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Gold & Precious Metals

Gold’s Fundamentals Strengthen

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Posted by Jordan Roy-Byrne - The Daily Gold

on Monday, 20 February 2017 08:46

The January headline consumer price index (CPI) came in at 2.5%, which is near a 5-year high. What happened to deflation? As a result, real interest rates declined deeper into negative territory or in the case of the 10-year yield, went from positive to negative. No this isn’t a commodity-driven story. The core CPI (ex food and energy) has been above 2% since the end of 2015 when commodities were in the dumps. Inflation is perking up and couple that with a Fed that pursues rate hikes at a glacial speed and that is very bullish for precious metals.   

The chart below is what I refer to as our master fundamental chart for Gold. It plots Gold along with the real fed funds rate and the real 5-year yield. In short, negative and/or declining real interest rates drive bull markets in Gold while rising real rates or strongly positive real rates (like in the 1980s and 1990s) drive bear markets in Gold. Since the middle of 2015 both the real fed funds rate and the real 5-year yield have declined by +2%. The real fed funds rate has declined from a fraction above 0% to now almost -2% (-1.88%). Meanwhile, the real 5-year yield has declined by roughly 2.5% in the past two years from nearly 2% to now -0.60%.

Feb172017realrates

Fundamental analysis can be backward looking and that is why it is so important to verify fundamentals through the lense of technical analysis. While there are numerous charts we could show we want to present a fresh look at some sector relationships which help confirm the strong fundamentals currently supporting the sector.

In the chart below we plot the gold stocks (both the seniors and juniors) against Gold and we plot the juniors against the seniors. During a healthy bull market in precious metals, the miners should show strength relative to the metals and secondarily, the riskier and more volatile stocks should also show relative strength. First, we note the GDX to Gold ratio appears poised to break its 10-year downtrend this year. Second, we see that the GDXJ to GDX ratio (juniors versus the seniors) is one month short of a 4-year high.



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Gold & Precious Metals

Silver: $25 By July?

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Posted by The Silver Doctor

on Thursday, 16 February 2017 09:22

SilverBars-SilverCoins-BackgroundPrecious metals expert Michael Ballanger ponders the timelessness of Hunter S. Thompson’s “blistering attacks on the status quo” and their applicability to today’s political landscape.


He also reminds us of the “incredibly bullish” fundamentals for silver and lays out the evidence for why this precious metal is on its way to $25/ounce by mid-year:

....read more HERE



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Gold & Precious Metals

Gold Gains on Uncertainty

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Posted by Frank Holmes - US Global Investors

on Wednesday, 15 February 2017 06:05

Last year, central bank policy and negative real interest rates drove the gold rally. This year, it seems to be uncertainty over Trump and other antiestablishment leaders, which is convincing the smart money to make wagers on the yellow metal, often seen as a safe haven during shaky times. So far in 2017, it’s up close to 7 percent, compared to the S&P 500’s 2.6 percent. In fact, if you compare this year’s price action to last year’s, they look remarkably the same, with a dip in December before the Federal Reserve raised rates. Although past performance is no guarantee of future results, gold could gain another $100 an ounce this year if it continues to follow the same trajectory.

COMM-Gold-Continues-Mirror-Price-Action-Last-Year-02102017
click to enlarge

Among those who are bullish on the yellow metal is Stanley Druckenmiller, the legendary hedge fund manager who dumped his gold the same day he learned Trump had been elected. Before that, it was the number one holding in his family office account. Now he’s back, telling Bloomberg he “wanted to own some currency and no country wants its currency to strengthen. Gold was down a lot, so I bought it.”

Higher demand has been good for both junior and senior gold miners, which recently crossed above their 200-day moving averages.

Junior and Senior Gold Miners Above Their 200-Day Moving Averages
click to enlarge

The NYSE Arca Gold Miners Index was up for an incredible seven straight days ended Monday, while the MVIS Global Junior Gold Miners has made positive gains in eight of the nine previous days.

Germany Brings Home More of Its Gold

Hedge fund managers aren’t the only ones whose demand for gold is strong. For the sixth straight year, central banks continued to be net importers of the metal in 2016, with China, Russia and Kazakhstan leading world consumption.

Germany repatriated 216 metric tons of gold in 2016

Although it might not have purchased any gold in 2016, the Deutsche Bundesbank, Germany’s central bank, ramped up its repatriation program, bringing home some 216 metric tons from vaults in New York, according to the Wall Street Journal. In 2011, former Fed Chair Ben Bernanke said central banks held gold simply because it’s tradition. I think the reason goes much deeper than that. Gold is money—it has been ever since the first gold currency appeared in China more than 3,000 years ago—and Germany’s efforts are proof of that.    



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Gold & Precious Metals

Valentine's Day Is Golden

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 14 February 2017 05:59

Feb 14, 2017

  1. The world’s ultimate asset, gold bullion, continues to act superbly. That’s because fundamental, cyclical, and technical price drivers are very positive and are in play at the same time.
  2. Please  click here now. Double-click to enlarge this gold chart.
  3. Gold is poised to burst upside from a small bull wedge pattern, after recoiling from $1250 area resistance.
  4. Support sits at $1222, and testimony from Janet Yellen today along with key US retail data tomorrow could be the fundamental catalysts that launch gold’s next assault on that $1250 zone.
  5. Experienced technicians understand that their charts only work when fundamentals are creating the technical picture they see on their charts.
  6. In the case of the US dollar, most amateur technicians were very bullish on the dollar at the start of the year. They’ve essentially been crushed by “Trumpamentals”.


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Gold & Precious Metals

Is the Gold Silver Ratio Predictive?

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Posted by Bob Loukas - The Financial Tap

on Monday, 13 February 2017 10:11

One aspect of the precious metals market today that I like is the Gold Silver Ratio.  It appears to have topped, right along with the 2016 gold bottom, and for all gold bull followers out there this is certainly a welcomed development.  Precious metals bear markets always hit silver hard, while bull markets always see Silver outperform gold.  As a result, the Gold Silver Ratio rises during bear markets and then falls during bull markets.

On the chart below, the long rising channel represents the precious metals bear market when gold/silver were both sold aggressively.  Each peak in the ratio, as seen with the red arrows, correspond with major Cycle price lows.  Meaning that as gold sold and collapsed into each yearly low, Silver as a ratio was hammered further.

But that trend has reversed, and silver has for the first time in five years outperformed gold.  The chart shows the Gold Silver Ratio has turned lower, meaning that with the last big gold selloff, Silver actually outperformed gold, on a relative basis.  It’s not proof of a bear market low, but we do know that every precious metals bull market saw silver dramatically outperform gold.  In every case, the Gold Silver ratio turn lower as the entire metals complex went higher.  From my perspective, it would appear that the ratio has broken lower and that a new downtrend has been established.

2-11-Gold-silver-ratio-1

https://thefinancialtap.com/



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