<b>Gold Price</b> Strong Season Starts :: The Market Oracle :: Financial <b>...</b> |
- <b>Gold Price</b> Strong Season Starts :: The Market Oracle :: Financial <b>...</b>
- <b>Gold Price</b> In 2014 Consolidating Above Major Support Area | Gold <b>...</b>
- Silver and <b>Gold Prices</b>: The <b>Gold Price</b> Broke it's Support and <b>...</b>
- Three Reasons Why <b>Gold Price</b> and Gold Stocks Will Rise :: The <b>...</b>
- Silver and <b>Gold Prices</b>: We Will See a Short Spike Downward in <b>...</b>
- <b>Gold Price</b> Looking Drab :: The Market Oracle :: Financial Markets <b>...</b>
| <b>Gold Price</b> Strong Season Starts :: The Market Oracle :: Financial <b>...</b> Posted: 25 Jul 2014 10:40 AM PDT By: Zeal_LLC
Gold seasonality is somewhat counterintuitive, with its mined supply essentially constant year-round. Once a company spends over a decade and many hundreds of millions of dollars to develop a gold deposit into an operating mine, its future production profile is essentially fixed. The gold supply is not like that of the soft commodities, where harvest floods the markets with a massive onslaught of new supplies. But supply is only half the price equation, demand is equally important. And rather fascinatingly, global gold demand varies dramatically as each calendar year marches forward. There are specific times of the year where demand explodes and other times where it withers. Gold's ironclad demand-driven seasonality is the product of well-understood income-cycle and cultural phenomena from all around the world. And today we happen to be right at the great ebb of this perpetual seasonal cycle, the end of July. The summer is gold's weakest season of the year, because there are no major recurring demand surges. But starting now, that changes dramatically. In the coming weeks Asians will once again start flooding into gold in droves, forcing its price higher. So buying today ahead of that near gold's seasonal lows is very prudent. Soon gold will start powering higher in its initial strong-season rally straddling late summer and early autumn. As gold rises, so will the entire precious-metals complex. The gold tracking ETFs, led by the mighty American GLD gold ETF, will mirror gold's advance. And silver and the stocks of the precious-metals miners will leverage and amplify it. The dawn of gold's strong season is always an exciting time. So this week I decided to celebrate 2014's major seasonal low by furthering my long-running studies on gold's seasonality. This critical knowledge will greatly help if you invest in or speculate in anything precious-metals related. The methodology is simple and easy to understand. Every calendar year of gold's secular bull since 2001 is individually indexed, and then each year's indexes are averaged. The results charted reveal gold's seasonal tendencies over any calendar year. Limiting this study to gold's secular bull is important because prices behave very differently in secular bulls and bears. And it is essential to index each year individually before averaging them to ensure percentage comparability. With gold averaging $311 in 2002 and $1409 in 2013, its raw unindexed prices just aren't equivalent. Every calendar year's gold prices are indexed off the final trading day's close of the previous year, which is set to 100. If gold is up 10% at any time during a year, its index will read 110. These indexed percentage moves are always perfectly comparable regardless of gold's absolute price level. Every year's since 2001 individual index is then averaged together, yielding this unique and indispensable gold-bull seasonality chart. Gold has enjoyed a very strong seasonal uptrend since its secular bull was born in 2001. On average over that span, gold ended each year an amazing 13.4% higher! It's just flabbergasting that gold is still so unloved by investors with such an awesome track record. That trounces the universally-adored S&P 500 stock index, which has gained a pitiful 1.9% annually at best over essentially the same secular timeframe. The problem is traders' short-term memories dangerously cloud their long-term perspectives. All anyone remembers is 2013, the most anomalous market year seen in our lifetimes after 2008's stock panic. The Fed's reckless jawboning and massive bond monetizations catapulted the S&P 500 29.6% higher. And that sucked vast amounts of capital out of alternative investments including gold, which plummeted by 27.9%. But investing is about riding long-term trends, not betting crazy anomalies will magically last forever. And gold's secular-bull seasonals reinforce how incredibly profitable it has been. Thanks to recurring gold demand surges that flare up around the world at various times of the calendar year, gold has enjoyed four major annual seasonal rallies on average. And since we're in late summer today, that's a great place to start. Gold's weak season runs from late May to late July, the time of the year devoid of regular surges in gold demand. I've long called these the summer doldrums. Gold tends to drift sideways to lower on balance in June and July, spawning a dark sentiment wasteland where everyone either forgets about gold entirely or starts to loathe it. Sound familiar? While gold bottoms seasonally in early July, it still languishes until late July. And then like Rip Van Winkle, gold awakens from its nightmarish slumber. The initial catalyst is actually agricultural harvest season! All of Asia is in the northern hemisphere, sharing the same growing season we do. After an entire year of hard work and heavy capital investment, Asian farmers start to harvest the fruits of their long labors. They sell their crops and finally learn how much surplus income they earned. Some of this is deployed into physical gold, driving up demand consistently in August and September. This is particularly true in rural India, where there isn't much of a banking system and a deep centuries-old cultural affinity for gold abides. This post-harvest gold buying may sound quaint, but actually we do something very similar in America. Our income-cycle investing happens in late December and January. Like Asian farmers, we don't know how much surplus income our entire year of work generated until the end of the year. Finally after bonuses are awarded and tax burdens are figured, we can invest any surplus we earned. Thus the American stock markets tend to see major capital inflows in early January. Investing can only come from surplus income beyond living expenses, no matter where in the world one lives. This Asian post-harvest buying pushes gold higher in August