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”.

China

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:

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Bloomberg reports that investor short positions are now at the highest levels since 2006.
Incredibly,
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!

China

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. 

freefall

The FOMC meeting looms ahead, as the main driver of global gold prices, in the short term. The policy announcement will be made at about 2PM on Wednesday, and most analysts believe Janet Yellen will remove the word “patience” from the Fed’s position on interest rate hikes.
My analysis suggests gold could trade down to $1095, if the Fed removes the word “patience, and from there a major trade-able rally would begin.

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 smuggling

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

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.

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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.