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Gold & Precious Metals

Gold: Demand Vacuum Has Silver Lining

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 03 October 2017 06:30

Oct 3, 2017

  1. Since I issued my “book profits now” call for gold several weeks ago, the price has declined relentlessly from the $1360 area high.
  2. Investors want to know if I see signs that a fresh rally could begin. The good news is that gold/silver stocks and silver bullion look better than gold bullion. Some stocks are rallying strongly while gold oozes lower.
  3. Please  click here now. This is the main problem for gold right now; a collapse in Indian market demand.
  4. Prime Minister Modi has acted more like Prime Minister Napoleon over the past year. He’s lorded over a collapse in manufacturing, anemic jobs growth and tanking GDP. He has essentially devolved into what I call a “taxaholic”. He’s maniacally obsessed with expanding government size at the expense of the economy.
  5. Modi has ordered jewellers to file what he calls “Know Your Client” forms on gold jewellery purchases of 50,000 rupees or more. That has helped hammer demand by about 50%. It coincided with major flooding that prevented buyers from going to the stores. 
  6. Over the past few weeks, Indian gold imports have been negligible. Commercial COMEX traders have sold into that demand vacuum, pushing the gold price down by about $90 an ounce.
  7. Dhanteras marks the start of Diwali on October 17. I expect some pick-up in demand then. Unfortunately, that doesn’t happen for another two weeks. 
  8. The Chinese “Golden Week” holiday is also in play. Gold markets in China close for the holiday. Western gold bugs are finding the holiday is anything but golden for them, as the price seems to melt lower on a daily basis. 
  9. Fear trade selling tends to produce violent price sell-offs. Love trade demand vacuums tend to produce the current “oozing” in the price. It’s not frightening for investors, but it’s disappointing and disheartening.
  10. The bottom line: Physical demand in both China and India is weak, and while buying in the SPDR fund (GLD-nyse) has been solid, it is nowhere near enough to overwhelm total supply.
  11. Please  click here now. Double-click to enlarge this gold chart. The technical picture reflects the fundamentals. Gold has a head and shoulders top pattern in play. Unfortunately, the target of the pattern is about $1215.
  12. As the price rallied towards $1360, I noted that key Indian dealers were adamant that they would only be buyers in the $1200 area. At the time, that price seemed impossible to most Western investors. How impossible does it seem now?
  13. For a closer look at the price action, please  click here now. Double-click to enlarge. The H&S top pattern is just plain “nasty”, but gold is now near a key Fibonacci line that sits at about $1268 on this December gold futures chart.
  14. The next US jobs report is scheduled for release on Friday. Gold has a rough general tendency to rally after the report is issued. A rally from either $1268 or the 76% retracement line at $1245 is likely, but a sustained move higher is unlikely to begin until Dhanteras ushers in Diwali on October 17.
  15. A crash in the stock market could jump start the rally, but please  click here now. Chinese regulators just cut the amount of reserves banks need to hold. That’s pouring liquidity into the stock market. It happens just after a great US manufacturing activity report yesterday. So, a stock market crash soon is possible, but unlikely.
  16. Gold market fear trade enthusiasts should focus on the December debt ceiling issue, rate hikes, and QT (quantitative tightening). 
  17. Please  click here now. Because government lunatics keep borrowing money, it takes very little in the way of rate hikes to create a bear market for general equities.
  18. The Fed is on track to raise rates three times in 2018, and to launch accelerated quantitative tightening. It will be very difficult for the stock and bond markets to keep rising in that environment.
  19. I suggested that the 2014 – 2015 period would see gold trade sideways with a slight downward bias, and 2016-2017 would see it trade sideways with a slight upwards bias. That’s exactly what has occurred. 
  20. 2018 should see gold begin a trending move to the upside. The fundamentals auger for that, and so do the charts. Please  click here now. Double-click to enlarge. The current vacuum in love trade demand is creating needed right shouldering symmetry on the long term gold chart.
  21. I expect Trump to continue to essentially do what he promised to do in his election campaign. His most important promise is to give government bond market creditors a haircut on what they get paid. 
  22. The US government bond market will collapse if the debt ceiling isn’t raised. Trump will get the bulk of his tax cuts platform passed, in return for raising the debt ceiling. He’ll then “finance” the rising deficit by attacking foreign holders of US government debt.
  23. This will occur as China launches its new oil for gold contract, which is optional for oil exporters. I doubt it creates the price parabola that many investors envision, but it should be generally supportive for the price of gold. It should help launch the price up and out of the huge inverse head and shoulders bottom on the long term gold chart. For the time being, the right shouldering process rolls on and investors should be eager accumulators.
  24. Please  click here now. Double-click to enlarge. Next, please  click here now. Double-click to enlarge. Both silver bullion and GDX look better than gold. Investors should focus on these assets during the final accumulation phase, and prepare for blast-off during Chinese New Year in early 2018!