and early September. And as it starts petering out, Indian's famous wedding season ramps up. If you know any Indians, ask them about this fascinating cultural phenomenon. Indian weddings are huge and elaborate productions that collectively demand a staggering amount of gold to pull off. This buying accelerates gold's strongest seasonal rally of the year. Marriage is so important in India that most are arranged by families. The timing of these weddings is critical, as Indians fervently believe that getting married during the autumn festival season increases couples' odds for success, longevity, happiness, and good luck together. Who wouldn't want such great blessings in their marriage? The autumn festivals including Diwali are the most auspicious times to tie the knot. Indian families pay fortunes to outfit their brides with extensive gold dowries, most in the form of intricate and beautiful 22-karat jewelry. Not only can the bride wear this gold on the most important day of her life, its value secures her financial independence within her husband's family. Like American parents, Indian parents spare no expense when marrying off their precious children. They buy vast amounts of gold. Something like 40% of India's entire massive annual gold demand occurs during this autumn wedding season! This helps drive gold's biggest seasonal rally of the year, which averages 6.9% gains between early July and early October. With such an important and one-off event as a child's wedding, Indian parents buy gold aggressively regardless of price or artificial barriers like the current crazy-high import duties. Gold takes a seasonal breather in early October, but then its price shoots higher again in November. Why? We start our own festival season here in the West, the holidays of Thanksgiving and Christmas. That period is dominated by a crazy spending frenzy. Many Americans do the great majority of their entire year's discretionary spending leading into Christmas, and that includes heavy gold jewelry buying. Jewelry demand explodes as holiday dollars deluge into golden gifts for wives, girlfriends, daughters, and mothers. Apparently many American jewelers do well over half their entire year's sales between just before Thanksgiving and Christmas! This Western festival season makes us happy too, just like Indians during their own festival season. And happy people are far more likely to freely spend money on discretionary wants. This Western holiday buying leads to another 5.0% gold surge on average between late October and early December. That drives gold's decisive seasonal breakout above its seasonal uptrend. Much like July, that October seasonal ebb is a great time to buy gold, silver, and the stocks of their miners. Gold tends to slump a bit in December, but soon awakens for another major 5.2% surge into late February. The strong early-year gold buying starts in the West, and is income-cycle driven just like the Asian farmers' buying. That's when we figure out how much surplus income we've earned and invest some of it in the financial markets. Even with gold still out of favor, there were still enough smart contrarian investors over the course of its secular bull to propel this metal sharply higher on average in January. And just as these big Western demand surges subside, the major Chinese festival season arrives. The Chinese calendar is based on the moon as well, and its new year usually arrives in the first couple weeks of February. The Chinese people celebrate this Lunar New Year by buying gold for gifts. While these gifts are small, there are a lot of Chinese which means a lot of aggregate gold demand. Income cycles play a part too. Like American investors in late December and January, Chinese investors figure out how much surplus income their entire year of work generated in late January and February. So the popular festival buying is augmented with serious investment buying. Once this surge in Chinese gold demand peaks later in February, gold usually starts slumping into late March. But note the chart above shows a mid-April low. Why? April 2013's extremely anomalous gold panic was such a wildly-outlying event that it dragged down the entire secular bull's averages a bit compared to my last seasonal read in late 2011. And the subsequent extreme selling in 2013 significantly reduced gold's average spring rally to merely a 3.0% gain. I certainly suspect this will mean revert higher as normal gold-buying patterns resume in the coming years. Unlike the rest of the strong season between late July and late May, gold's spring rally has no clear income-cycle or cultural driver. I suspect it is the result of the same psychology that leads to general-stock buying in the spring. After a dark, cold winter, the longer daylight hours and warmer temperatures of spring leave people happier. And traders who feel better are much more likely to deploy capital. Gold's strong season is powerful and well worth riding for any investor or speculator. All-in between early July and late May, gold has averaged a stellar annual seasonal gain of 15.4% in its entire secular bull between 2001 and today! That is one monster of a seasonal rally. If gold merely enjoys an average one between its recent mid-July low of $1294 and May, we are looking at $1493 gold by next spring! And since last year was such an extremely anomalous down year that largely short-circuited gold's usual seasonal tendencies, probabilities greatly favor the opposite this year. We are likely to see far more upside than usual as gold continues to mean revert out of 2013's extreme lows. And once again the ETFs like GLD will mirror gold's gains, but silver and the precious-metals miners' stocks will amplify them. This next chart uses the same indexing and averaging methodology but carves up gold's secular-bull price action into calendar months instead of years. Each calendar month is individually indexed off the final close of the preceding month set at 100, and then they are averaged. This perspective gives a clearer view on how gold tends to perform in any given calendar month. And the best of the year are approaching. August, which is almost upon us, is actually gold's second strongest month of the year on average with a 2.7% gain. Then September is the third strongest, with a slightly lower (before rounding) 2.7% gain too. And then after October's seasonal slump, November is actually gold's strongest month of the calendar year at +3.3% on average. Now is a great time to buy precious metals with gold's best months of the year nearing! July is the best time of the year bar none