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Signals vs. Noise in the Gold Market

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Posted by Jordan Roy Byrne - The Daily Gold

on Thursday, 19 July 2018 07:41

Screenshot 2018-07-19 06.29.45

In his book Nobody Knows Anything, my friend Bob Moriarty wrote about the difference between signal and noise. Unfortunately, much of the information in the gold space or what passes for such is really noise. Conspiracy theories around manipulation, price suppression and China are all too popular while important factors like real interest rates, investment demand and gold’s relationship to equities are neglected. At present the Gold market has experienced a critical breakdown yet in some circles a new theory and explanation is gaining traction.

Last week more than a handful of subscribers alerted me to Jim Rickards’ belief that China has pegged the SDR (an IMF reserve currency) Gold price from 850-950 SDR/oz and this is what is impacting the Gold price. Rickards writes that the peg is too cheap given the scarce supply of Gold and that the IMF will print trillions of SDRs during the next global financial crisis. It’s a signal that China is betting on the SDR and Gold, he says. He also tweeted that at the Sprott Investment Conference he would present the evidence of the new gold standard at 900 SDR/oz. 

First, the supply of Gold is not scarce. The supply of Gold actually grows in perpetuity because Gold is not consumed like other commodities. 

Second, let’s look at the chart of the Gold price in SDRs, kindly provided to me by Dan Popescu. Sure, it has traded from 850 to 950 for the past 18 months but that does not imply a peg or some behind the scenes price management. Everyone following precious metals knows the market has been locked in a very tight range for many months. 

However, technically speaking the Gold price in SDRs has broken down from a large, bearish consolidation and the implication is price will continue to trend lower. I expect it will test that low at 840 and ultimately trend towards its 2014-2016 lows before its next bottom.

It is an ominous looking chart (above) and so is this one (below).



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Gold & Precious Metals

"Gold: World Currency Or Ultimate Asset"

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 17 July 2018 07:56

July 17, 2018 

  1. The world’s greatest asset is on sale.  In China, India, and the Western gold community, shoppers are happily placing small amounts of “golden groceries” into their shopping carts each week, and enjoying the price sale.
  2. Please click here now. Double-click to enlarge this gold chart.  
  3. From a technical perspective, this chart is magnificent.  The left shouldering process took about eighteen months, and the right shouldering process has just reached the same eighteen months of time.
  4. The pattern itself is an inverse head & shoulders bull continuation pattern.  From a price perspective, perfect symmetry would be created if gold traded at $1180 during the next few months, before surging above the $1400 neckline area and up towards the $1750 target zone.
  5. Please click here now. Double-click to enlarge this short-term gold chart.
  6. Gold may trade down to the “perfect symmetry” zone of $1180.   It could also begin to rally from the current $1250 - $1225 modest support zone.  What happens next will be determined mainly by market fundamentals.
  7. Jay Powell seems determined to push ahead with balance sheet contraction via QT, rate hikes, and he may widen the Fed funds/excess reserves spread further.  
  8. That’s negative for the ability of the US government to finance itself, positive for money velocity, and positive for gold.
  9. Please click here now. Double-click to enlarge this dollar versus rupee chart.  
  10. The bottom line is that the current gold price sale is a very mundane love trade oriented affair.
  11. That’s because the dollar’s strength against the rupee during gold’s weak demand season has resulted in a very modest price sale for gold priced in rupees.
  12. The good news: A bear wedge has appeared on the dollar-rupee chart just as gold arrives at $1250 -$1225 support and seasonal love trade demand begins to strengthen.  
  13. This is essentially a mandate for all gold market shoppers to buy this price sale, and buy it with a smile.
  14. Please click here now. I’ve suggested the US stock market is somewhere between the seventh and ninth innings of its ballgame, and clearly top money managers at Guggenheim agree. 
  15. Global tariffs are modestly inflationary and negative for GDP growth.  Trump’s next round of tax cuts may not even provide enough stimulus to offset the tariffs.  
  16. The Western world is steadily transitioning from growth with growing inflation to more inflation, fading growth, and peaking stock market valuations.  
  17. Recent polls suggest that at least 70% of American Millennials want a third political party, don’t trust banks, and are enthusiastic bitcoin investors.
  18. Please click here now.  Double-click to enlarge.  Gold is the world’s greatest asset, and bitcoin is the most exciting.  I cover the most intense action at my www.gublockchain.com website.  The goal is to help global blockchain/crypto enthusiasts get richer as fast as possible.
  19. When baby boomers dominated US demographics, they focused on traditional stocks and government bonds.  In contrast, Millennials in Asia are focused on stocks, bitcoin, and gold.  I’ve predicted that American Millennials will ultimately have the same focus as their Asian counterparts.  
  20. I’ve also predicted that gold-backed bitcoin beats out the yuan and the IMF SDR in the race to become the main world currency, but it could be just bitcoin alone.  
  21. In that scenario, gold would function as the safe haven/ultimate asset, and bitcoin as the payments currency.  Going forwards a decade or two, the dollar may look good in a glass jar in the ancient history museum, but Asian Millennials won’t see much use for it beyond that. Regardless, outrageously good times lie directly ahead for both bitcoin and gold.
  22. Please click here now. Double-click to enlarge.  GDX has rallied against gold many times in the past, but that was always when gold rallied against the dollar. 
  23. Now it’s happening while gold falls about $140 an ounce!  This stunning price action fits with the transition from deflation to inflation.  
  24. It’s very similar to what happened in the late 1960s in America, and adds to the importance of buying the current price sale in both miners and metal!

