1. Market Update
Since early July already the gold market is caught in some form of an agonizing and confusing sideways consolidation. Every time it looks like it is about to break out to the upside it's coming back down. The series of lower highs is certainly not very convincing yet typical for a consolidation. At the same time the bears are not able to push prices back below $1,300 because around that level the bulls always come back into the market and destroy the bear's work within short time. This is a tricky situation in which many swing-traders are loosing money due to the lack of a clear trend. The best solution of course would be to just wait at the sidelines until we have a clear trend back in place. Of course only in hindsight one can clearly see such a sideways pattern. At least my Gold Model is neutral and urges us to remain patient here.
But in my humble opinion the mining stocks are already finishing their correction and are a "buy" again. We bought GDX and I now recommend to add GDXJ as well.
The crypto currencies (mainly Bitcoin) are consolidating too and you should just continue to hold them.
Generally speaking we have seen rather quiet markets but I think we will get some bigger moves an certainly more volatility in the last quarter of the year..... I continue to believe that we are in a world wide crackup boom which will push all asset classes higher due to massive inflation from all the important central banks. Important note: inflation means increasing the money supply, rising prices are just the visible consequence.
2. The Midas Touch Gold Model neutral since 15th of September
Compared to last week we have the following bullish changes:
SPDR Gold Trust Holdings
GDX Gold Miners - Daily Chart
US Real Interest Rate (now -0.745%)
Here are the model's latest conclusions:
Bullish: 24th of June 2016
Neutral: 22nd of August 2016
Bullish: 6th of September 2016
Neutral: 15th of September 2016
Remember, the model is mainly a trend-following approach. Now that gold is trendless consolidating sideways since more than two months already the model will get into trouble.
3. Gold - Consolidation since early July continues
The new bull market in gold is not an easy task since early July. The bulls are still in control but hiding their true intentions while the bears do not make any progress either.
Trust me, a tricky sideways consolidation within a new up trend is nothing to worry about. We're certainly in the last quarter of this consolidation. Either it will finish with another higher low meaning around $1,310 -$1,315 in the next couple of days or we will indeed get a final sell out down towards my initial target zone around $1,295 - $1,262. This "worst case scenario" of course would free the gold market from all the weak hands and give us an excellent chance to buy the dip.
But currently the situation is not clear yet. Personally I am indecisive as on the one hand I expect the $1,300 level to hold while on the other hand experience tells me that before the largest moves gold most often shakes out everybody. A move down towards $1,262 would certainly do exactly that. But in bull markets the pullbacks are usually shallow and the miners are already oversold. So my main expectation is calling for a very limited remaining downside here and that prices should hold above $1,300 before finally taking off towards $1,415 - $1,430 somewhere in October.
In the bigger picture my midterm price target remains $1,500 - $1,530 until spring 2017 from where I do expect a multi-month pullback back down to current levels...
4. Bitcoin - consolidating but still bullish
The consolidation since early august continues and Bitcoin is experiencing a rather quiet period. This is positive especially after the drama in August. I think the market is building a base here for the next leg up. Only a move below the rising green trend-line around $545 would indicate that something is wrong with the bull thesis.
As long as Bitcoin is holding above its 50MA ($592) and especially above its 200EMA ($553) a rally towards the next resistance level around $635 should be just a question of time.
Let's keep the stop at $495 - pretty far away but this wide stop will help us to ride the trend instead of being shaken out during volatile short-term noise. Overall Bitcoin should test the recent high at $777 soon or later. Just continue to hold your bitcoins.
5. Midas Touch Consulting Portfolio & Watch list:
As recommended in my last report we were able to buy GDX and BRI below the defined limits. Besides that the portfolio is doing well and all positions are currently in green...
Endeavour Silver (EXK):
Endeavour Silver is in a consolidation between $4 and $6. Overall its holding up pretty well and remains my top silver stock recommendation. Endeavour Silver is one of the highest leverage play on the silver price and has an excellent management. Just continue to hold and let your winnings run.
Ether is gaining traction. Once it can overcome $14-$15 we should see it quickly rising towards $20. We are already up 67% in less than two months. Let your winnings run and move your stop to $9.60.
Continue to hold, market is consolidating. Keep your end of the day stop at $495.
Brazil Resources (BRI.V):
As recommend we bought back Brazil Resources below 2.80 CAD. The company has just recently completed the final milestone payments for the Cachoeira gold project. Here you can find the latest press release. Hold the stock with a stop loss at 1.95 CAD.
Gold Miners ETF (GDX):
The mining stocks are getting oversold on the weekly chart. It's time to buy! We got filled with our limit already but it's not too late. Buy the ETF up to $27 and place a stop at $21.
Junior Gold Miners ETF (GDXJ):
This Junior Miners ETF is the best way to play the gold bull market with leverage Buy the ETF up to $46 and place a stop at $37. At current prices you're risking around 19% to make potentially at least 100-200% over the next one to four years. Even just holding it until spring 2017 should result in outstanding gains.
6. Long-term personal beliefs (my bias)
Officially Gold is still in a bear market but the big picture has massively improved and the lows are very likely in. Gold was able to push above the January 2015 high at $1,307 and we finally looking at a series of higher highs. If this bear is over a new bull-market should push Gold towards $1,500 - $1,530 and Silver towards $26.00 within the next 8-24 months.
My long-term price target for the DowJones/Gold-Ratio remains around 1:1. and 10:1 for the Gold/Silver-Ratio. A possible long-term price target for Gold remains around US$5,000 to US$8,900 per ounce within the next 5-8 years (depending on how much money will be printed..).
Fundamentally, as soon as the current bear market is over, Gold should start the final 3rd phase of this long-term secular bull market. 1st stage saw the miners closing their hedge books, the 2nd stage continuously presented us news about institutions and central banks buying or repatriating gold. The coming 3rd and finally parabolic stage will end in the distribution to small inexperienced new traders & investors who will be subject to blind greed and frenzied panic.
Bitcoin could become the "new electronic money" for the digital 21st century. It is free market money but surely politicians and central bankers will thrive to regulate it soon.
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