to add new precious-metals long positions, with the whole string of major seasonal rallies still ahead. Late October, late December, and mid-April are secondary buying points to add positions, but with much less seasonal rallying left after these points they aren't as optimal as late summer. Right now is the year's most favorable time to deploy serious capital in precious metals. As always, it's very important to remember that seasonals are tendencies based on long-term averages. They are secondary drivers, affecting prices like headwinds and tailwinds affect airplanes. Gold can certainly still move counter to seasonal tendencies for a spell if that's the way its primary drivers happen to be pushing. Sentiment, technicals, and fundamentals can all easily offset and outweigh seasonals. So don't get discouraged or scoff at seasonals if gold moves the wrong way for a week or two during a seasonally-strong time. That happens, as even strong tailwinds can be bucked with sufficient power. But over time, these seasonal tendencies are very strong and will normalize. Recurring major gold buying worldwide is the underlying source of seasonals, which is the most fundamental force possible. In addition to the usual income-cycle and cultural gold buying, the coming months are likely to see additional very bullish big fundamental buying come into play. 2013's extreme gold anomaly was driven by just two groups of traders dumping gold at epic record rates, American stock traders and American futures speculators. And so far this year even before gold's strong season they've actually been buying gold instead. GLD's gold-bullion holdings are actually rock-solid this year after plummeting last year. As of this week, they were up 0.9% year-to-date. That may not sound like much, but it is a vast improvement from the extreme 31.2% year-to-date plunge as of the same day in 2013! As the overvalued and overextended US stock markets inevitably roll over, stock traders are going to remember the wisdom of portfolio diversification. They will flood back into GLD shares faster than gold is rallying, forcing this ETF's custodian to shunt that deluge of excess capital directly into gold-bullion buying. This will combine with the Asian buying to force gold up faster. And that will accelerate the massive buying in gold futures that has been underway this year. American futures speculators still have lots of buying left to do to mean revert to normal years' levels. So when the fundamentally-driven tailwinds of the strong autumn seasonals combine with heavy buying of the GLD gold ETF by American stock traders and gold futures by American futures speculators, we are likely looking at one exceptional autumn gold rally! It won't be smooth, it won't climb in a nice straight line, and there will be sharp setbacks. But on balance gold is perfectly poised for a major new upleg. We're ready at Zeal. We started adding new precious-metals-stock trades this week for the first time since April, on top of our existing ones that have unrealized gains as high as +119% this week. We expect to continue this new deployment over the coming weeks as we position for this year's gold strong season. The best of the smaller gold and silver miners' stocks could easily double or triple from here by next spring. The stocks we're buying come off our popular comprehensive reports detailing the ones our research has shown have the best fundamental prospects. Buy your reports today and get deployed while this sector remains out of favor! We have also long published acclaimed weekly and monthly contrarian newsletters. In them I draw on our decades of hard-won experience, knowledge, wisdom, and ongoing research to explain what's going on in the markets, why, and how to trade them. Since 2001, all 686 newsletter stock trades have averaged stellar annualized realized gains of +22.6%! Subscribe today! The bottom line is gold's strong season is just getting underway. While gold's mined supply is constant, its global demand fluctuates dramatically throughout the calendar year. Major income-cycle and cultural drivers from around the world lead to outsized gold demand surges. And gold's best months of the year are nearing as Asian harvest buying ramps up followed by the fabled Indian wedding season's arrival. The usual autumn gold seasonal strength this year coincides with extremely toppy global stock markets due to roll over any day. And when they do, investors will flock back into neglected gold for prudent portfolio diversification. This Western mean-reversion buying after last year's extreme gold anomaly stacked on top of Asian seasonal buying ought to spawn one monster gold upleg. Get deployed ahead of it. Adam Hamilton, CPA So how can you profit from this information? We publish an acclaimed monthly newsletter, Zeal Intelligence , that details exactly what we are doing in terms of actual stock and options trading based on all the lessons we have learned in our market research. Please consider joining us each month for tactical trading details and more in our premium Zeal Intelligence service at … www.zealllc.com/subscribe.htm Questions for Adam? I would be more than happy to address them through my private consulting business. Please visit www.zealllc.com/adam.htm for more information. Thoughts, comments, or flames? Fire away at zelotes@zealllc.com . Due to my staggering and perpetually increasing e-mail load, I regret that I am not able to respond to comments personally. I will read all messages though and really appreciate your feedback! Copyright 2000 - 2014 Zeal Research ( www.ZealLLC.com ) © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.  | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <b>Gold Price</b> In 2014 Consolidating Above Major Support Area | Gold <b>...