liquid goldGold remains vulnerable now, until Janet takes the rate hike bull by the horns, and takes action.  
A downside breakout would theoretically see gold trade at about $1000. The $950 – $1050 area is massive buy-side support.
If there is a fundamental event that could activate a downside breakout from the symmetrical triangle, it’s probably an implosion of a company like Glencore…

fall plungeFor decades, I have defined the August 7 – October 31 time frame as “crash season”. There’s no question that current US stock market price action is very concerning.
The real risk of being invested in US stocks during these three months dramatically outweighs any potential reward.
That’s because GENERATIONAL WEALTH can be destroyed in a few days, weeks, or even hours.
August is typically the set-up month, and the crash and/or ensuing bear market occurs in either September or October.

ChinaConspiracy buffs feel gold is manipulated and want to see a lot more transparency on the COMEX, but I’ve argued that a bigger key to higher gold prices, is to add transparency in Chinese markets.
The Chinese government and central bank are moving very quickly to get that done.
SAFE has started releasing a monthly report of the nation’s FOREX holdings, and that includes gold.  

china goldRather than staging a technical “break down”, silver has essentially been trading sideways, and it has not traded significantly below than the November lows.
From the May highs, silver has drifted lower, whilst gold fell somewhat violently.
This difference in price action is typical when system risk fades, and inflation begins to dominate precious metals price discovery.
This price action suggests a concerning rise in inflation may be closer than most analysts think it is.

gold bullI don’t think most investors realize what kind of sea change is taking place in the gold stocks sector right now.
It’s a process that can turn gold stocks into one of the most stable cash flow cows… in the history of investing.

The world gold market is in a state of transition. It’s transitioning from a Western fear trade orientation, to an Eastern love trade orientation, and thus gold is on the cusp of a “bull era”.

mexican goldA “bull era” is clearly here. Chinese banks are mandated by the Chinese government to promote gold in a positive way.
The world’s largest banks dominate gold trading.   They are the “commercials”, and it’s clear they have been very aggressive buyers into the tail end of gold’s seasonal weakness.
Today’s FOMC announcement could lay the foundation for a multi-month rally in gold, silver, and mining stocks.

Indian goldIndia is the world’s main market for silver, and demand shrivels a bit during the May – June time-frame.
As a result, the silver price usually swoons, and frustrated investors can make irrational statements about this mighty metal.
It’s just a seasonal swoon, like an ocean tide change. The silver price tide will come back stronger than ever, because demand from the Hindu religion is cyclical and inelastic.
The bottom seasonal line: Eager gold and silver price enthusiasts should expect a major rally to begin in about two weeks, and continue for several months.

thomsonToday is gold options expiry day on the COMEX. As expiry day approaches, gold has a tendency to trade sideways to lower.
The most successful investor now is the one who dials down their obsession with predicting the next price move, and simply pours themselves a glass of fine bull era infrastructure construction wine

The 2008 crisis saw the Fed use some of its tools, but not all of them.
The Fed’s most powerful tools, gold revaluation and money printing, were never employed in that crisis.
QE4, if used to fund government infrastructure spending, can be inflationary, but if the next crisis is severe, only gold revaluation will work to end it.

When some individual gold stocks rise by 100% – 400% in just four months, investors can begin to feel it’s a stock picker’s market. While the best stocks will always produce bigger returns than the worst ones in any sector, I think what is occurring in the precious metal stocks is something very much “bigger”.
There are three powerful forces coming together that could soon create “upside thunder” across the entire gold stocks sector:


Fear trade enthusiasts should keep a close eye on the actions of the PBOC (China’s central bank).  Most major actions of the PBOC are not related to the love trade. They’re related to the fear trade.
A growing Chinese QE program, a possible announcement of higher official gold reserves, and/or a public endorsement of gold by the PBOC could create a very powerful rally in gold, and an even bigger one in gold stocks!
If China engages in a major QE program, its stock market could soar higher for years, and citizens would celebrate by buying vastly more gold jewellery.
Nothing the Fed does in its meeting this week will change Apple’s plans for massive sales growth in China, and nor will it change the insatiable and exponentially growing appetite of Chinese citizens to own a lot more gold.


The rise in the stock market is creating a lot of wealth for Chinese investors, and they are celebrating by buying gold jewellery. The first issue of the Apple gold watch sold out in less than an hour in Chinese stores!
Over the next two to three years, Apple will likely need substantial amounts of gold to meet the massive demand for its gold watches. Each watch is made with about two ounces of gold.
Below is a daily chart for ZiJin Mining, the largest gold mining company in China. I own the stock, and I’m an eager buyer of much more stock, on every 25 cent decline in the price.
This great company is clearly poised to be a leader in the gold jewellery oriented “bull era”.


The love trade in China and India has experienced astronomical growth in the past several years, as signs of wage price inflation in America are appearing.
These two events are highly supportive for gold prices. With all due respect, most of the amateur analysts still regularly drawing arrows to Pluto or Hades on their gold charts may need to take a large “chill pill”.
Here’s one reason why:

gold bull

The latest US jobs report has stunned most analysts, with its dramatic weakness. Most investors in the Western gold community are nervous about rate hikes, and this report supposedly gives the average gold investor a little breathing room.
I beg to differ. In the current situation, rate hikes are not bearish for gold prices.
They’re BULLISH, and here’s why:


Bloomberg reports that investor short positions are now at the highest levels since 2006.
retail investor short positions on the COMEX, are now larger than their long positions!
Clearly, the gold market window is open, for a violent short covering rally!


On March 20, 2015, global gold price discovery changed. Transparency was introduced to the London gold market, as the new “LBMA Gold Price” was launched.
Now, the Eastern love trade is starting to overwhelm the Western fear trade. It’s a theme that will probably accelerate very dramatically in the second half of this year.

Without the Eastern love trade, gold probably would trade in the $700 – $1000 area, if another financial crisis didn’t occur.  That’s because Western fear traders simply don’t buy enough tonnage to overwhelm mine and scrap supply, except in the most extreme and temporary situations.
In contrast, the Eastern love trade should produce consistent 5% – 15% annual gold price appreciation, with very limited volatility, for decades to come.
I expect to see gold stocks make a “stealth” change over the next 1 -2 years, from being the most hated asset class in the world, to one of the most respected.