Thanks

Cheers

St  

Stewart Thomson  

Graceland Updates 4am-7am 

https://www.gracelandupdates.com   

https://gracelandjuniors.com

https://gudividends.com     

https://guswinger.com   

https://gublockchain.com



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Gold & Precious Metals

Gold And Silver Struggle As Sentiment Shifts

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Posted by Przemyslaw Radomski

on Thursday, 12 July 2018 11:21

goooold

In yesterday’s analysis, we discussed how meaningful gold and silver’s pre-market decline was given a relatively small move in the USD Index. The implications were quite bearish for the PM market, especially that we had just seen a target being reached in gold stocks. And because mining stocks had just underperformed gold for the first time in weeks. Yet, before the day was over, the USD, gold and silver had all reversed and erased most of their daily moves. Does it make the outlook bullish again? Is gold still likely to reach $1,300 shortly?

No. The USD Index indeed reversed its course, but the precious metals’ initial reaction shows how vulnerable they are with regard to the rallies in the USD Index. This is not the kind of reaction that one wants to see when keeping a long position. It’s the one that is preferred while holding a short one.

Let’s take a look at the charts for details.... CLICK for the complete article



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Gold & Precious Metals

SWOT Analysis: Gold Stocks Outperform Bullion for Past Five Weeks

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Posted by Frank Holmes - US Global Investors

on Tuesday, 10 July 2018 07:52

Strengths

·         The best performing metal this week was gold, up 0.14 percent. St Barbara produced a record-breaking 403,089 ounces, up 6 percent from the 2017 fiscal year, according to Bloomberg. This is the first time the company has exceeded 400,000 ounces in a year. Mining in higher grade zones of the South West Brank resulted in an average grade of 13.2 grams per ton of gold. At June 30, the total cash at bank and term deposits was A$344 million, up from A$262 million on March 31.

·         Top officials at the Chinese Central Bank gave their assurances on Tuesday that yuan devaluation would not be used as a weapon in the trade war despite speculation that the weakening currency is a deliberate attempt to gain an advantage over the United States. The yuan lost 3.7 percent over the past three weeks, making it the worst performing currency in Asia for the period. “Since the start of the week, everyone’s become a lot more nervous about what’s happening in China,” says currency and metals strategist Georgette Boele of ABN Amro. 

·         The yuan’s share in the Russian Central Bank’s foreign-exchange and gold assets almost tripled in the last three months, jumping from only 1 percent in the third quarter to 2.8 percent. “The rise in the share of yuan assets… reflects Russia’s intentions to diversify away from major currencies,” said emerging markets currency strategist Piotr Matys. Russian policymakers cited China’s economic success in the past year and the renminbi’s appreciation against the U.S. dollar to explain their decision to buy yuan.

Weaknesses

·         The worst performing metal this week was platinum, down 1.02 percent as declining European diesel sales continue to weigh on demand.  Platinum is used to reduce emissions in diesel engines and that segment of the automobile market has fallen to 38 percent versus a year ago at 47 percent in wake of the VW emission rigging scandal. Gold imports to India dropped over 25 percent in June from a year earlier, reports Bloomberg. The rupee’s extended slump hit record lows last month, making overseas goods more expensive. Between the weaker rupee and changing attitudes among Millennials, Indian jewelers are struggling to gain new customers as young, urban professionals increasingly choose vacations, electronics and other luxuries over jewelry. India’s gold consumption has been declining since 2010 due to government crackdowns on “black money,” which moves outside the official economy and escapes taxation.