</b> Posted: 25 Jul 2014 02:58 PM PDT So far, the gold price in 2014 in the first six months has been trading in a tight range between $1190 and $1390. The yellow metal had one significant rally in February / March and one moderate rally starting in June. The spikes in the gold price in 2014 have been driven partly by fear and partly by inflation expectations. The first rally coincided with the outbreak of tensions in Ukraine. The second (modest) rally was driven by the US Fed statement mid June that inflation expectations are soaring. Basic chart analysis shows that the gold price chart in 2014 has a clear "line separator" which has served as major support throughout the first half of the year. As evidenced by the first chart below, the $1270 – $1280 area has been resistance in the first weeks of the year and subsequently turned into support after the February / March rally. From a technical point of view, the gold price is developing a major trading range. After the crash of 2013, both gold and silver established a bottom in the summer. That bottom was tested on the last day of 2013. Since then, the newly developed trading range has held up quite well. The general rule of thumb is that the strength of a trading range ("consolidation") is a function of the time spent to establish that range. The fact that gold, silver and miners are trading in a range for a year now should result in a solid base before a new trend starts. The above chart also shows that the very short term trend has been down, as evidenced by the blue line connecting the highs in July. The price has touched the trend line three times, a sign that the price is ripe to start trending. In which direction will the gold price be trending in the second half of 2014? That is impossible to say. For the time being, there are two conflicting forces at play. First, the bullish force is that August till December is the seasonally strongest period of the year. Particularly August is a month in which the metals close almost always higher, as we wrote here and here. On the other hand, the dollar, which is in general negatively correlated with gold, has started an uptrend recently. The following chart is the same as the previous one but with it shows additionally the dollar (grey line). The blue lines are the dollar's trending lines for 2014. They show that the key chart formation has been a triangle. The purple oval shows that the dollar broke the trend a week ago; it has been moving steadily higher since then. Interestingly, but unsurprisingly, the yellow metal has closely tracked the gold miners index (HUI) for the whole year. The fact that there is no divergence between the metals and the miners is not really telling anything about gold's prospects. At least it is not a bearish sign neither. Going forward, gold should respect its key support area, especially during its seasonally bullish period. Today, July 25th, spot gold closed at $1307.65, up 1.32% on the day. For an uptrend to establish, at least three consecutive closes above $1310 are required. Chart courtesy: Stockcharts.com. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver and <b>Gold Prices</b>: The <b>Gold Price</b> Broke it's Support and <b>...</b> Posted: 24 Jul 2014 04:44 PM PDT
I note between gritted teeth that both the silver and GOLD PRICE punched through their 300 day moving averages today, as well as the uptrend lines which had been supporting them. The SILVER PRICE landed on its 200 DMA (2035c) as did gold ($1,287) in this twin fall, but gold rose up off its 200. Gold has some internal lateral support that runs back to 2013 right at $1,387, too. Last gold price breakout occurred around $1,280, so everybody expects this correction will fall that far and stop, which means it probably won't. Another target is a roughly 75% correction of the preceding rise from $1,240.20 to $1,346.80, or about $1,265. Of course, it could stop at that $1,280, IF it breaks the 200 DMA ($1,287). Does this sound as if I am vacillating? Ought to, because I am. Silver enjoys strong support at 2000c and at 1975c. 50 DMA also stands ready to catch it at 2015c. I'll buy a little tomorrow one way or the other, just so I don't miss out. GOLD/SILVER RATIO rose 1.7% to 63.339 from yesterday's 62.258. That catches my eye because it matches the high a couple of weeks ago. Ratio looks overstretched to the upside, which hints that the silver and gold's fall will be short-lived. In this Best of All Possible Worlds, the sick Portuguese Espirito Santo Financial Group that owns 20% of sick Banco Espirito Santo is trying to dodge behind the bankruptcy curtain in Luxemburg. That's the third company in a week linked to the Espirito Santo family. But in this Best of All Possible World's bankruptcy is no stigma, makes no one nervous, and roils no stock indices. I reckon they all look at it as the Best of All Possible Bankruptcies. In the US all indices but the S&P500 wavered slightly, but a bit nervously. S&P500 added 0.97 (0.05%) to rise to a new high above yesterday's at 1,987.98. No, that was not an epochal accomplishment, and only nudges the S&P500 up a little closer to its upper trading channel line. It is rising on rising volume. In this Best of All Possible Worlds, everything is possible. The Dow dropped for the second day running, down 2.83 (0.02%) to 17,083.80. Trading out into the nose cone of a bearish rising wedge, it can rise higher, even to 17,300, maybe even overthrow the upper boundary of that wedge. Yet a certain doominess hovers over all, for an end to this looms ahead shortly. But in this Best of All Possible Worlds, anything is possible. Steady-ish stocks and falling metals pushed the Dow in gold and Dow in silver higher today. Dow in silver jumped to its 50 DMA (837.31 oz or S$1,082.58) and closed 2.63% higher at 836.83 oz (S$1,081.96). Dow in gold burst through its downtrend line and rose 1.06% to 13.24 oz (G$273.69 gold dollars). Y'all don't act like I didn't tell y'all this was coming. And it has further to rise still. The Best of All Possible Scrofulous Fiat Currencies, the US Dollar, managed by the Best of All Possible Central Banks, rose six basis points (0.07%) today to end at 80.94. It appears to be rallying, and threatens a roughly two hundred basis point rally, i.e., to 82.75. In this BOAPW even the euro rose today, up 0.03% to $1.3464, but still sick as a poisoned dog. Lower prices seem inevitable, but remember that all scrofulous, rotten fiat currencies are manipulated, subject to the secret cosmic motions and goofy policies that take hold of central bankers' minds. The Yen has fallen all the way to the bottom side of its narrow triangle below its 20 DMA (98.46) and on top of its 50 DMA (98.23). If it makes one baby step lower, it falls out of the triangle for a long tumble. Aurum et argentum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Reasons Why <b>Gold Price</b> and Gold Stocks Will Rise :: The <b>...</b> Posted: 24 Jul 2014 04:31 AM PDT By: The_Gold_Report