Thanks! 

Cheers
st

Oct 3, 2017
Stewart Thomson  
Graceland Updates
website: www.gracelandupdates.com



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Gold & Precious Metals

SWOT Analysis: Gold Falls – Can It Get Back Up?

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Posted by Frank Holmes - US Global Investors

on Monday, 02 October 2017 06:19

Strengths

 

  • The best performing precious metal this week was palladium, up 1.67 percent. Palladium prices rose above platinum prices on expectations there may be a surge in gasoline engines from China before clamp downs on their use comes into effect.  Gold traders and analysts surveyed by Bloomberg maintained their bearish bias for a third week despite North Korean tensions escalating after our military show of force last weekend with fly-by of their airspace.
  • Despite gold having a lousy month with negative price action and a spike in volatility, to four-month highs seen in the metal, holdings in exchanged traded funds rose to their highest levels since last November.
  • At this week’s Denver Gold Form, Randal Oliphant noted that the industry may be reaching peak gold production as major new discoveries have waned over the last couple of decades, despite industry spending or changes in technology.

 

Weaknesses

 

  • The worst performing precious metal this week was platinum, down 2.20 percent. Platinum is suffering a continued loss of market share to palladium in the near-term play out.  Comments earlier in the week from Federal Reserve Chair Janet Yellen sent gold lower. Yellen said that it would be imprudent to leave rates on hold until inflation reaches 2 percent this year. Her comments overshadowed the earlier heated North Korean war of words.

 

10-2fh



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Gold & Precious Metals

Newton's Third Law

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Posted by Michael Balllanger for The Gold Report

on Friday, 29 September 2017 06:45

Precious metals expert Michael Ballanger discusses the effects of "Quantitative Tightening" on precious metals markets. 

Ballanger9-28-17-3 1


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Gold & Precious Metals

Peak Gold: Is It Real?

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 26 September 2017 06:31

Sep 26, 2017

  1. Today is options expiry day for gold. That’s almost certainly the reason for gold’s pullback today, after it staged a powerful rally yesterday.
  2. A pause in the price action is normal around these expiry events. The October options contract is expiring, which is recognized by traders as an important one. 
  3. Traders will now focus on December options. 
  4. Please  click here now. Double-click to enlarge this short term gold chart.
  5. For a medium term view of the price action, please  click here now. Double-click to enlarge.
  6. From a technical perspective, all the current price movement in the gold market appears to be “textbook” action. To summarize the recent movement: Gold burst above the $1305 area highs and surged to the “Call-In” day highs in the $1352 area.
  7. I issued a “book profits now” call as that happened, and the rally promptly died. The pullback took gold back to the breakout zone in the $1305 area. 
  8. Yesterday, gold staged its first rally from that support zone. Gold may soon pull back deeper into that support zone before launching what should be a successful rally above the call-in day resistance zone at $1352 - $1362.


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Gold & Precious Metals

The Road Ahead For Gold

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Posted by Jordan Roy-Byrne - The Daily Gold

on Monday, 25 September 2017 06:07

In recent weeks both metals and miners have declined somewhat sharply after reaching resistance. Gold peaked just below major resistance near $1375/oz and GDX, the biggest ETF for gold miners peaked at its October 2016 and February 2017 highs. If precious metals can break through this resistance then a major move higher would begin. However, the recent selloff, coupled with a lack of relative strength suggests the road to a breakout could lead well into 2018. 

On the daily chart shown below, we can see that Gold has retreated after testing important trendline resistance. Although Gold’s long-term technical structure leans bullish, Gold is currently showing relative weakness. Gold against foreign currencies (Gold/FC) did not make a higher high and Gold/Stocks barely made a higher high. Both ratios may need to hold their blue support lines in order for Gold to remain above $1260/oz. 

 Sep232017ed1

Turning to the stocks, we see that GDX, like Gold was turned back at major resistance. GDX has now tested $25-$26 three times in the past year. On a clean break above that resistance, GDX should retest its 2016 high. It has key support above $22 and at $21. GDXJ will not gain any momentum until it breaks above the September high around $37.50. It has support at $31 and $32. 



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