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What the Stock Market Decline Means for Gold and Gold Stocks

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Posted by Jordan Roy Byrne - The Daily Gold

on Monday, 12 February 2018 06:02

It was a rough week for investors in stocks and stocks of all kinds. The S&P 500 lost 5%. Emerging Markets also lost 5%. Gold Stocks, which had weakened before the broader equity market have been hit hard. They (GDX, GDXJ) also lost 5% last week. The HUI Gold Bugs Index (which excludes royalty companies unlike GDX) lost 7%. After a strong start to the year, gold stocks have essentially given back all their gains. Nevertheless, we remain extremely optimistic on gold stocks over the next 12-18 months as trends in the economy and stock market should begin to support Gold after the second quarter.

Historically speaking some of the best performance in Gold and gold stocks occurred during or after a bear market in stocks. The best examples can be found in the 1970s and 2000s as the charts show. Gold surged after the bottom in stocks in 1970 and continued to perform very well during the 1973-1974 bear market. After a brief but sharp bear in 1975-1976 Gold rebounded strongly as the S&P 500 began a mild bear market in 1977. Years later Gold emerged from a significant bottom in 2001 while the stock market endured its worst bear market in a quarter century. Gold continued to perform even after the market bottom in late 2002. Gold emerged from the global financial crisis before the stock market but continued to make new highs after the stock market bottomed in March 2009. 

 

02092018goldspx70s



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Gold & Precious Metals

Gold Stocks Decline: Key Tactics

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Posted by Morris Hubbartt - Super Force Signals

on Friday, 09 February 2018 06:27

Today's videos and charts (double click to enlarge) posted Feb 9, 2018

SFS Key Charts & Video Update

goldcorp



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Gold & Precious Metals

Goldman Sachs boosts gold price forecast, sees $1,450/oz in 12 months

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Posted by From a report by analysts Michael Hinds and Jeffrey Currie

on Thursday, 08 February 2018 07:17

The report shows that they raised their 3, 6, and 12 months forecast to $1,350, $1,375, and $1,450/oz respectively.

Previous forecast was $1,225, $1,200, and $1,225/oz for 3, 6, and 12 months.
 
The reason for the revision was more towards stronger emerging market growth, with more upward pressure also seen from stronger EM currencies against a weaker dollar and potential for hedging demand in a choppy market environment.
 
They also argue that higher inflation breakevens due to rising oil prices will help boost gold prices as well.
 
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Gold has been on the retreat over the past two weeks after peaking just above last year's high, and even the recent decline in sentiment from equities (and even talks on inflation) have failed to keep prices up. Gold is now down 0.59% on the day at $1,310.74.
 


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Gold & Precious Metals

Fear Creeps Back into Stocks, Shining a Light on Gold

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Posted by Frank Holmes - US Global Investors

on Wednesday, 07 February 2018 06:10

gold-stock-market-02-2018Monday’s monster stock selloff is exhibit A for why I frequently recommend a 10 percent weighting in gold, with 5 percent in bullion and jewelry, the other 5 percent in high-quality gold stocks, mutual funds and ETFs.

What began on Friday after the positive wage growth report extended into Monday, with all major averages dipping into negative territory for the year. The Dow Jones Industrial Average saw its steepest intraday point drop in history, losing nearly 1,600 points at its low, while the CBOE Volatility Index, widely known as the “fear index,” spiked almost 100 percent to hit its highest point ever recorded.

Gold bullion and a number of gold stocks, however, did precisely as expected, holding up well against the rout and helping savvy investors ward off even more catastrophic losses. Klondex Mines and Harmony Gold Mining, among our favorite small-cap names in the space, ended the day up 4.6 percent and 4.8 percent, respectively. Royalty company Sandstorm Gold added 1.4 percent.

The research backs up my 10 percent weighting recommendation. The following chart, courtesy of BCA Research, shows that gold has historically outperformed other assets in times of geopolitical crisis and recession. Granted, the selloff was not triggered specifically by geopolitics or recessionary fears, but it’s an effective reminder of the low to negative correlation between gold and other assets such as equities, cash and Treasuries.

Gold has historically outperformed during geopolitical crises and recessions
click to enlarge

“We expect gold will provide a good hedge against a likely equity downturn, as the bull market turns into a bear market” in the second half of 2019, BCA analysts write in their February 1 report.

The reemergence of volatility and fear raises the question of whether we could find ourselves in a bear market much sooner than that.

So how did we get here, and what can we expect in the days and weeks to come?

Gold Has Helped Preserve and Grow Capital in Times of Rising Inflation



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Gold & Precious Metals

Gold The Ultimate Iron Lady

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 06 February 2018 06:15

Feb 6, 2018

  1. The appointment of Jerome Powell as new Fed chair is likely the catalyst that ushers in a multi-decade era of rising inflation and soaring gold stocks.
  2. I’ve announced a long term target for GDX of $15,000. That really isn’t very high… given the strong inflation numbers that I am projecting for America in the years ahead.
  3. Having said that, Powell has only been on the job for one day. Investors need to show patience. Wait to see what he actually does before taking “back up the truck” market actions. 
  4. Powell’s first significant actions are likely to be announced at the March 21 Fed meeting. I expect a firm commitment to more rate hikes and more quantitative tightening.
  5. That’s inflationary because it boosts bank profit margins and they become more willing to take lending risk. That produces a rise in the velocity of money. 
  6. As the cost of borrowing rises, companies will raise prices and workers will demand higher wages. If Powell also makes a firm commitment to deregulating America’s thousands of small banks on or before March 21, inflation would accelerate even more rapidly.
  7. Please  click here now. It’s my contention that wage inflation of 20%+ is not just theoretically possibly, but morally justified. Here’s why:
  8. For many years, global governments have colluded with central banks to run socialist/fascist QE programs. These programs moved money from workers and savers to government bonds and stock markets. Additional money was simply printed and taken.
  9. QT, higher rates, and small bank deregulation are beginning to re-empower Main Street. This is happening while “Government Street” (the bond market and the dollar) and Wall Street risk disintegrating. 
  10. Please  click here now. Double-click to enlarge this exciting bond market chart. A head and shoulders top pattern is in play. The neckline has been crushed.
  11. Please  click here now. Around the world, governments are announcing import duties. That’s inflationary. If India’s government had cut the gold import duty, it would have increased demand, but the duty itself is also inflationary. 
  12. Please  click here now. Institutional money managers are starting to focus on the inflationary implications of Trump’s tax cuts that I highlighted when he first proposed them. In the context of QT, rate hikes, and deregulation, these cuts can increase inflation quite significantly.
  13. Please  click here now. Double-click to enlarge. The bond market is building what I have dubbed a “super top” pattern. The target of the super top is about 80. 
  14. The Fed has projected that rates will take many years to reach “normal” levels. This chart suggests the normalization process will take about seven more years.
  15. This “normalization” sounds great in theory. In the real world, it involves a decline to 80 for the T-bond price. That would drive borrowing costs for the US government to incredibly painful levels. 


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