Is the greatest gold rally in years on the horizon?
Below is a nice snapshot of the latest COT report for gold. The commercial traders (banks) have been sizable buyers of gold, into the current price decline.
It appears they are betting on a duties cut in the Indian budget, but whatever the reason is for their current buy program, the commercial traders have a winning track record. Amateur investors who are shorting gold now, are essentially taking the other side of that trade.
That’s a dangerous and reckless approach to take in the gold market. As the Indian budget is released, the bearish amateur traders are at great risk of receiving a serious financial beating!
Gold could make a new low in 2015, while Janet hikes rates, the dollar rallies, and gold stocks surge higher…
Most gold analysts are vastly underestimating the importance of the titanic changes taking place in the world gold market.
In the big picture, 2015 is likely to go down in history as the year that transparent and legitimate price discovery returned to gold.
All gold community eyes should be on the month of March, for three key reasons:
Gold is off to a great start in 2015. The daily gold chart looks superb!
Gold is arguably already fundamentally stronger and more stable now, than at any point of time in world history, and silver looks even better!
I see much more gold-positive news coming out of both China and India in 2015. If India chops the import duties in the upcoming budget (roughly scheduled for February 28), there’s a good chance that gold stages steady price advances against the dollar, during every single calendar month of this year.
The US dollar has staged a massive rally against most currencies in early 2015, but it has fallen sharply against gold in the same time frame. Why is that?
The simple answer is that India, and its gold-focused citizens, will dominate the world in the coming decades, and I’m predicting that dominance will begin within 18 months.
As the year 2015 gets underway, the US dollar is almost in free-fall against the rupee. Only the actions of the Indian central bank are preventing the dollar from suffering an outright crash.
As good as gold & gold stocks look, silver stocks look even more spectacular.
There’s a bullish inverse head and shoulders pattern in play on the daily SIL-NYSE chart, and my immediate term target is $13.25, if SIL can close above $11.25 for two consecutive days.
This should be a spectacular year for enthusiastic silver stock investors.
A new force that is bullish for gold has unexpectedly appeared, which is the Swiss franc’s mauling of the US dollar.
The franc has a stellar track record of being a hard currency, and a key lead indicator for the price of gold.
Please view the monthly chart of the dollar versus the franc below. The dollar has essentially imploded.
Entire brokerages and funds have been destroyed, as the dollar has gone into “meltdown mode” against the franc.
As painful as it’s been for these dollar bugs, I think there’s much more pain to come.
America is in no condition to endure an economic downturn, yet a downturn is coming, almost as surely as night follows day.
When the next crisis unfolds, I expect the Fed to quietly ask the Chinese central bank to revalue gold, by announcing a major gold buy program.
This would allow China’s currency to become a competitor with the dollar.
Equally importantly, it would allow the Fed to hide the key role that a higher gold price would play, in managing US government debt that is clearly out of control.
As the year 2014 ends and 2015 begins, gold is postured quite bullishly, from both a fundamental and technical standpoint.
China officially imported almost 100 tons of gold in November, and Hong Kong imported about 50 tons.
India also officially imported about 150 tons in November. Clearly, Chindian demand is once again robust, and growing!
The “shock and awe” growth of the Indian and Chinese economies is relentless. That means the growing dominance of the love trade on the global gold price discovery stage, is probably best described as a “clock that can’t be turned back”.
Gold mining companies are entering 2015 with robust demand from China and India, and with a very stable outlook for fuel costs.
This situation should entice substantial numbers of value-oriented fund managers into the sector, throughout the year!
Gold is working off what is an overbought technical condition, and should be poised to stage a significant rally by early January.
While a modest rise in the price of gold in 2015 might not sound very exciting, when coupled with a further collapse in the price of oil, gold stocks could suddenly become the darling of institutional investors around the world.
The FOMC meeting begins today, and Janet Yellen holds a press conference tomorrow afternoon.
The Fed has consistently failed to raise inflation to their comfort zone, and the global oil price crash will make their job even harder now.
If all the Fed says at the press conference is that “lower oil is good for consumers”, I’m concerned that institutional investors may lose confidence. The current global stock markets decline could morph into a horrific crash.
The US stock market has lost upside momentum, and the falling price of oil threatens to create an “Armageddon” type of event in the junk bond market, yet gold looks and feels superb.
For any market to continue to rally in a technically overbought situation like gold is entering into now, it needs a catalyst to do so.
Is there such a catalyst on the horizon?
Gold has staged a nice upside breakout, from a bullish flag pattern.
A rise above $1200 could usher in a lot of momentum-oriented buying,creating a near-vertical surge to the $1235 -$1240 price zone.
In my professional opinion, gold demand in India for Diwali has been the main price driver of this rally, and that demand has overwhelmed speculators carrying short positions on the COMEX.
Gold is in a tremendously strong position right now. The weekly charts are very bullish, and flag patterns are in play on the shorter term charts. Fundamentally, India is a force to be reckoned with for decades to come, and the Swiss referendum and the potential for the ECB to become a gold buyer is growing.
Almost all the lights are green, for gold!
Take a look at the HUI/gold ratio chart below in the year 2000 – 2001 period.
While gold went nowhere, gold stocks surged from late November in the year 2000, until the spring of 2001.
I think a similar situation is on the horizon now.
Is the Western gold community prepared to profit, if it happens? I hope so!
Gold, not stock market casino chips, will be where India puts their growing riches, and rightly so!
With Indian gold demand potentially moving into “overdrive” mode, most gold stocks appear ready to have a great year in 2015!