The Gold Report: Over two days, July 14 and 15, the price of gold fell over $40 per ounce ($40/oz), more than 3% of its value. To what do you attribute this drop? Jeffrey Mosseri: I don't think it was a very extraordinary event. Gold has been trading around $1,300/oz. We see sharp upward and downward movements triggered by, for instance, something Federal Reserve Chair Janet Yellen said or a negative report by Goldman Sachs. It looks as if gold will stay in the $1,300/oz range for a little while. We'll see which way it breaks out. We believe it's going to break out on the upside. Douglass Loud: Gold had been running up for a while, and every so often investors want to take some money off the table. TGR: How high do you believe gold will go? JM: The average sustaining cost of production for gold is about $1,500/oz. If gold continues to trade below that level, at some point no new mines will be brought on. Supply and demand indicates higher prices for gold. At the same time, we're dealing with a seasonal trading pattern. Usually the position for those commodities tightens up around September–October. We think this will happen again this year. Higher prices? Yes. How much higher? We don't know. TGR: Given that the financing for junior gold companies collapsed years ago, shouldn't the concomitant shortage of new supply have led already to higher prices? DL: Well, there are games going on. Every once in a while some big bank will say that gold is too high. Then it goes down. After that, some big bank will say investors should buy gold and gold goes back up again. Institutions can profit by shorting gold and then buying it back before it rises in price, or so the conspiracy theorist in me thinks. TGR: The world is becoming a more dangerous place. We have the civilian airliner shot down over Ukraine, civil wars in Iraq and Syria, Hamas attacking Israel, and Israel striking back, as well as a burgeoning territorial dispute between China and Japan. As a result, do you expect a flight to safety by investors? JM: Actually, we are flummoxed by the apparent disconnect between what's going on in the world and commodities prices in general. We think that the reason for this is that the U.S. dollar is the least dirty shirt in the laundry basket. Investors are fleeing to the dollar because it's easier and cheaper, but if these hot spots continue to get hotter, it will almost certainly translate into more gold buying. DL: Then there's the issue of real gold versus paper gold. There may be much more paper gold than real gold to support that paper. TGR: The traditional argument for gold bullion is that it is a rare, real good that cannot be multiplied endlessly. Before gold exchange-traded funds (ETFs), if investors wanted exposure to gold that wasn't in bullion they had to invest in mining stocks. Do you think ETFs have resulted in a substantially changed gold market? JM: For many years the traditional relationship between gold and gold stocks was that the stocks predicted the direction the metal would go. This changed with the introduction of ETFs, and for the last few years, the tail has been wagging the dog. The ETFs were an interesting introduction. They have been and will continue to be a very good way to play gold, but they did result in putting gold stocks out of favor. Now people are beginning to realize that it is the mining companies that produce the gold, and they're going to make the profits. TGR: Historically, the end of a recession led to big increases in gross domestic product. We've yet to see this after the post-2007 recession. Why not? Are we now living in a new world of permanent low growth? DL: We're supposedly out of a recession because a bunch of statistics say so, but tell that to the shopping malls that are one-third empty and to the people who don't know how they're going to pay for the increases in food and fuel that are no longer included in the inflation statistics. JM: Serious economic growth has been stymied by a rash of new regulations and by the standoff between Congress and the Obama administration. This disincentivizes capital investment and capital creation. Most of the stimulus money created from 2008 went to firm up bank balance sheets and did not get into the economy proper. And so the recovery has been a lot more anemic than in the past. Now, however, business loans are beginning to be made by the banks. Little by little this will percolate into the economy. And the $8 trillion ($8T) created by the central banks has to find a home somewhere. We believe this will be reflected in higher gold prices, and, in fact, higher prices for commodities in general. TGR: The Financial Times reported in June that public institutions, central banks mostly, have invested $29.1T in the markets, mostly the equity markets. JM: Well, because of continued very low interest rates, most of the stimulus has gone into improving bank balance sheets and into the equity markets but not into the economy proper. TGR: HudBay Minerals Inc. (HBM:TSX; HBM:NYSE) has taken over Augusta Resource Corp. and Osisko Mining Corp. was taken over by Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) and Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE). Can we expect more such buyouts? JM: Yes. What's interesting about recent takeovers is that they were initiated as hostile bids. This is very unusual for Canada, which is a much more gentlemanly arena than America, Britain or Australia. We believe it's a question of value. Mining assets are now cheap, and well-financed companies can buy good properties cheaply. DL: We were in a meeting the other day with some executives whose company almost went under simply because their project took longer than expected. The company kept having to make payments on its equipment to keep its place in line, and pretty soon it used up all its cash. Time can kill a smaller business. And so mining companies can be bought on the cheap because they have no money and can't raise it. TGR: The Osisko buyout has resulted in the creation of a new royalty company called Osisko Gold Royalties Ltd. (OR:TSX), which began trading at the beginning of June at $13.50/share and has since risen to $15.95/share. Why does the market value this company so highly? DL: Because it has a royalty on the Canadian Malartic gold mine in Quebec. So the company is like a mine without the mine. JM: Streaming companies are very attractive so long as they finance good projects. Investors see this stream of cash flow, and they love it. It's less risk with more visibility. TGR: Osisko Gold Royalties has $157 million ($157M) in cash. How big a player does it intend to become? JM: Clearly it will be a major player. The question is, will it buy other existing streams or will it buy other projects that will stream later? I think it will do both. TGR: HudBay now has Augusta. Its Reed copper mine in Manitoba is now in production, and its Constancia copper mine in Peru is scheduled to begin commercial production in the second half of 2015. How do you rate