Oct 10, 2017

1. The traditional post jobs report rally for gold is in full swing. Please  click chart above to enlarge or here now. Double-click to enlarge this daily gold chart. Gold arrived at a key Fibonacci line at about $1268 as the US jobs report was released.
2. Please  click here now. Double-click to enlarge. The dollar has stalled against the yen, and that’s also good news for gold.
3. Gold tends to stage great rallies in the days following the jobs report, and this rally is a particularly interesting one. Here’s why:
4. First, Trump has ratcheted up his “hawk talk” in regards to North Korea and Iran. He’s scheduled to make a key speech on Thursday about Iran, a country which is now exporting two million barrels of oil a day.
5. Second, the Chinese government recently chopped commercial bank reserve requirements. That triggered a massive rally in bank stocks around the world, and in most stock market indexes.
6. Chinese citizens tend to buy more gold when stock markets are rallying and economic sentiment is positive. 
7. Friday also marked the last day of COMEX gold trading during the Golden Week holiday in China. Chinese gold markets are now open again, and eager buyers are clearly in action. 
8. Perhaps most importantly of all, on Friday the Indian government cancelled the “Know Your Client” rule for gold jewellery buyers and that happens just in time for the launch of Diwali.
9. Please  click here now. This is pretty big news for gold price enthusiasts around the world.
10. Given all of this gold-positive news, it’s pretty easy to understand why gold has bounced so firmly from the $1268 area Fibonacci line.
11. Fundamentally, there is nothing negative for gold right now. Gold has rallied after every rate hike. It did that in the 1970’s as the Fed Funds rate soared to 20%. The precious metals and the mining stocks soared like a flock of golden eagles as that happened, and 2018 could see that repeated, albeit on a smaller scale.
12. The Fed has three rate hikes scheduled for 2018, and aggressive quantitative tightening (QT). By December of 2018, money velocity should reverse and begin a long term bull cycle.
13. The QE money ball is essentially “toast”. Bond prices will get a haircut as rates rise and QT accelerates. Money will pour out of government bonds and central banks and into the fractional reserve banking system, and… into gold. 
14. Please  click here now. Central banks and governments have not propped up their economies since the 2008 financial crisis occurred.
15. What they have done is prop up financial markets while insidious inflation and no wage gains on Main Street have seen the plight of the average citizen get worse.
16. That can change. Please  click here now. Donald Trump’s three main campaign promises were to cut taxes, chop the price of the US dollar against other fiat currencies, and to give government bond market creditors a haircut.
17. His promises are essentially a mechanism to move a portion of the fifteen trillion dollars in financial markets liquidity towards Main Street. He has yet to do that, but I think 2018 will probably be recorded in history books as “The Golden Year”. 
18. I’m predicting that 2018 will be the year that Trump begins talking more openly about the bond market and the need for creditors to be realistic about what they can expect to get paid. 
19. Along with the “motherlode” of positive demand coming out of China and India, Trump’s actions and words should help make 2018 the year that gold ends its sideways trading pattern of the past three years, and starts a significant trending move higher.
20. Please  click here now. Double-click to enlarge this fabulous silver chart. There’s a beautiful inverse head and shoulders bottom formation in play, with an ultimate target in the $22 area.
21. Please  click here now. Double-click to enlarge this key GDX chart. GDX has started a strong rally. All fundamental lights are green for the entire precious metals asset class. 
22. Most technical lights are green, except for one. Please  click here now. Double-click to enlarge. My “line of concern” at $1300 relates to the head and shoulders top neckline that gold is rallying towards now. 
23. The technical target of that pattern is about $1215. Whether the “Queen of Assets” can successfully surge through that neckline area is likely to be determined in the short term by Trump’s speech on Thursday about Iran. In the medium term, it will be determined by the amount Diwali gold demand that appears (or doesn’t) over the next two weeks.
24. Tactics? Nervous investors should buy put options and buy them today! On the buy-side, the key for gold bugs is to be light buyers of all their favourite precious metals investments if gold trades at $1270 and to be substantially bigger buyers at $1215 or lower. Do that, while cheering that the price only goes higher!

Thanks! 

Cheers
st

Oct 10, 2017
Stewart Thomson  
Graceland Updates
website: www.gracelandupdates.com

Today’s videos and charts (double click to enlarge):
 

SFS Key Charts & Video Update

SF Juniors Key Charts & Video Analysis

SF Trader Time Key Charts & Video Analysis

Thanks,

Morris

website: www.superforcesignals.com

About Super Force Signals:
Our Surge Index Signals are created thru our proprietary blend of the highest quality technical analysis and many years of successful business building. We are two business owners with excellent synergy. We understand risk and reward. Our subscribers are generally successfully business owners, people like yourself with speculative funds, looking for serious management of your risk and reward in the market.

Frank Johnson: Executive Editor, Macro Risk Manager.
Morris Hubbartt: Chief Market Analyst, Trading Risk Specialist.

