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Gold & Precious Metals

U.S. Gold Market Switches From A Surplus In 2016 To Deficit In 2017

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Posted by Steve St. Angelo - SRSRocco Report

on Monday, 08 January 2018 06:33

The U.S. gold market suffered a net deficit this year compared to a small surplus in 2016.  This was quite interesting because U.S. physical gold demand will be down considerably this year.  In 2016, total U.S. gold demand was 212 metric tons versus an estimated 150 metric tons this year.  The majority of the decline in U.S. gold demand is from the physical bar and coin sector that is down 56% in the first three quarters of 2017 compared to the same period last year.

So, why will the U.S. gold market suffer a deficit if gold demand is down sharply this year?  Well, it seems as if the culprit is the huge increase in net gold exports.  Last year, the U.S. imported 374 metric tons (mt) of gold and exported 398 mt for a net 24 mt deficit.  However, this year, estimates for U.S. gold imports will fall to 250 mt while exports increase to 475 mt.  Thus, the U.S. net export deficit will be 225 mt in 2017:

US-Gold-Market-Net-Balance-2016-vs-2017f

However, if we look at all the data in the chart above, the U.S. gold market will experience a net 76 mt deficit in 2017 versus a 44 mt surplus last year (bars right-hand side of chart).  Again, we can see that U.S. gold imports are estimated to decline significantly this year to 250 mt compared to 374 mt in 2016.  Furthermore, total U.S. gold exports are forecasted to increase to 475 mt this year versus 398 mt in 2016.

When we factor in U.S. gold mine supply, domestic consumption, and gold scrap supply, the market will go from a small 44 mt surplus in 2016 to a 76 net deficit this year.

So, the question remains… what happens when the markets crack, and retail investors flock into Gold ETF’s as well as surging gold bar and coin demand? 



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Gold & Precious Metals

Gold Rally: Indicators Suggest Pause

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Posted by Morris Hubbartt - Super Force Signals

on Friday, 05 January 2018 06:46

Today's videos and charts (double click to enlarge):

SFS Key Charts & Video Update

f1



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Gold & Precious Metals

Strength or “Strength” in the Miners?

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Posted by Przemyslaw Radomski - Sunshine Profits

on Thursday, 04 January 2018 06:40

Gold moved visibly higher during the first session of the year and this time mining stocks accompanied it. In fact, it seems that they are back on the track after a short pause. What’s the likely reason behind this year’s rally and what does it imply going forward?

Let’s jump right into the mining stock charts (chart courtesy of http://stockcharts.com).

2018-01-03-1-gold-stocks

Gold stocks indeed broke above the rising support lines, but since that was only one close above them, the breakout is unconfirmed. There are several reasons to think that it will not be confirmed without even considering the apex-based reversal or gold’s cyclical turning point.

The two things that we would like to discuss with regard to the above chart are: the 200-day moving average, and the RSI above the 70 level.



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Gold & Precious Metals

5 Reasons Gold Stocks Will Breakout in 2018

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Posted by Jordan Roy Byrne - The Daily Gold

on Wednesday, 03 January 2018 06:08

5-Reasons-Gold-Stocks-Will-Breakout-in-2018 opt1 rev01There are very few sellers left

There were very few sellers left in January 2016 when the devastating “forever bear” was about to end. Six months later and a 150% rebound in the large caps and 200% rise in the juniors (GDXJ) provided sellers an opportunity. They drove the miners and juniors down by 40% to 45% in less than five months. However, both GDX and GDXJ have been able to hold above that low multiple times. GDX has held $21 four times! GDXJ has held $29.50 twice in solid fashion. 

The bears had multiple opportunities in 2017 to push the miners lower but the miners held above their December 2016 lows and maintained the 62% retracement of the 2016 surge. The miners did not break out in 2017 but they held key support multiple times and the latest rebound suggests selling power has dried up. 


The recovery pattern following a mega-bear market bodes well for gold stocks in the second half of 2018

In November we wrote about this history and the potential implication for gold stocks in 2018 and beyond. The mega bear markets that compare to gold stocks from 2011-2016 with respect to price (+80% decline) and time (+2 years) follow a distinct pattern. The initial rebound is sizeable in price but not so much in time. That gives way to a correction and consolidation that lasts a minimum of 18 months. Then the market surges higher in third-wave like fashion. 

