gold-coin-sales-halted-chi-20140807-001At about 2PM today, the next FOMC minutes get released.
The bottom line: With the CRB index approaching solid support, any gold-negative news is not likely to move the price of gold lower than $1275.

The upside numbers of importance are $1325, $1347, and $1392.   This is a different market than it was, when QE was the main theme of global gold price discovery.
While it will likely take longer than most investors expect for gold to rise significantly, it will still rise, and gold and silver equities are poised to do extremely well.

Indian goldMost investors buy gold because they are nervous about the financial system, government debt/bureaucracy, central bank money printing, and dangerous geopolitical developments.   In a nutshell, that’s the “fear trade” for gold.
The fear trade is a great reason to own a core position in gold now, and forever.   Gold should be the first item bought in any investment portfolio. That’s because lowest risk assets must be bought first, not the ones that appear to offer the most potential reward.
Ironically, it’s probably going to be the “love trade” (gold jewellery), not the fear trade, that makes the Western gold community a lot richer.

Summer_SaleA floor is not a “bottom that occurs just before blastoff!” event.   It’s a general price zone of enormous support, where downside price volatility should not be feared.
As the month of August gets underway, the gold market has a solid feel to it.
The commercials are still net short at least 160,000 contracts in gold.
There is great symmetry between the actions of the commercial traders in July-August 2009 and their actions today.

summerLet the Good Times Roll!
During the first six months of 2014, there have been quite a number of events that are positive for the gold market, and there was a big one yesterday.
Gold staged a nice breakout from a small bullish wedge pattern last night, and the entire chart has a very bullish look.

Why is that?   Well, the month of August can see Indian citizens buy enormous amounts of gold, as they begin preparations for the wedding season and Diwali.   Expectations of those liquidity flows into gold are likely why the gold chart looks so bullish now.

china goldAs the Western business cycle matures, inflationary pressures tend to rise. I’ve predicted that 2014 H2 (2nd half of 2014 calendar year) would see institutional money managers and Fed officials begin to talk about growing inflationary pressures. That’s starting to happen now.
The time to be heavily invested in the precious metals sector is not later. It’s now.

goldDubai is known as “offshore India”.   The city’s gold business is run mainly by Indian precious metal industry experts, and Indians dominate the buy-side of the trade.
As the gold jewellery era unfolds, Dubai should completely dominate all gold markets.
It will be the undisputed king of global gold price discovery very soon.
The battle for control of gold price discovery is probably best summed up like this: Singapore and Shanghai may talk a good talk, but only Dubai walks the walk.
In the supposed battle to overtake London and New York as the prime market of gold price discovery, there is everyone else, and then there is Dubai.

goldWhile the short and intermediate trends for gold are greatly influenced by Fed policy, events in China and India are now the key drivers of gold’s primary trend.
As important as today’s FOMC minutes are, on Thursday the Modi government releases its first budget. The most powerful gold dealers in the world are intensely focused on this budget.
Gold’s next primary trend move could be determined by what happens in India on July 10.

The government itself is extremely tight-lipped about what will happen, and that’s creating the potential for a violent gold price move to the upside or downside, as the budget is released.
It’s possible that the FOMC minutes create strong selling, but a gold-bullish budget from India quickly reverses that, and sends gold surging towards my target of $1432.

gold bull

gold bullHas gold topped out, or is it beginning a new leg higher?
Take a look at the hourly bars gold chart below.   A persuasive argument can be made that gold staged an upside breakout last night.
The range of $1305 – $1326 was decisively penetrated to the upside, and gold traded as high as $1335.
Monday’s close was critical, because it was not just the end of the month, but the end of the quarter.
Junior gold stocks staged a spectacular ending to the first half of the year, on massive volume.
The chart suggests the second half of 2014 will be even better!

In 2009, I suggested that a huge inverse H&S bull continuation pattern was forming on the gold chart. It had “outrageously bullish” implications.   I believe  a much bigger inverse H&S bull continuation pattern is forming now on the monthly gold chart.
If I’m correct, the “bare minimum” arithmetic target is: $2663.
I think my target price is absolutely justified by the global fundamental and geopolitical price drivers.

Global fundamentals for gold are outrageously bullish!
Let’s do a quick review of the facts.

poker big lossesRather than invest in failing infrastructure, central banks and governments are acting like hedge funds, betting on the stock market and OTC derivatives, using fiat credits that are borrowed or printed.
The bottom line: While global citizens are told to “grin and bear” austerity, their leaders are having a “good ‘ole time” spending trillions of dollars, at the stock market casino.

stare bastards in the eye SinclairTechnically, all sectors of the gold market look bullish.
Regardless of whether a daily chart, weekly chart, or a monthly chart is used, all technical lights are green.
The weekly charts suggest that investors who are waiting for gold to bottom in July are at risk of missing an enormous rally that appears to already be underway.
The technical price patterns that tend to be the most reliable, tend to be what I call “eye candy”.

summerIs it possible that a substantial 2014 summer rally begins after the release of this Friday’s key jobs report? I think so.
I’ve outlined a rough scenario for summer rally enthusiasts on the daily silver chart below. I’ve suggested silver could move up to about $22.
Much higher prices are possible if Western world inflation and Indian buying increase significantly, and I think that’s exactly what’s going to occur. 

shanghai gold exchangeThe Chinese central bank has granted approval to the Shanghai Gold Exchange (SGE) to launch a global gold trading platform.
Jiang Shu’s words that China’s strong gold demand is currently “only a number, not a power” make it clear that the new platform will be designed to put upwards pressure on the gold price.
Gold is entering a new era, centred on gold jewelry demand in China and India.

Indian goldThe landslide win of Narendra Modi just days ago is viewed by Indian economists as the catalyst that will raise Indian GDP growth to 8%. The bottom line is that India’s gargantuan population is young, vibrant, and hungry for gold!
The only way for Indians to get the enormous amount of gold they will demand as their economy grows, is to buy it from mines owned by Western gold community investors.

Indian goldMainstream economists appear to be almost obsessed with the idea that strength in the Dow will produce waterfall-sized selling in the GLD SPDR fund.
In contrast, my view is that most weak hands in that fund sold out in 2013. The total amount of gold held by the remaining SPDR investors is now only about 780 tonnes.
In the big picture of gold demand versus mine supply, the relatively small size of SPDR holdings are making them less relevant to overall gold price discovery. The liquidity being moved into SPDR and out of it, is slowly being swamped by liquidity flows in China and India.