet a downturn is coming, almost as surely as night follows day. 
  10. When the next crisis unfolds, I expect the Fed to quietly ask the Chinese central bank to revalue gold, by announcing a major gold buy program. This would allow China’s currency to become a competitor with the dollar. 
  11. Equally importantly, it would allow the Fed to hide the key role that a higher gold price would play, in managing US government debt that is clearly out of control.
  12. Please  click here now. That’s the daily oil chart. The price has arrived at my short term $49 target area.
  13. I think oil may trade under $30. Rate hikes and a peak in the US business cycle could keep it there for a long time, which is fabulous news for gold mining companies. 
  14. At the start of December, the Indian central bank killed the 80-20 gold export rule, and gold immediately soared about $100! There are strong rumours that the Modi government may be only about 48 hours away from making another major announcement, directly relating to gold.
  15. “The Union Commerce Secretary Rajeev Kher has scheduled a meeting on Jan. 7, which will be attended by representatives from country’s finance ministry, the Gems and Jewellery Export Promotion Council (GJEPC) and the Reserve Bank of India (RBI). According to reports, the government intends to extend the ‘Make in India’ campaign into gold sector.” –Resource Investor News, January 5, 2015.
  16. Indian gold demand is the elephant in the gold price discovery room, and that elephant is beginning to “stand up and take charge”. “The recent survey conducted by the country’s leading credit rating agency ICRA Ltd shows that the gold jewelry demand in Indian domestic market is poised to witness 10% growth in 2015.” – Scrap Monster News, January 5, 2015. 
  17. Dramatically lower fuel costs, coupled with higher demand for gold from China and India appear to be creating a huge “win-win” situation, for Western gold stock investors!
  18. Please  click here now. That’s the daily GDX chart, and the fundamental price drivers are creating a very bullish technical picture. Note the buy signal in play on my 14,7,7 series Stochastics oscillator. Volume is bullish. A two day close above $20.50 could ignite a powerful rally, to the $28 area.
  19. Please  click here now. That’s the GDXJ chart. I think most analysts are underestimating the dramatic effect that low fuel prices and surging Chindian demand can have on the price of junior gold stocks. Naked shorting should soon be replaced by “institutional respect” for gold stocks, and that includes the junior sector.
  20. The reason most gold bears have been so wrong about gold crashing in 2014 and 2015, is because they are excessively focused on technical analysis and the US economy. They also appear to be almost clueless about key events occurring in India and China.
  21. Going to war with only one weapon is an act of madness. It’s the same thing with investing in gold. Investors who stare at charts and just trade gold rather than embrace it as the ultimate asset, are likely to fail miserably, in the long term. That’s because charts don’t make fundamentals. Fundamentals make charts. The bears learned that the hard way, when the Indian central bank killed the 80-20 rule. They may be about to get another brutal lesson in gold market fundamentals, if the Modi government openly embraces the gold jewellery industry in the next 48 hours.
  22. The gold jewellery sector is the second largest employer in India, and gold is a key part of the Hindu religion. Simply put, the Western gold bears and their ridiculous chart patterns are no match for the “shock and awe” power of a billion Hindus, whose thirst for gold is…. insatiable!
  23. Please  click here now. That’s the daily gold chart. Note the Stochastics oscillator buy signal in play now. Note the “bull era channel” that I highlighted. In the very short term gold will continue to move erratically, in response to key economic data like the upcoming jobs report on Friday. In the bigger picture, the rise and consistency of Chindian demand should create a stable and modestly rising price trajectory. 
  24. Please  click here now . That’s the daily chart for silver. Note the nice buy signal in play on my Stochastics oscillator. The bull channel is steeper than the gold channel, and that’s normal. Silver tends to rise more strongly than gold does, when both are in an uptrend. Bullion expert Koos Jansen has apparently reported that silver trading volume on the Shanghai market exceeded that on the COMEX in 2014. I’ve predicted that gold will meet the same “fabulous fate” by 2017. Silver’s price tends to be determined by the gold price, and as gold trading volume in Shanghai (and Dubai) begins to overwhelm the COMEX, both gold and silver investors can probably look forward to many happy years, of higher prices!

