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In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,179.44 won $24.83 per ounce (-2.06%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, lost 1.57%. The U.S. Trade-Weighted Dollar Index lost 0.64% for the week.
The upper median line of the mod-Schiff fork is defining the resistance level for Gold on the upside. The “jumble-zone” is defining support on the downside. I have written more than once about the mess of support and resistance levels in the $1180 to $1190 region and Gold is back in that area again. There is a lot of energy in this region because of the failed triple bottom around $1183.
The Dubai Precious Metals Conference last weekend was attended by precious metals investors from around the world. Interestingly, quite some speakers dedicated their presentation to China and its gold market. One of those speakers, Albert Cheng, Managing Director at the Far East unit of the World Gold Council, explained how China will be rolling out their “one belt, one road” reforms, with a global reach. Those initiatives will be gradually integrated with the gold market.
Depending on the magnitude of additional “money printing” that the world’s central banks will unleash upon the global financial community, we could see hyperinflation in several countries within a few years. Why? Central banks will try everything to avoid or reverse a deflationary collapse in paper asset markets because a deflationary collapse is “game over” for their credibility, governments, and politicians. They will print and print more and continue to fuel the inflationary boom, and … the bigger the boom, the larger the distortions, and the deeper the collapse.
The financial crisis in 2008 knocked the wind out of precious metals stocks and HUI returned to the 150 level once again. After testing this long-term support level, price zoomed higher, this time increasing 400% in less than three years. Today we find the HUI back at the 150 level after more than three years of painful declines. There are some really bullish aspects to this chart.
For the week commencing April 20th, there are a limited number of economic data of importance to the metals. There is no central bank announcement scheduled, as seen in the table below. Wednesday or Thursday could shake markets with the home sales data in the US, although we do not expect this to be of great impact to the metals. Germany is planning to release its economic sentiment (Tuesday) and business climate index (Friday) but that should not be of any significance to the metals. The most likely scenario is to see a continuation of the consolidation pattern in gold and silver.
Junior gold and silver miners spent more than the seniors on exploration during this timeframe ($14.6 billion compared to $12.5 billion), and their discoveries collectively had a much higher valuation ($12.1 billion compared to $7.9 billion). Accordingly, they were roughly 30% more effective than seniors at generating wealth for investors.
In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,204.27 up $9.55 per ounce (0.80%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, gained 4.28%. The U.S. Trade-Weighted Dollar Index lost 1.72% for the week.
The first chart shows Spot Gold getting a bounce off the 1140 level in mid March and hitting resistance in the 1220 area twice now. I think the long-term trend for gold is down because of the 52-week low in November. Even though the surge to 1300 looked impressive, gold gave it all back with a decline back to the November lows and the current bounce only managed to retrace 50% of the prior decline. At this point, the immediate trend is up, but this is a counter-trend move. A break below support in the 1180 area would signal a resumption of the bigger downtrend and project a move to new lows.
For the week commencing April 13th, there are quite some economic data and central bank announcements scheduled, as seen in the table below. Tuesday is a busy day with economic data out of the US and China, but they are not very likely to move metals and markets (unless some of the data would be shocking). On Wednesday, the European Central Bank will announce their interest rate decision during a press conference. It seems impossible that the ECB will hike interest rates; the most likely scenario is a status quo, there is a small probability that they will lower interest rates. However, President Draghi could have some drivers in his speech which could create short term volatility in markets and metals. On Friday, the latest CPI figures will be released both in the US and Europe. There is a small chance that the CPI will be significantly higher or lower than the previous months.
In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,208.35 up $5.75 per ounce (0.48%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, lost 2.2%. The U.S. Trade-Weighted Dollar Index gained 1.95% for the week.
While it is correct that dollar gold is not looking very constructive on the long term chart, it should be said that gold in ALL other currencies looks significantly different. Obviously the monstrous rally in the US dollar since last summer is the reason for the situation we just explained. But gold trading higher worldwide except in countries which use the USD is a constructive sign for gold bulls.
The first chart shows Spot Gold ($GOLD) in a long-term downtrend with lower lows and lower highs since May 2013. Even though gold held the November low around 1140 and bounced the last few weeks, this bounce is still just a counter-trend move within a bigger downtrend. A double bottom is also possible, but such a pattern would not be confirmed until a break above the January high around 1300. Such a move would also break the upper trend line of the falling channel.
For the week commencing April 6th, there are almost no economic data scheduled to be announced, as seen in the table below. On Wednesday, however, there are some central bank announcements on the agenda. The Japanese central bank is planned to give a press conference, and the FOMC minutes of the meeting on February 25th and 26h will be published. That is a recipe for potential volatility in almost all markets. We expect Wednesday to be potenially very volatile.