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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.

liquid gold

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.
Here’s why: 

China dragon

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.

gold morgan oil

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.

gold crash

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. 

gold bull

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! 

Indian 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!

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I expect that gold could stay under some pressure this week, until Friday’s US Employment Situation report is released, at about 8:30 AM on Friday.
If gold were to trade in the $1219 area, that would be a rough 50% retracement of the $1183 – $1255 rally.
Such pullbacks are perfectly normal after decent rallies.  The overall picture remains a healthy one.
Chinese demand is starting to rise again and Indian demand is superb. Gold is well-supported here, and investor fear is unwarranted. 

yellen

Wealth in the stock market that is “here to stay”, is generated by buying business cycle troughs, not peaks.
While most bank economists and gold community analysts predicted a Fed taper would crush the price of gold, I suggested it would cause gold to rally, and turn the Dow into a wet noodle, and that’s exactly what has transpired.
Here’s what will happen next: 

launch rocket vertical

In late 2013, I predicted the Fed would taper all the way to zero in 2014, and suggested that taper would turn the Dow into a “wet noodle”, while creating a rally in gold prices. That’s the opposite of what most analysts thought would happen in 2014, and it’s exactly what has transpired.
The risk of a complete global stock market meltdown is growing now. The Fed’s number two man, Stan Fischer, has thrown gas on the fire, by aggressively suggesting the Fed’s next move will be to raise interest rates.
Many investors are assuming the Fed can engineer another huge stock market rally with further easing.  
Instead, what they could experience is something more akin to an economic ice age.

gold bull

A major decline in oil prices that causes a collapse in global stock markets while Indian gold demand surges, is likely to entice those money managers to recommend gold stocks to their clients.
As the dollar has rallied, the price of silver has declined significantly, and the gold to silver ratio has soared to the 70 – 80 area.
What are the implications for silver, if there is a global stock markets crash caused by deflating oil prices?