Why it’s important to the typical gold investor

By Michael J. Kosares
Author: The ABCs of Gold Investing
Founder: USAGOLD

“Even those of us who have been tracking gold’s progress for decades frequently give in to the ease of quoting gold’s value in terms of fiat currency – most commonly in US dollars. And yet, we have it the wrong way round. Gold is in fact the centre of the economic universe, and all the fiat currencies (including cryptocurrencies) revolve around gold.” – Jeff Thomas, InternationalMan.com

Most gold investors are aware that major national currencies have been in an uptrend against the dollar since the beginning of the year. What might be surprising is the degree they are up against the dollar. Here is the scorecard:

Euro –– +10.3%
Japanese yen –– + 4.2%
Chinese yuan –– + 4.5%
Swiss franc –– + 5.1%
British pound –– + 8.9%
Australian dollar –– + 9.0%
Canadian dollar –– + 7.2%
(As of 9/27/2017)

Even more surprising is the degree to which gold has strengthened against those same currencies. Here is that scorecard:

Euro –– + 1.1%
Japanese yen –– + 8.0%
Chinese yuan –– + 6.5%
Swiss franc –– + 6.1%
British pound –– + 3.4%
Australian dollar –– + 2.1%
Canadian dollar –– + 3.2%
U.S. dollar –– + 11.5%
(As of 9/27/2017. See charts below.)

Gold and the dollar are often referred to as safe havens in the same breath, but what these numbers tell us is that – at least for now – gold increasingly has become the safe haven of choice. It is too early to know whether or not the across-the-board uptrend in gold will continue, but it is worth noting and monitoring. Clearly, significant capital is finding its way to the gold market globally and we suspect that institutional investors and funds have played the dominant role.

Why is gold’s appreciation against domestic national currencies important to the individual American gold investor?

It identifies an important trend in gold ownership taking hold in the top economies around the world – a developing investor mindset and response to host country monetary policies that could be of immense importance going forward. It is revealing that the same phenomenon has taken root concurrently in all eight of the countries represented by the currencies listed above.

The pattern reflects concern about central banks’ ability to lift local economies out of a persistent disinflationary malaise. It also suggests that for many investors gold, not the U.S. dollar, looks to be the safer and more productive alternative should things take a turn for the worse.

As long as the low interest rate environment and concerns about overvaluation in the stock and bond markets persist, asset managers and investors are likely to continue shifting resources to underpriced gold (and silver). Given forward guidance provided by the central banks, it appears those policies and concerns will be with us for years to come.

Thus far, gold’s performance against major currencies has flown under the radar in financial circles and outside the notice of the mainstream media. That is not likely to remain the case for long.

Click image for Larger Charts

Charts courtesy of Gold Charts$Us/Nick Laird.  With thanks.

In the October issue of News & Views, we pick up where this article leaves off with a very important companion piece: How Professional Investors Radically Altered the Gold Market.  We also explore what has brought the Old Guard back into the precious metals market.  Last, we include a CLIENT SPECIAL ADVISORY in conjunction with the 20th anniversary of The ABCs of Gold Investing.

http://www.usagold.com/

Strengths

• The best performing precious metal this week was palladium, up 1.67 percent. Palladium prices rose above platinum prices on expectations there may be a surge in gasoline engines from China before clamp downs on their use comes into effect.  Gold traders and analysts surveyed by Bloomberg maintained their bearish bias for a third week despite North Korean tensions escalating after our military show of force last weekend with fly-by of their airspace.
• Despite gold having a lousy month with negative price action and a spike in volatility, to four-month highs seen in the metal, holdings in exchanged traded funds rose to their highest levels since last November.
• At this week’s Denver Gold Form, Randal Oliphant noted that the industry may be reaching peak gold production as major new discoveries have waned over the last couple of decades, despite industry spending or changes in technology.

Weaknesses

• The worst performing precious metal this week was platinum, down 2.20 percent. Platinum is suffering a continued loss of market share to palladium in the near-term play out.  Comments earlier in the week from Federal Reserve Chair Janet Yellen sent gold lower. Yellen said that it would be imprudent to leave rates on hold until inflation reaches 2 percent this year. Her comments overshadowed the earlier heated North Korean war of words.

• The reversal in gold prices took price levels down to the 50-day moving average where support levels seemed to hold through the remainder of the week.
• Gold exports from Hong Kong to China have slowed.  For the first eight months of the year, imports are down 70 tonnes from the same measurement point of last year’s 485 tonnes.

Opportunities

• Dennis Gartman, who successfully called the gold rally in 2017, is now forecasting gold will be “demonstrably higher,” potentially rising to $1,400 per ounce in the coming months.  Gartman notes that the metal’s recent correction is merely a pullback leading up to much higher gold prices.
• Sentiment from both the Precious Metals Summit and the Denver Gold Group meetings over the past few weeks reflects an attitude of focus on brownfield projects around existing operations to extend mine lives. In addition, it appears that merger and acquisitions are going to be inevitable, with a large focus on politically-safe jurisdictions.
• Desjardins Securities recommended Wesdome Gold as a new buy along with Golden Star, which just commenced stoping at its Prestea Underground Mine.  Prestea is expected to achieve commercial production in the fourth quarter of this year.  In addition, Columbus Gold signed a definitive agreement to spin out its Nevada gold properties into a separate company later this year.  Columbus Gold’s other properties in French Guyana could be of interest to Nord Gold, its JV partner.

Threats

• President Trump’s tax overhaul plan boosted the dollar this week and could potentially be a headwind to gold if corporate earnings rise due to reduced tax rates.
• One Nation is threatening to form a bloc in the West Australian parliament to stop the government-proposed hike in the state’s gold royalty.  The government announced legislation to increase gold royalties from 2.5 percent to 3.75 percent when the spot price is above A$1,200.  Treasurer Ben Wyatt espoused the hike would be negligible, but the miners contend there will just be fewer jobs.
• Morgan Stanley penned a report this week emphasizing the need for capital discipline in the gold mining space and highlighted that the industry needs to deploy capital into only the highest-return projects with low capital intensity that can still generate returns when prices fall.  They noted that at current capital intensity levels, a gold price of $1,350 an ounce is needed to cover the cost of capital.

http://usfunds.com/