this company? JM: Very positively because we see its production going up radically in 2014–2015. Copper production should increase by over 50% next year. We happen to be very positive on copper. We also think HudBay will increase its gold production. And Augusta may not be its last acquisition. TGR: How likely is it that HudBay will be able to move forward its newly bought Rosemont copper project in Arizona within a reasonable amount of time? JM: All these big projects come down to two things, permitting and financing. The financing part should be easier. We think HudBay will move it along at a good pace, and that it will overcome any permitting hurdles. DL: Otherwise, there would have been no point in HudBay buying it. TGR: How ambitious is HudBay? How big does it want to be? JM: HudBay has extremely good management and will operate within its financial constraints. Other than that, I think the company will grow as big and fast as it can. Talking of permitting, after 10 years, we feel that Polymet Mining Corp. (POM:TSX; PLM:NYSE.MKT) is very close to obtaining its permits and its financing, and will finally be going into production on its huge copper-nickel deposit in Minnesota. TGR: The Reed copper mine is owned 30% by VMS Ventures Inc. (VMS:TSX.V). After VMS pays back HudBay and the cash flow from Reed begins to accrue, how transformative will this be for VMS? DL: The cash flow will be very helpful, but the company shouldn't run out and make any acquisitions tomorrow. It's going to take a while for it to receive actual cash from that project versus accounting entries of cash flow. We like some of its other projects. One of them is in Greenland, and that's very interesting, but it is Greenland. TGR: You're referring to the fact that VMS owns 22% of North American Nickel Inc. (NAN:TSX.V) and its Maniitsoq nickel sulfide project in Greenland. Rick Mills told The Gold Report that he thinks the world of this project and that VMS was quite clever to get a piece of it. DL: We think it's clever, too. Right now everybody's worried about gold and silver, but they should be paying attention to copper, nickel, zinc and molybdenum. One of these days these metals are going to tap us on the shoulder and say, "Remember us?" TGR: In a previous interview, you talked a fair amount about Yukon mining. Are you still keen on that region? DL: Yes. There are those who feel that expenses went through the roof, which they kind of did, but we still like some of our companies up there. For instance, Alexco Resource Corp. (AXR:TSX; AXU:NYSE.MKT) and its Eastern Keno Hill Silver District. The company is run by some really smart guys. For example, Alexco used to pay Air Canada about $600,000 yearly to fly its workers in and out. It has solved that problem, and it has gotten other costs under control as well. Additionally, there's a lot of zinc up at Keno Hill, and if zinc comes back, it will be a very profitable project. When I was in the Yukon a while back, someone told me jokingly that the Yukon ought to annex northern British Columbia (B.C.) because it was more like the Yukon than B.C. There are a lot of good projects in that region, like Pretium Resources Inc. (PVG:TSX; PVG:NYSE), with its huge high-grade gold discovery that's just waiting to be taken advantage of. And there is Western Copper and Gold Corp. (WRN:TSX; WRN:NYSE.MKT)and its Casino project, which is going to produce copper at a very low cost. Any company that can accomplish this will do very well because the need for copper isn't going to go away. TGR: What is the status of Alexco's Bellekeno silver mine? DL: I think it's coming along very nicely. And Alexco has found a wonderful new site called Flame & Moth. Unfortunately, it's right under the mill it just built, so it is building the entrance to this new mine right next to the mill. The company will have two major production areas going. If it produces, for the sake of argument, 3 million ounces (3 Moz) of silver a year, it could well do 6 Moz of zinc. In addition, Alexco has its environmental recovery division. There are an awful lot of big companies that have bought a lot of little companies over the years, and they've got a whole bunch of little mines that maybe weren't cleaned up the way they should have been. Alexco is poised to profit from that. TGR: Which gold juniors do you like in Nevada? DL: We've always liked Midway Gold Corp. (MDW:TSX.V; MDW:NYSE.MKT) and its Pan project because it's plain and simple. You take it out of the ground and put it on the pad. I also like Paramount Gold and Silver Corp. (PZG:NYSE.MKT; PZG:TSX) because it owns the Sleeper gold project. It was hugely successful before and could be again. JM: We also like Allied Nevada Gold Corp. (ANV:TSX; ANV:NYSE.MKT). TGR: Midway just closed a $27.5M bought-deal financing. Pretty good for a junior these days, no? JM: It is and speaks well to the probability of it getting into production and cashing in. TGR: Moving on to South America, are you still fond of Exeter Resource Corp. (XRC:TSX; XRA:NYSE.MKT; EXB:FSE) and its Caspiche project? DL: We still like Exeter a lot. TGR: From June onward there has been a rather significant appreciation in its share price. JM: That's because Exeter pared back its Caspiche project from a major copper-gold porphyry, whose capital expenses would be around $4.5 billion ($4.5B), to a $200M capital expense (capex) oxide-only project, which stands on its own two feet and should be very profitable. Then, if commodity prices rise enough to attract capital for large projects once again, the underlying porphyry will still be there for further development. TGR: What else interests you in South America? DL: Because of the government of President Cristina Kirchner, Argentina has rather taken itself off the grid. If she is replaced with a more mining-friendly leader, then we like Yamana, which bought Exeter's Cerro Moro project. We would also revalue McEwen Mining Inc. (MUX:TSX; MUX:NYSE ) and Goldcorp Inc. (G:TSX; GG:NYSE). JM: A better regime would also benefit Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ). TGR: Argentina has been troublesome for business ever since Juan Perón first came to power in 1946. Does there come a point when mining companies decide to write off a country once and for all? JM: In the end, greed trumps grief. DL: And don't forget the grades in those Argentine projects are extremely high, which should make them very profitable. TGR: Are there any other precious metals companies you'd like to mention? DL: In Mexico, there's First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), which is