The gold stocks are nearly 17 months through their consolidation. We do not know if the consolidation is ending soon or if it will last another three, six or even nine months. We do know that history argues the correction and consolidation should end sometime in 2018. 

Gold is not too far away from breaking out

Gold is much closer to breaking its 2016 high than the miners but the miners could begin to sniff that potential breakout in Gold before or as it happens. Gold recently bottomed around $1240 with sentiment indicators at encouraging levels. In the chart below we plot Gold along with its net speculative position as a percentage of open interest (CoT) and the GLD put-call ratio. The CoT recently touched 27% which, although not a bearish extreme is fairly low relative to most readings since February 2016. The GLD put-call ratio recently touched the highest level in more than two years. With current sentiment relatively muted, Gold has a chance to rally up to trendline resistance. That would put it in position to breakout sometime in 2018.


Gold Stocks are one of the few sectors that offer compelling value

As we discussed last week, the gold stocks continue to offer historic value. The value is not quite as historic as in January 2016 when it was absolutely historic but it remains exceptional. Outside of the commodity sector there is nothing in a value sense that compares with the gold stocks. Even within the commodity sector, there is little that compares to gold stocks. Heading into 2018 traders and investors have to be intrigued at the deep value opportunity in the gold stocks in nominal and especially relative terms.

Increasing inflation expectations

Commodities typically outperform at the end of an expansion and into the beginning of a recession. This is accompanied by rising inflation. Some commodity sectors have performed well but the commodities as a whole (CRB or CCI) has yet to make new highs. One thing that could trigger a sharp rise in inflation expectations would be a breakdown in long-term bond prices. 

In the chart below we plot the 5-year bond price, the 10-year bond price and the 30-year bond price. The 5-year bond has already broken to a 7-year low while the 10-year bond is not far behind. The 30-year bond continues to hold above its 2015-2016 lows but does not have much wiggle room. A breakdown in the 10-year and 30-year bonds may not be immediately bullish for precious metals but a continued decline or acceleration to the downside would be.


The strength of the current rebound in the gold stocks has definitely surpassed our expectations and the December lows should hold moving forward. If that is the case then a breakout move for the gold stocks this year is more likely than not. More backing and filling may be ahead but if GDX and GDXJ can surpass their September highs it would be a very good sign for 2018. The miners have plenty of work to do before a true breakout move can begin but traders and investors would be wise to keep a close eye on the sector. We prefer companies with strong fundamentals that are trading at reasonable values and have upcoming catalysts that will drive buying. To follow our guidance and learn our favorite juniors for 2018, consider learning more about our premium service. 



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Gold & Precious Metals

2018: The Most Golden Year

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 02 January 2018 06:29

Jan 2, 2018

  1. The world’s most awesome asset is taking the world gold community into the new year with grand style. Please  click here now. Double-click to enlarge. Gold has stunned most analysts and roared to my $1310 target price without missing a heartbeat!
  2. The bull wedge pattern is both majestic and powerful. The ultimate price target of this pattern is a minimum price of $1350 and arguably as high as $1490.
  3. When “QE to Infinity” and the death of the American economy was accepted as “the new normal” in both the gold and mainstream communities, I argued vehemently against that view.
  4. Instead, I laid out an intense scenario involving an imminent multi-year process that would involve a taper to zero, relentless rate hikes, quantitative tightening, and ultimately a massive reversal in US M2V money velocity. 
  5. I’ve predicted this reversal will create a powerful bull cycle in gold and silver stocks, making them one of the best performing assets on the planet.
  6. Please  click here now. I think many gold investors are underestimating just how little inflation it really takes to create an institutional panic in US stock and bond markets.
  7. I’ve predicted that this inflation likely happens by mid-2018. Clearly, institutional investors view even a modest rise of inflation as a major concern, if not outright panic. Please  click here now. This is the type of statement that entices institutional money managers to buy lots of gold, silver, and mining stocks.
  8. They like to see consistent price appreciation with reasonable volatility, and a modest rise in inflation is exactly what the doctor has ordered to make that happen.


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