Jan 6, 2015
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
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Tuesday Jan 6, 2014
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an invetor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

SWOT Analysis: Gold Remains an Increasingly Valuable Alternative Asset

Posted by Frank Holmes - US Global Investors

on Monday, 5 January 2015 15:06

Strengths

 

  • Gold traders surveyed by Bloomberg are bullish for next week. Rising concerns surrounding the political uncertainty in Greece are increasing the precious metal’s appeal as a haven.
  • Goldman Sachs set its long-term forecast for gold prices at $1,200 an ounce for the next three years. This price is estimated by the investment bank to be the majority of gold producers’ breakeven price. If gold prices fall below $1,200 an ounce, losses would result in a supply reduction, which should prop prices back up.
  • China’s net gold imports from Hong Kong reached a nine-month high in November, most likely due to inventory build-ups for the Lunar New Year. Furthermore, the Shanghai Gold Exchange saw strong withdrawals last week at 57.7 tons, bringing the year to date total to 2,073 tons.

 

Weaknesses

 

  • Gold ended 2014 slightly down, declining 1.72 percent. This is the second-straight year that gold has declined.
  • The drop in gold prices this year is affecting coin sales. The U.S. Mint is heading for its biggest annual decline in sales since 2006.
  • Gold-backed ETFs are seeing the negative effects of lower gold prices as well. Holdings in gold-backed ETFs dropped to the lowest level since 2009, as roughly $6.7 billion was removed this year.

 

Opportunities

 

  • Gold prices responded positively to news last Friday that China’s central bank was considering loosening liquidity requirements for the country’s banks. With many seeing this speculation becoming reality, news of further stimulus in China should cause a further rise in gold prices.

 

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  • The New York Federal Reserve recently saw a 42 ton withdrawal of gold. The recent rise in gold repatriation from countries like the Netherlands and Germany is a sign that global market and political uncertainty is on the rise and gold is becoming increasingly valued as a haven asset.
  • German five-year yields on government bonds dropped below zero this week for the first time. The difficulties facing Europe are captured in this event, as investors are now willing to pay to hold German debt with no returns. With falling rates and growing uncertainty, gold becomes an increasingly valuable alternative asset.

 

Threats

 

  • Chilean President Michelle Bachelet presented a bill this week that would make union leaders the only authorized negotiators in wage bargaining, while outlawing mining companies’ rights to replace workers on strike. The proposal will risk further investment delays according to the mining companies affected.
  • The Zambia Mines Minister is refusing to undo the hike on mining royalties that came into effect on January 1. The policy raises royalties for open pit mines from six percent to 20 percent.
  • The Chilean Supreme Court declined to hear Barrick Gold Corp.’s appeal regarding fines imposed on its Pascua-Lama project. The fines, imposed by the country’s environmental regulator, could make it more difficult to move the project forward.

 

Potential Upside Target for GDXJ

Posted by Jordan Roy-Byrne - The Daily Gold

on Friday, 2 January 2015 14:57

As 2015 begins I’d like to briefly follow up on my most recent article in which I discussed the oversold condition in the miners. Breadth indicators as well as technical indicators (such as distance from the 200-day moving average) showed the miners reaching an extreme oversold condition in November and nearly again only a few weeks ago. Miners essentially were at their third most oversold point since 2001. The other two were during the 2008 financial crisis and during Gold’s spring collapse in 2013. The current oversold condition combined with the failure of most indices to make new lows in December could be the setup for a first quarter rebound.

Before I get to GDXJ I’d like to show an updated bear analog chart for gold mining stocks. We use data from the Barron’s Gold Mining Index dating back to 1932. The current bear market is in blue. Other than during the final weeks of the 1996-2000 bear market gold stocks (according to this chart) could be at their most oversold point in history. It certainly is very close. Bull markets began from similar points. Three times the 1996-2000 bear became this oversold. Twice it rebounded and the final time it consolidated for weeks before falling to its bear market low in the second half of 2000.

jan1.2015edbgmibears-1024x750

 

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Below is a weekly bar chart of GDXJ. Note the confluence of trendline and lateral resistance just below $33. The 50% retracement of the recent 53% decline (June to December) is $33. Clearly $33 figures to be important overhead resistance. GDXJ closed Wednesday pennies below $24.

jan1.15edgdxj

 

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At the bottom of the chart we plot a rolling 7-week rate of change for GDXJ. Over the past two years GDXJ has gained at least 30% within seven weeks on four different occasions. Twice it gained at least 40%. A 40% advance from Wednesday’s close would take GDXJ to $33.50.