well run and keeps finding more silver. JM: It has very high-quality management, and the company always seems to find a way around whatever problem is presented. TGR: You are interested in rare earths as well. Which particular company do you like? JM: Texas Rare Earth Resources Corp. (TRER:OTCQX) and its Round Top project in Texas. TGR: What makes this special? JM: It's a big hill that's all rare earths and ready to go. The capex is only $292.7M with a mine life of 20 years. The pre-tax net present value is $1.47B, and the internal rate of return is 69%. DL: The company has a very good share of heavies, which is quite important. It's in America. It is strategic. It knows how to do it, and it's relatively easy. It's a big mountain, and it will go right in there and take it out. TGR: The current bear market in precious metals goes back to April 2011. When will it end? JM: We think it may have already ended. The recession has cleaned out a lot of doubtful companies. The survivors with really good projects will either be bought out or get financed. We think that's going to start to happen in the very short term. TGR: How long will the trend have to keep moving upward before we can say that we're now in a bull market? JM: Metal stocks did extremely well from 2002 to 2010. Then there was a correction. We think that we are preparing for the next upward move, which should last for several years. There is a tightness in various metal markets, which will mean higher metal prices. This could lead to more mines going into production in the future. TGR: When you consider your favorite companies, which qualities do they share? JM: Good, solid management is one. Good deposits and good grades are another, and either being in production or being close to production is a third. DL: And we're very sensitive to country risk. I mean, we're not going to touch the best mine in the world, if it's in the Congo. TGR: Jeff and Doug, thank you for your time and your insights. Douglass N. Loud joined Greystone Asset Management at its founding in 2005 and has been senior managing director of Axiom Capital Management Inc. since 2009. Prior to that, he was with Murphy & Durieu, where he served as executive director of the Private Clients Group. Loud has over 35 years of investment management and securities industry experience. He holds a degree from Yale University and a law degree from the University of California, Berkeley. Jeffrey N. Mosseri established Greystone Asset Management in 2005 and became a director of Axiom Capital Management Inc. in 2009. He was a stockbroker and investment manager at Goldsmith & Harris for 20 years. Mosseri also worked as a stockbroker and investment manager for Carnegie Capital, the investment advisory division of Prescott Ball & Turben, where he ran the international arbitrage division and developed the gold mining research and investment department. Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page. DISCLOSURE: Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part. Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported. Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734. Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies. 101 Second St., Suite 110 Tel.: (707) 981-8999 © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver and <b>Gold Prices</b>: We Will See a Short Spike Downward in <b>...</b> Posted: 25 Jul 2014 04:31 PM PDT
Sure, silver and GOLD PRICES touched their 200 day moving averages yesterday, which often limits a correction. Can't say that yet, and I still suspect we will see a short spike downward in both metals. Both weekly charts are trending down. Overhead you will know this correction has ended when you see the SILVER PRICE close above 2120 cents and the gold price over $1,325.50. Down below, if the low hasn't yet been seen, gold could hit $1,265 - $1,280, silver 1980 - 2000c. Lower is conceivable, but not my expectation. Better take your chances buying QUICK. These low prices won't last much longer. Stocks behaved very strangely this week, and strangely is seldom good. S&P500 hit a new high close yesterday, 1,987.98, but all that gain was stripped away today when the S&P500 lost 9.64 (0.48%) to 1,978.34. Here's where it gets weird: that's 0.12 points above last week's close, so by the tiniest margin the week cannot be classified as the first part of a key reversal (break into new high for the move with a lower close). Add to that the Dow's failure to make a new high, and that all other indices fell the day the S&P500 made that new high. Today the Dow tumbled 123.23 (0.72%) to close at 16,960.57. The weekly Dow closed lower, too. Both weekly charts show bearish rising wedges, leaving me thinking it is only a matter of short time before both indices collapse into a correction of at least 10%, with the ultimate high later this year. The Daily Dow fell down out of it's rising wedge with a no nonsense "I'm falling to the earth's core" dive Closed beneath it 20 DMA (17,004) and the MACD and RSI were already falling. Look for a touch of the 50 DMA at 16,847. Right now the uptrend line from March 2009 about 16,700. 'Twould be serious bidnis indeed if the Dow fell thru that. Dow in metals had a zig zagging week, sharply higher and sharply lower. Dow in silver bounced off its 50 dma (836.81 oz or S$1,081.94 silver dollars) and fell 2,51% today to close at 815.61 oz (S$1,054.53). The correction's A-B-C shape allows it to called "complete", but a close below the 200 DMA (802.95 oz or S$1,038.16) is needed to confirm that. Better still would be a close below the last low at S$1,018.63 (787.85 oz). Indicators are turning down. Dow in Gold's shape might also mark completion. It leaves behind a double-toppy appearance, with tops at 13.184 (G$272.54) and 13.200 (G$273). Today it plunged 1.18% to a farewell at 12.96 oz (G$267.91. It did cut through the 50 DMA (13.02 oz or G$269.15) and standeth not far from its 20 dma (12.92 oz or G$267.08). DiG will confirm its correction has ended when it closes below the last low at 12.645 oz (G$261.39). My, this IS interesting, stocks faltering against metals. My, my. That there US Dollar index is just arunning like a house afire. Cleared the neckline of an upside down head and shoulders it has been forming since March. Grabbed a respectable 20 basis points today (0.25%) and closed at 81.14. To break out of its range and prove a rally it must still climb over 81.50. Dollar's got a full load on, moving so fast it's leaving scales and a sulfur trail wherever it goes. Euro is signalling a very sizeable fall. It dropped 0.26% today, complete with a gap down, never a good sign. Ended at $1.3429. Well, the yen did it today -- broke plumb through the bottom boundary of that long narrow triangle. Opened up down there, but managed to end the day smack on the line and smack on its 200 DMA (98.20), closing down 0.02% at 98.20. Sure acts as if it wants to nosedive. Ten year treasury yield tried to break out of its short term (since early July) downtrend, broke through the line yesterday, but fell back today to land on 2.469%. Needs to close above 2.55% before Janet Yellum starts getting that "I ate too many of them green apples" look on her gracious physiognomy, bless her little heart. On 25 July 1850 Gold was discovered in the Rogue River in Oregon. Y'all enjoy your weekend! Aurum et argentum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <b>Gold Price</b> Looking Drab :: The Market Oracle :: Financial Markets <b>...</b> Posted: 21 Jul 2014 04:19 AM PDT By: Austin_Galt
