Gold stocks have suffered heavy collateral damage following the Federal Reserve’s hawkish surprise late last month, which ignited enormous gold-futures selling by American speculators. This devastated sector has been battered back down near last summer’s deep secular lows. But these gold-stock price levels are fundamentally absurd, the product of extreme and irrational sentiment that can’t persist for long.
Today’s gold-stock price levels are the greatest fundamental disconnect in the entire stock markets, an epic opportunity for contrarian investors and speculators!
The entire gold-mining industry is trading as if the price of gold, the overwhelmingly-dominant driver of its profits, was just a small fraction of prevailing levels.
Gold stocks are radically underpriced fundamentally based on their current and future earnings power.
Gold has enjoyed a strong new uptrend in recent months following last summer’s extreme gold-futures shorting attack. But speculators returned with a vengeance this past week, aggressively dumping gold futures again following a hawkish surprise by the Fed. The resulting gold plunge shattered its support, and thrust sentiment back into hyper-bearish territory. But gold-futures shorting soon reverses to big buying.
With the Federal Reserve’s first rate-hike cycle in nearly a decade looming, traders are working overtime trying to divine its timing and impact on the markets. They are closely monitoring the same employment and inflation data the Fed will use to start tightening. But there’s another little-discussed concern for the Fed, the solvency of the US government. The Fed’s zero-interest-rate policy has spawned a grave US debt bomb.
Silver is finally showing some signs of life after suffering a dark year. The epically-bearish sentiment that bludgeoned this metal to major secular lows is cracking, with a strong rebound rally now underway. And this recent buying is likely just the earliest vanguard, as silver remains deeply undervalued relative to its primary driver gold.
Silver will need an utterly massive upleg to fully mean revert to normal levels.
Despite gold blasting higher this month, this metal remains deeply out of favor among investors. They have shunned it for years thanks to extreme central-bank money printing levitating stock markets. This slayed demand for alternative investments, led by gold. But the resulting radical underinvestment in gold today is super-bullish. Vast capital inflows will be necessary to return gold investment to normal levels.
The left-for-dead gold stocks have rallied dramatically this past week, surging to a major breakout. This pivotal technical event reveals the hyper-bearish psychology plaguing this sector in recent months is dissipating, paving the way for investment capital to return. And given the fundamentally-absurd price levels in this battered sector, this new gold-stock buying is likely just the initial vanguard of a massive new upleg.
Traders today universally believe inflation is dead, that there is no persistent decline in the purchasing power of money. That’s what government price indexes around the world are indicating. But this false notion is one of recent years’ main Fed-conjured illusions. Price inflation is the result of rising money supplies, and they have been skyrocketing.
Serious risks are mounting that they will spill into price levels.
Gold has lapsed deeper into pariahdom this year, becoming the most-hated investment class in all the markets. Traders are avoiding it like the plague, utterly convinced gold is doomed to spiral lower perpetually.
But this wildly-bearish psychology is DEAD WRONG.
Financial markets are forever cyclical, and gold is no exception to history’s ironclad rule.
The best time to be heavily long anything is when few others are…
Gold was beaten to a pulp as the Fed seduced investors into forgetting prudent portfolio diversification.
With the Fed shifting from record easing to a years-long tightening cycle, the fortunes of the markets are due to reverse.
The stock markets are going to face a stiff headwind for years, forcing investors to diversify back into alternative investments led by gold.
Is your portfolio ready for this monumental shift?
Silver has had a rough year, slumping to major new secular lows. After sliding on balance for years now, even the diehard silver bulls are losing faith in their metal. But despite its vexing slumber, silver’s price-appreciation potential from today’s levels remains enormous. Between radical underinvestment and very-high speculator silver-futures shorting, silver is poised to see MASSIVE BUYING as gold recovers.
The epicenter of gold’s intractable weakness over the past couple years has been the Federal Reserve’s upcoming rate-hike cycle. Everyone assumes higher interest rates will devastate zero-yielding gold, leaving it far less attractive. This premise led investors to avoid gold like the plague, and speculators to short sell it at wild record extremes. But provocatively, history proves gold thrives in Fed-rate-hike cycles.
The smaller gold miners and explorers have suffered catastrophic stock-price losses in recent years. These extreme declines have led investors and speculators to assume that much of this sector won’t survive lower prevailing gold prices. But nothing could be farther from the truth.
The hated and left-for-dead junior-gold sector is not only very strong financially today, but could still thrive at much lower gold prices.
The US stock markets just suffered an extraordinary plunge, shocking traders out of their complacency psychosis.
This cast the foundational premise behind recent years’ incredible stock-market levitation into serious doubt. Traders are finally starting to question whether central banks can indeed manipulate stock markets higher indefinitely.
Any wavering in this faith has very bearish implications for stock prices.
The entire gold-mining sector was crushed last month, suffering a full-blown panic. This was triggered by an extreme shorting attack on gold by American futures speculators. As fear-blinded traders rushed for the gold-stock exits, they claimed their selling was rational because gold miners’ very existence was threatened by such low gold prices.
But that’s a total fallacy, this sector has no problem weathering sub-$1200 gold.
With gold languishing near deep secular lows, its technicals look hopelessly broken. Sentiment is off-the-charts bearish, with traders universally convinced gold is doomed to spiral lower indefinitely. But gold’s weakness this year is very deceiving, as it wasn’t the product of global fundamental supply-and-demand forces.
Extreme record shorting by American futures speculators spawned these artificial lows.
Gold has certainly had a rough summer, facing withering selling pressure from record futures shorting. The resulting new secular lows have greatly exacerbated the already-extreme bearish psychology long plaguing this metal. But considering the howling headwinds gold has suffered in recent years, it has actually proved amazingly resilient.
This indicates strong latent demand due to accelerate as sentiment shifts.
Gold stocks suffered a full-blown panic this past week! This exceedingly-rare magnitude of selloff was triggered by extreme futures shorting intentionally executed to force a flash crash in gold. After gold’s major multi-year support failed in this Machiavellian onslaught, gold stocks plummeted. The levels of fear were so epic that this entire sector was slammed much deeper into fundamentally-absurd price territory.
What if the withering selling pressure devastating gold and silver this summer is artificial? What if the traders dumping the precious metals don’t actually own them in order to sell them? What if 2015’s apparent glut of gold and silver has been mostly borrowed first and then sold? And what if these short sellers used extreme leverage to dump these metals? This scenario radically changes precious metals’ outlook.
A record short-covering frenzy is imminent…
China’s stock bubble has burst, with its stock markets utterly collapsing after rocketing parabolic. The failure of this popular speculative mania has grave implications for the global stock markets. It shatters the universally-believed myth that central banks can nullify normal market cycles. No government has more power over its stock markets than China’s, yet not even it could magically eradicate greed and fear.
Gold and silver are languishing near major lows, trudging through the barren sentiment wasteland of the summer doldrums.
The major factor behind this weakness is extreme shorting by American futures speculators. But their heavily-bearish bets are actually VERY BULLISH for both precious metals.
Not only do these traders as a herd always bet wrong at price extremes, their shorts are guaranteed near-future buying.
The US stock markets were quick to rally after the Federal Reserve did nothing at its June policy meeting. Traders love the endless dovishness gushing forth from this Yellen Fed. But their complacency is very misplaced. It was epic Fed easing that fueled the stock-market levitation of recent years. So the Fed shifting away from these extraordinary policies is a major downside risk for these Fed-inflated stock markets.