Whether or not a new bull market is about to begin does not change the near term outlook. Gold and silver miners (and juniors especially) became extremely oversold and are ripe for a good rebound. It appears to be an excellent long opportunity for traders as well as an opportunity for investors to start scaling into long positions. Consider learning more about our premium service which includes a report on our top 10 juniors to buy for the coming bull market.  

 

Good Luck!

 

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com

Diversify With “Physical Precious Metals Stored Outside The U.S.”

Posted by Dr. Marc Faber

on Wednesday, 31 December 2014 18:27

faberDr Marc Faber, respected economic historian and author of the respected monthly newsletter, the ‘Gloom, Boom and Doom Report’, has warned that 2015 is set to be very volatile, urged international diversification and owning “physical precious metals stored outside the U.S.”

In another insightful and witty interview with Bloomberg Television’s In the Loop, with Betty Liu, Erik Schatzker and Brendan Greeley, the ever charming and affable Dr. Marc Faber reaffirmed his long-standing preference for investing in emerging eastern economies, his lack of faith in the dollar and advised Americans to own gold….

CLICK HERE for the complete article

What You Really Need To Know About Gold in 2015

Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

on Wednesday, 31 December 2014 16:16

I love gold. I love its history. I love the role it’s had in many a monetary system. I love the beauty of gold. I love the versatile uses of gold.

I love gold coins. I love objects made of gold. I love gold’s role in new technologies.

But gold is not the be-all end-all of the investment world. Nor is it the world’s savior. It is not even a very good hedge against inflation.

The hate mail will pour in again. I’m sure of it. But I have my reasons for giving you the truth, and nothing but the truth about gold. As despised as I’ll be for the facts I give you today, you need to know the truth.

There are too many myths and propaganda out there about gold, and if you get caught up in them, you most assuredly will lose the shirt off your back investing in gold.

Screen Shot 2014-12-31 at 7.51.38 AMThe fact of the matter is that the chief reason promoted to invest in gold — inflation — is dead wrong.

Consider the following:

– At the depths of the depression in 1929, an ounce of gold sold for $20. The Dow Industrials was at 40.

An ounce of gold today is roughly $1,196. It’s increased 59.8 times over.

But the Dow Industrials stands at roughly 18,000. That’s 450 times more than it was in 1929.

And that means that since 1930, the Dow has outperformed gold 7.52 times over.

– In 1980, gold sold for $850 an ounce. The Dow Industrials was 824.57.

At $1,196 today, gold has increased 1.4 times over.

But at 18,000 today, the Dow has increased 21.83 times over — a performance that’s more than 15 times better than gold’s.

So why do investors get so much of their dander up when it comes to gold?

The answer, in my opinion, is simple: They put way too much credence into conspiracy theories and into the sales pitches made by dealers and analysts who are nothing more than gold promoters.

[Editor’s note: For Larry’s guide to investing in precious metals and natural resources, take him up on this risk-free trial of his Real Wealth Report.

Because you see, overall, gold is not as great an inflation hedge as most would like to believe. The fact of the matter is this:

First, there are times when gold is a great inflation hedge, and there are times when it is not.

Second, there are times when gold goes up, and there are times when gold goes down, just like any other market or asset class.

Therefore …

Third, to maximize your profits in gold, you need to know when to be aggressively in gold, and when not to be.

And as a corollary …

Fourth, to also maximize your profits, you also need to ignore the garbage that’s out there about gold.

Gold is one of the most emotional markets on the planet, one of the world’s most recognized investments, all over the world.

Yet it is also the market where the biggest lies are told, the biggest myths are perpetuated, and where the largest amount of misinformation is spread.

I tell you this only because it’s my job to help protect your wealth. I have no vested interest in doing anything but that.

So bring on the gold investors — and especially the gold dealers and promoters — who will want my scalp for writing this today. I don’t really give a hoot. All I care about is spreading the historical truth, not BS, propaganda, or market myths.

That said, there will soon come a time — in 2015 — when it is prudent to load up on gold, but we’re not there yet.

I’ll keep you posted. And be sure to check my next column, one week from today, where I’ll give you more detail on the bottom I see coming in gold and silver, plus two more forecasts for 2015 …

Forecasts that — if they pan out as I expect they will — can help make 2015 your best year ever.

Happy New Year and best wishes,

Larry

 

About Larry Edelson

 

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View all posts by Larry Edelson