DAILY CHART Sorry if the chart looks a bit confusing but corrective patterns can be confusing. So let's just say the chart is in keeping with a corrective theme! Price recently made a low at the start of June at US$1241 and culminated in the a recent a top on the 11th July at US$1333. And as with most rallies that have occurred since the 2011 all time high, the gold permabulls are there to celebrate the occasion and calling the next great bull market to now be underway. I'm not sure what chart they're looking at. Perhaps they're not even looking at a chart. Well, whatever they are looking at, I'm definitely not seeing it! That daily chart does not look impulsive in nature to me. Quite the opposite. The chart shows that the trading has been wishy washy for around a year now. Typical of trading that is corrective in nature. But let's try and break it down anyway. I have drawn two trend lines. One trending down across the tops of August 2013 and March 2014. The other along the two most recent lows. Price now looks headed down and I expect that the lower trend line will contain this move. Before we get further into that, I have added a Moving Average Convergence Divergence (MACD) indicator which shows the red line currently above the blue signifying lower prices are likely in the very short term. Ok, let's move on. I have added Fibonacci retracement levels from the most recent low in June to the July high. I have also drawn Fibonacci retracement levels from the larger move of the August 2013 high to the December 2013 low. Now an interesting observation is the 61.8% level of the smaller range is around the same level as the 38.2% level of the larger range. This is around the price US$1278. I think this level is a great candidate for the current move down to end. We can see on the chart the pink line I have drawn that leads to this level. Personally, I think gold is in the middle of a multi month bear rally and so once the next minor low is in price can head up to a new rally high. And where will that rally high be? Well, I have drawn a pink line to where I think it will end. That is the 76.4% retracement level of the larger range at US$1373. This would also conveniently bust the down trending black line which a lot of people are looking at. Busting that trend line would surely run some stops in the process. Breaking higher above the March 2014 high, as denoted by the horizontal line would be the first real sign the bulls are taking control. Unlikely in my opinion. Let's now take a look at the weekly chart. WEEKLY CHART I have added some Bollinger Bands and ever since price made the first low at US$1180 back in June 2013 it has been toing and froing between the upper and lower bands. This can be a sign of corrective action or it could be, just to give the permabulls a bone, a sign of a trend change. I favour the former, especially considering no major swing high has been broken yet. The MACD shows the red line below the blue line indicating higher prices in the coming weeks are likely. And from the daily analysis we already have a potential target for that move up to end. Now, what I find most interesting on this chart derives from my application of the Andrew's Pitchfork which is denoted by the three green parallel lines. A bearish development recently was price breaking to the downside of the lower channel line. It needs to get back up into the lower half of the pitchfork to get the bullish case back on track. Let's see if the next push higher can do it. I doubt it! Now let's wrap it up by looking at the monthly chart. MONTHLY CHART I have added some simple Elliott Wave annotations to give some structure to the whole downtrend since the all time high. It appears gold is still tracing out a corrective Wave 4 with one final move to low awaiting. I have also added the Parabolic Stop and Reverse (PSAR) indicator as denoted by the dots. I suspect price can break to the upside of the dots next month which would relieve some tension and help unwind some of the negativity. Then perhaps we get a final Wave 4 high in September. I have added Fibonacci retracement levels of the upleg from 2008 low to 2011 high. I think price can eventually bottom out at the 76.4% level which would also conveniently break the critical psychological US$1000 level. That would see the permabulls in complete despair. Just the type of sentiment required for a major low. And perhaps then the next real bull market will start while the permabulls dejectedly call it just another rally in a bear market. Bingo! Bio Please register your interest in my website coming soon. Any questions or suggestions, please contact austingalt@hotmail.com © 2014 Copyright Austin Galt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. |
Gold's strong season is just getting underway, with this metal's summer-doldrums seasonal low in place. The past couple months' stiff headwinds are starting to shift to fierce tailwinds, thanks to Asian demand ramping up heading into autumn. Gold's pronounced seasonality is very important for all investors and speculators to understand, as today's inflection point is a very bullish omen for this still-unloved asset.
It's hard to see the present until it's in the past. What does this mean for gold? Money managers Doug Loud and Jeff Mosseri of Greystone Asset Management say that a bull market may have already begun. All the signs are there: rising political tension, a shortage of new supply and a cull of the weakest stocks. In this interview with The Gold Report, Loud and Mosseri list a dozen gold, silver and copper companies that should ride the crest of the wave.
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