·         Centerra Gold’s Mount Milligan mine is facing a water shortage that could impact production. The company has requested the BC Environmental Assessment Office update its environmental assessment to allow for access to additional ground- and surface water sources through 2020. Without additional water, Centerra could see decreased output levels in quarter four of 2018.

·         Exchange-traded funds with a focus on commodities experienced outflows for the eighth straight week, reports Bloomberg. Precious metal funds also suffered from outflows, with SPDR Gold Shares experiencing the steepest loss at $686 million. However, VanEck Vectors Gold Miners added a net $178.2 million in a single trading session, increasing the fund’s assets by 2.1 percent, according to Bloomberg. This is the largest one-day increase since May 29 and the twelfth straight day of inflows.

Opportunities

·         As seen in the chart below, gold stocks have outperformed bullion for the past five weeks. In fact, the spread between the two shows outperformance of gold equities by over 500 points.   This increase in the value of the gold mining companies relative to gold is borne out by the money flows cited in the prior bullet point, in that money is coming out of precious metal funds and instead are buying the stocks of the companies that mine gold. Perhaps this rotation is anticipating the seasonal buying pattern in the yellow metal, which normally rises as the fall season approaches, but the stocks can perform much stronger than gold bullion itself.

7-9fh

·         Forecasts from Australia, the world’s second-largest producer of gold, expect the yellow metal to “perform well” in the second half of 2018, reports Bloomberg, namely due to political uncertainty and trade tensions. The Department of Industry, Innovation and Science said in its quarterly commodities outlook, “Any sustained overheating in the U.S. economy would likely see inflation rise and gold demand rise, as investors seek an inflation hedge.”

·         Commodity bull Goldman Sachs says the trade war between China and the U.S. will have an economic impact, but a “small” one, reports Bloomberg, particularly when it comes to the threat on raw materials. The investment bank forecasts a 10 percent return on commodities over 12 months as the dollar drops, and reiterated its bullish call on crude oil. In another bit of news this week, it seems that returns on U.S. Treasuries have turned Japanese investors sour on America. In reaction to Japan shedding Treasuries, investors there have plowed record amounts into U.S. stocks, corporate bonds and agency-backed securities, writes Bloomberg.

Threats

·         According to Bloomberg, the U.S. dollar could be the best place for global investors to find safety amidst a trade war and higher rates from the Federal Reserve.  “That’s because the conflict is unfolding alongside what could be an even more powerful dynamic: U.S. monetary-policy normalization,” the article continues. Demand for the dollar is rising higher, leaving gold (historically known as the safe-haven asset) to drown. In fact, the yellow metal is heading for the lowest close in a year.

·         U.S. authorities demanded documents related to possible corruption and money laundering from Glencore Plc this week, sending the stock down the most in two years. “The documents relate to the company’s business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to present,” reports Bloomberg. Two days after the plunge in price, Glencore announced that it will spend up to $1 billion buying back its own shares before the end of the year. Some analysts say this buyback plan makes major acquisitions by Glencore less likely in the near future.

·         The Associated Press reported on Friday that some immigrant U.S. Army reservists and recruits who enlisted in the military with a promised path to citizenship are quietly and abruptly being discharged. Immigration attorney and retired Army Reserve lieutenant colonel Margaret Stock, who helped create the immigrant recruitment program, said she has been inundated over the past few days by recruits being discharged. “Immigrants have been serving in the Army since 1775,” Stock said. “We wouldn’t have won the revolution without immigrants. And we’re not going to win the global war on terrorism today without immigrants.”

http://www.usfunds.com/



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Gold & Precious Metals

Rising Temperatures Can Fry The Economy

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Posted by Brian K Sullivan

on Friday, 29 June 2018 15:05

heat and productivity

Temperatures will soar across much of the U.S. the next few days, approaching 100 degrees Fahrenheit (38 Celsius) from Chicago to New York as the summer’s first heat wave takes hold and spurs electricity demand. Heat affects more than daily life, it also has a huge impact on business and economic output... CLICK to watch the video



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