This is an excerpt from the latest Global Gold Outlook Report, released by Global Gold Switzerland. The article below represents an interview with Dimitri Speck. Global Gold was interested to talk to Dimitri due to his strong reputation in identifying market anomalies, particularly in the gold market.
The bullish news of the day has to be the breakout in Gold Miner stocks this week. They have really surged. This breakout is a little early based on the January and July cycles over the last few years, but it clearly looks to be jumping here. The ratio of the Gold Miner ETF to the price of the gold tracking ETF (GLD) can be a big clue to the breakout. Today we can see the GLD breakout clearly and the signal given by the ratio, confirming the breakout.
There is evidence that gold is turning bullish – and even that Gold formed both a DCL and ICL this week. Because Gold was technically oversold and deep in the daily count (27 days), the Swing Low this past week was most likely confirmation that a new Daily Cycle has started.
Among the many factors that we can point to as being influential for precious metals and we have covered just one of them, however this is an important week for both of them. A quick look at the chart and we can see that gold’s decline is accelerating so a re-test of the June lows now looks to be on the card
I still maintain that gold prices will gain significantly in the long-term due to the expansionary monetary policies of the major central banks and currency debasement. And, as prices fall, I do not recommend anyone to sell their physical gold and instead to use these price dips to add to their holdings.
I’m encouraged by what I see with the Miners. For the first time since the markets topped, investors are not pricing in a failure of the Gold Cycle. Generally, the Miners will overshoot the Gold Cycle both on the high side in a bull market, and on the downside in a bear market. They are leveraged to the price of Gold and carry a higher beta, so can be much more volatile around key Cycle pivots.
Gold Spot price retained a tight trading range through April and May, allowing speculation as to resolution. We have been neutral awaiting technical evidence of a directional move which has now taken place to the downside. The breakdown now suggests that there is a good possibility that 1,200 will again be tested. Silver Spot price is failing along with Gold, currently below both MAs and breaching support at 19; risk 18 or lower. A lift through 19 again and then 20 would now be needed to suggest another rally attempt.
The statement in the title of this article is not meant to make a forecast or any forward looking statement. The point is that, based on seasonality, June is traditionally the weakest month of the year. The gold price, according to the seasonal pattern, is likely to hit the year’s bottom in the weeks ahead. Chances are high that a rally will ensue in the months ahead. Silver has a similar seasonal pattern till June. As of July, however, the rally has not been as strong as in gold.
Gold and silver are the exact opposite of debt. When you own gold and silver, you own it outright. You know by the unrelenting manipulation of the price for both by the central bankers how desperate they are to keep it from challenging their grand fiat scheme. We are adherents of letting the market interaction of price and volume, as found in the charts, speak loudest and silence a great many “opinions” offered from a variety of sources.
I can see the metal in a grinding move lower rather than a sharp fall as it slowly bleeds out speculative interest off the long side while meeting some increased physical buying from India and perhaps China. But as far as Western-oriented investment demand goes, that is not going to be there until investors believe that the bull market in equities is over or some fresh geopolitical event arises.
The pieces of paper we mistakenly call money will become less valuable in the years ahead. Take this opportunity to convert some paper currency to physical silver while the High Frequency Traders and central bankers are gifting us with artificially low silver and gold prices.
Whatever one chooses to believe, one still has to deal with the known facts, and what is factually known to date is that gold is at 1,300, [not 1,500, not 2,000, and certainly not 5,000 or 10,000 the ounce], and silver at 19, [not 26, not 50, and for sure, not 100 or 300 the ounce]. However corrupt or not reflective of the “real price” for precious metals, the charts continue to be the most commonly accepted measure, at least for now.
Investor demand for silver bars and silver coins is strong and increasing. The High-Frequency Traders can suppress the price for only a limited amount of time. I think silver prices will be higher by the end of 2014 and much higher by the next US presidential election. The pieces of paper we mistakenly call money will become less valuable in the years ahead.