gold bull

Gold surged this week on massive buying from stock investors and speculators.  This critical group of traders and their vast pools of capital utterly abandoned gold in the past couple years.  So to see them start to flock back is a watershed event, heralding a major reversal in gold’s fortunes.
And with their gold exposure remaining near extreme lows, they have vast buying left to do to restore prudent portfolio diversification.

Bolt run

Silver looks to be on the verge of a major new upleg, finally emerging from the past couple years’ ugly sentiment wasteland. 
This beleaguered precious metal recently bottomed as futures speculators threw in the towel on their extreme shorting. 
And while investors’ ongoing silver stealth buying continues, it’s been modest. 
So there is vast room for capital inflows to accelerate dramatically as gold mean reverts higher.
 Silver dropped 19.7% in 2014 after plunging a brutal 35.6% in 2013.  Such dismal performance naturally left silver universally despised, the pariah of the investment world.  But that is changing.
Silver is ready to run again, a very exciting prospect given the huge uplegs it is renowned for.

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Gold stocks have suffered a miserable few years, becoming a laughingstock even among contrarians.
But this despised sector’s seemingly-endless downward spiral has left gold stocks vastly undervalued relative to gold, which drives their profits.
The fundamentally-absurd disconnect between gold-stock price levels and gold can’t last.
And it sure looks ready to end, making 2015 the year gold stocks shine again.

falling-bear

The prevailing valuations in the lofty US stock markets are increasingly becoming a bone of contention.
Wall Street calmly asserts stocks are fairly valued or even cheap, since it has a huge vested interest in keeping people fully-invested.  But a growing chorus of dissenters is disputing that idyllic notion, warning that stock valuations are very high and portend great downside risk.  Indeed, topping valuations abound.

falling-bear

Gold’s been on an incredible roller-coaster ride over the past couple months, whipsawing like crazy.
And contrary to popular rationalizations, these swings had absolutely nothing to do with fundamentals.
Their sole driver has been American speculators’ extreme shorting of gold futures, which has battered gold’s price around in the absence of investment demand.  But this epic gold shorting looks exhausted.

GLD

Gold has suffered a rough couple of months, getting pounded below major support.  One driver was stock-market capital flowing out of gold again, as evidenced by renewed differential selling pressure seen in gold-ETF shares.  But this was minor compared to last year’s, despite extreme bearish sentiment plaguing gold.
Gold-ETF selling exhaustion has effectively been hit, paving the way for big rebound buying.

apocalypse

This latest capitulation by gold-stock investors has left this hated sector at truly apocalyptic lows.  Bearish consensus is so extreme that pretty much everyone believes the gold miners are doomed to spiral lower forever.  But today’s horrendous gold-stock price levels aren’t righteous, they’re a temporary emotional fiction conjured by epic fear.  Trading at fundamentally-absurd levels, gold stocks are due to mean revert far higher.

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Americans spoke loudly and clearly at the polls this past week, repudiating Obama’s and the Democrats’ failed big-government policies.
This huge Republican victory has serious implications for the Fed and US stock markets Republican lawmakers have long opposed this easy Fed, and they will put great pressure on it to normalize its balance sheet and interest rates. 
This is an ominous omen for these Fed-inflated stock markets.

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Battered silver remains deeply out of favor, recently plumbing miserable new lows after drifting sideways for most of 2014. This metal’s relentless and oppressive weakness continues to break the wills of long-suffering contrarians.  But professional investors are taking advantage of the epically-bearish psychology plaguing silver.  They’ve been steadily accumulating positions all year long in massive stealth buying.
Silver certainly wasn’t always a loathed market pariah.  Back in early 2011, silver blasted up above $48 on widespread enthusiasm from investors and speculators.  It was one of the 2000s’ greatest bull markets, up an astounding 1105% during a 9.4-year span where the benchmark S&P 500 limped to a 20% gain.  The brave contrarians fighting the herd to buy silver low in the early 2000s greatly multiplied their wealth.
So with silver now super-low and despised, it seems like no one wants anything to do with it.
There is a widespread belief that silver is no longer cyclical, that it is doomed to spiral lower forever.
Now, not even the majority of contrarian investors, who claim they like buying out-of-favor assets cheap, will touch silver with a ten-foot pole.   It has been left for dead, starved for capital in a parched wasteland of hyper-bearish sentiment.

But provocatively, such extremes are exactly what major bottoms are made of. 

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The world’s financial markets are changing dramatically with the Federal Reserve on the verge of ending its third quantitative-easing campaign.  The Fed’s massive deluge of inflation drastically distorted markets, which are finally starting to normalize.  The precious metals were crushed by the Fed’s artificial levitation of the stock markets, leading to extreme futures shorting.  But that looks to have peaked, a very bullish omen.

cliff fall coyote

The US dollar has relentlessly blasted higher in recent months, achieving its longest consecutive-week rally in history.  Speculators have flooded into the world’s reserve currency for a variety of reasons, ranging from Federal Reserve rate-hike hopes to festering Eurozone worries.
But the resulting massive dollar surge has left it super-overbought while breeding universal bullishness, the precursors to a sharp selloff.

mali gold

Nevada is well known as the United States’ top gold-mining jurisdiction.  The numerous mines within its massive gold trends combined to produce a whopping 5.4m ounces in 2013, which accounted for 74% of total domestic output.  This output ranks Nevada as the world’s fourth-largest gold producer, behind only the countries of China, Australia, and Russia.
With Nevada’s geopolitically-stable mild desert region pumping out more gold than global juggernauts South Africa, Peru, and Canada, it is naturally a top destination for mining companies looking to hit it big. 
And an emerging producer has hit the trifecta with a trio of advanced-stage projects poised to add to Nevada’s gold-mine tally.

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Since early 2013 the US stock markets have done nothing but rally, levitating thanks to the Fed’s oft-implied backstop.  This incredibly unnatural behavior has left sentiment dangerously unbalanced, with hyper-complacency and euphoria running rampant.  Only a major selloff can restore normal psychology.
And with the Fed’s third quantitative-easing campaign ending, odds are high such a big downside event looms.

Gold stocks have plunged in September, crushed by the withering selling pressure from heavy futures shorting hammering gold.  As usual, these falling prices have kindled extreme bearishness on this left-for-dead sector.
But despite this rotten sentiment, gold stocks’ young upleg remains very much intact technically.
This impressive resiliency is fueled by these miners’ incredibly-cheap fundamental valuations.

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Gold and silver have been pounded lower over the past month, contrary to their bullish seasonals.  This selling pressure has come from the usual suspects, American futures speculatorsThey’ve been busy aggressively dumping gold and silver futures, particularly on the short side.  But each time they pressed this bet in the past 15 months, gold soon surged higher.
Shorts are bullish since they must soon be covered.

Silver has also seen a huge spike in speculator shorting, raising the odds it too is on the verge of its own parallel short-covering rally when gold’s starts.