I like the Bullish percent index change and some of the Gold stocks breaking out while Gold sits below $1300 and recently tested 2 month lows. It is starting to feel bullish. I would expect Silver and Gold to pop together with the mining stocks if this all works out.
Tag: gold outlook
Could this mark the beginning of the decline of gold from prior highs? I don’t think the decline will start with force, given Janet’s comments this past Friday. The Fed is planning to maintain its schedule until better conditions prevail-this is fairly unpredictable given so many exogenous factors that could throw the recovery off, like further economic losses in Europe or China. However, once this begins, we might expect to see capital flow to where higher returns can be made. Given a pent-up demand for higher returns-hopefully it will not create an asset bubble.
If I had to make a guess I would say that both metals sell off one final time into a lower low by early 2015. Based on historical analogues alone, Gold seems to be following the 1996-99 bear market quite well and could bottom around March 2015. At the same time if Silver falls to a lower low around March 2015, that would be one of the longest and most oversold downtrends (not including the 1980-82 bubble crash).
Contrary to popular belief, rising rates are no threat to gold. This metal soared in the 1970s during the last secular rising-rate environment as stocks and bonds got hit. Gold powered higher again in the 2000s with both short and long rates far higher than today’s levels. And gold surged during the only major modern rate-hike cycle seen a decade ago, when the Fed more than quintupled short rates.
Earlier in the year I spoke with Business Television’s Taylor Theon about this very idea that to invest in gold requires not only discipline but also diversification. As I’ve often stressed, we at U.S. Global Investors recommend that 10 percent of your portfolio should be allocated to gold—5 percent to bullion, 5 percent to mining stocks, and rebalance every year. This should always be the case, whether gold is soaring at a good clip or whether its wings appear to have been clipped.
Basic technical analysis shows that mining stocks have recently reverted to their mean for the first time in about three years, while spot gold is gradually working its way back.
Gold and silver have performed relatively well this year and showed strength toward the end of the second quarter. My feeling is that stronger gold and silver prices that we have seen earlier than anticipated this year is a reflection of global political tensions and maybe just a reminder that we are not out of the woods as far as U.S. economic performance is concerned. We look for gold and silver prices to retain most of their gains in the third quarter.
Once the grip of the fiat “dollar” gives way, and it is slowly losing ground, then the price for gold and silver will find their more natural value. Not until. When might that happen? It could be weeks, it could be months, maybe even another year or two, but whenever it happens, it is more likely to be an overnight “adjustment,” with little or no gradual rise, as many may expect. The price could be $1,300 or $1,800 one day, and the next day it could be $4,500 or $7,500 the ounce. No one knows for certain, but at least you know some of the options. Plan accordingly.
Gold prices will rally much higher in the next 5 years. Jim Sinclair’s initial target of $3,500 seems very likely by 2016 – 2019. If the powers-that-be choose hyperinflation to deal with their massive debts, then much higher prices are “in play.” There are many other options. For example, if you don’t trust or like gold, a bank will pay you 1% interest each and every year if you invest in a Certificate of Deposit.
I think that Gold is in an extended Elliott Wave (V) which has a lot of upside potential. Elliott Wave Principle helps to better understand the nature of the market movement and completed with other tools it can forecast the market progress and define important turning points with a high degree of accuracy.
So far, the gold price in 2014 in the first six months has been trading in a tight range between $1190 and $1390. The yellow metal had one significant rally in February / March and one moderate rally starting in June. The price chart has a clear “line separator” in the $1270 – $1280 area which has served as major support throughout the first half of the year.
So when the fundamentally-driven tailwinds of the strong autumn seasonals combine with heavy buying of the GLD gold ETF by American stock traders and gold futures by American futures speculators, we are likely looking at one exceptional autumn gold rally! It won’t be smooth, it won’t climb in a nice straight line, and there will be sharp setbacks. But on balance gold is perfectly poised for a major new upleg.
Since September 2012, the S&P500 and the gold mining indexes decoupled from each other. Today, the disconnect between both is huge. From a technical perspective, it appears that the gold miners are testing a resistance line which goes back spring 2013. One should closely monitor the ongoing price action in the gold miners. If they would be able to break through the current price point (250 area), then the good days of gold and silver miners could be here. That would indicate underlying strength in the precious metals complex, and hence in the metals as well.
The second Advisory Board meeting of Incrementum Liechtenstein has taken place, in which all relevant and important topics for gold investors have been discussed.The economic situation and China in particular, a monetary policy update, the geopolitical situation, a stock market review, and precious metals and miners market update.