• 287 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

  1. Home
  2. Markets
  3. Other

Gold Market Fear Is Unnecessary

  1. Since the start of this year, gold has performed extremely well. Please click here now. This daily chart shows the shiny metal moving steadily higher, in a bullish channel.

  2. The current minor trend sell-off in gold is technically healthy.

  3. Also, this price correction should not come as a surprise to any fundamentally-oriented investor; the Crimean crisis seems to be factored into the price now, and there is a key FOMC meeting tomorrow.

  4. As a result, the price has backed off a bit over the past few days. There is decent minor trend support at $1355 and $1332.

  5. Price discovery in gold mainly results from the fundamentally-oriented liquidity flows of institutions and gold dealers. Unfortunately, amateur chartists don't seem to pay much attention to key economic events.

  6. Thus, an investor who is armed only with technical analysis and a US debt clock may find it's quite difficult to prosper in the gold market.

  7. The good news is that compared to last year, the current institutional liquidity flows situation in gold is very solid. Please click here now. This snapshot of the world's largest gold ETF (GLD-NYSE) shows the change in tonnage held by the fund during the first eleven weeks of the 2013 calendar year.

  8. From the start of January to March 17, 2013, there was clearly enormous selling. The fund's holdings fell from about 1350 tons, to about 1219. The bottom line is that about 131 tons of supply hit the market, in less than eleven weeks.

  9. Please click here now. That's a snapshot of the change in tonnage for roughly the same time frame this year. There's been a rise of about 18 tons.

  10. The key point here is that while Western buying is not wildly bullish for gold, it's not bearish.

  11. In December of 2012, Shinzo Abe was elected as Prime Minister of Japan. I've argued that the vast Japanese QE program that he has endorsed would begin to create serious inflationary concerns amongst institutional money managers within just 18 months. On that note, please note the following important news being now carried by Bloomberg:

  12. The Bank of Japan can double its annual pace of bond accumulation to 100 trillion yen ($985 billion) to give fresh impetus to the economy after next month's sales-tax increase, said an aide to Prime Minister Shinzo Abe.... Hamada said the central bank should add stimulus as soon as May should indicators show the 3 percentage-point tax rise is seriously damaging the economy. He said annualized growth of 0.7 percent in the final quarter of 2013 showed that "Abenomics isn't strong enough." "It would be too late if the BOJ waits for April-June GDP data" due in August, Hamada said. - Bloomberg News, March 15, 2014.

  13. A substantial part of the American QE program was directed at OTC derivatives that were arguably worthless. That's not inflationary, unless it creates a surge in the velocity of the money supply.

  14. That's not the case in Japan. On a percentage basis, the Japanese program is already much bigger than American QE was at its peak. As big as Japanese QE already is, it could become vastly bigger!

  15. Unlike their government, Japanese citizens are tremendous savers who shun debt. If Abe/Kuroda ramp up QE significantly, they could begin to buy substantial amounts of gold, effectively giving these wise citizens a key seat at the gold price discovery table.

  16. It's possible that a fair amount of the gold being imported into China is being re-routed to India. The World Gold Council has estimated that Indian smuggling in 2013 was about 200 tons. That's close to 20 tons a month, and probably closer to 40 tons a month, given that the government restrictions were not fully in place until the halfway mark of the year.

  17. The Indian economy is growing, and gold prices are relatively low. It would be reasonable to assume that real demand in 2014 in India is at least as high as it was in 2013.

  18. From the $1180 area lows to the recent $1192 area highs, gold has risen about $210, and done so in a "steady as she goes" plodding uptrend. When the price rises in this manner, demand from gold jewellery buyers in China tends to be relatively inelastic.

  19. The Crimean situation has caused gold to rise only a little bit more rapidly. As a result, dealers in both China and India are probably lightening their bids, but not killing them. That's creating a modest and healthy retraction in the price. An end to the Crimea crisis could push gold down to the $1300 area, but that would probably cause large dealer buying.

  20. Industrialization in China will continue for decades. In good times, gold demand there should grow at least as fast as GDP. Citizens in China don't really trust the government or the banks, and with good reason. Current threats to the Chinese banking system could drop GDP growth by maybe a point or two, but those threats could also create a Chinese citizen surge into gold.

  21. All fundamental lights for gold demand are green. Gold is not easy to mine. Most oil drilling programs succeed. In contrast, most gold exploration programs fail. Technically, gold is overbought and it's risen about $212 without a significant correction. The bottom line: If this sell-off intensifies a bit, I don't see anything for anyone in the Western gold community to be concerned about.

  22. Please click here now. That's the GDX daily chart. It's unknown whether the current minor trend sell-off will end after the FOMC meeting. Gold stocks do tend to move much more than gold does. Using Friday's high near $28 as a marker, a 50% retracement of the current rally would put GDX in the $24 area. I'll be a buyer there, if it happens.

  23. From a technical perspective, I'd like to see that move occur. To find out why, please click here now. That's another look at the GDX daily chart. A substantial inverse head and shoulders bottom pattern could be formed, if gold corrected towards the $24 area now. That's bullish!

  24. The cycle of deflation appears to be ending. Japanese QE and Chindian jewellery demand suggest that the gold investor of the twenty-first century doesn't need to be afraid of price corrections anymore. Western gold stock shareholders have the opportunity to participate in a historic "gold bull era", in a very profitable way!

Thanks!

Cheers

 


Special Offer For Website Readers: Please send me an Email to freereports4@gracelandupdates.com and I'll send you my free "Ultra Juniors" report! While these stocks are ultra-risky, some of the smallest junior gold stocks have already scored "ten bagger" gains in just two months. I'll show you five more that could be poised to do the same thing, if gold moves above $1400!

 

Back to homepage

Leave a comment

Leave a comment