Townhall: "Gold Could be Set for a Big “Bounce Back” Rally"
Goldbully
Posts: 17,350 ✭✭✭✭✭
Gold Could be Set for a Big “Bounce Back” Rally
Mike Fuljenz / Posted: Jul 14, 2017 12:01 AM
After the Flash Crash in gold on June 26 and the Flash Crash in silver on July 6, Wall Street traders are ultra-bearish on the metals. Traders tend to be trend-followers and they see the trend is now down, so they have sold precious metals. The Commitment of Traders report last week showed that the net long positions in gold and silver dropped for the fourth straight week. In reviewing this data, Commerzbank said, “This puts net longs at their lowest levels since February 2016 [for gold] and August 2015 [silver]. Short positions in silver are currently at a record high….In the past, such extreme positioning by speculative financial investors has often sparked a pronounced countermovement in prices.”
The basic theory of “contrarian investing” is that when most big traders line up on one side of the trade, there are few big traders left holding the bag, so a move in the other direction is likely. In this case, the big sellers have nearly all sold their gold and silver, so even a small amount of buying pressure can push the metals back up. For a recent case in point, the previous low position in net-long gold contracts was February 2016, when gold traded below $1,100. Gold promptly shot up to $1,365 by July 2016. The previous low in net-long contracts for silver was August 2015, when silver was under $15 per ounce. The price of silver reached $20 within a year. When selling pressure is exhausted, greater profits are possible.
CARTOONS | Henry Payne
View Cartoon
The rationale – I’m tempted to say the ignorance – of the traders is that the Fed might raise interest rates again since last Friday’s jobs report was better than expected, but we have already shown how gold has risen after most of the previous 20 interest rate increases by the Fed, going back to 2004. Pundits also tell us that Europe may start raising rates soon – or at least stop their “quantitative easing,” however they keep going the “easy money” route, adding 60 billion euros a month ($800 billion a year) in new money.
In short, smart investors can use the latest dip in gold and silver to bet on a big bounce back coming soon.
A “Flash Crash” in Stocks and Silver Struck Last Week
Americans first experienced a “Flash Crash” on May 6, 2010, a 36-minute stock market crash of epic proportions. The carnage began at 2:32 pm Eastern time, when the Dow Jones Industrial Index plunged almost 1,000 points (998.5, to be exact) in about 15 minutes, only to recover that loss fairly rapidly, by 3:08 pm. The electronic bid prices for dozens of stocks and exchange-traded funds (ETFs) fell to a penny a share. Investors who had “stop loss orders” or automatic sell orders were wiped out in trading that day.
Article continues here...............https://townhall.com/columnists/mikefuljenz/2017/07/14/gold-could-be-set-for-a-big-bounce-back-rally-n2354670
Comments
Bring it on ......
Cheers, RickO
It's been a long time in coming. Fingers crossed. Curious though why gold hasn't rallied in the face of a fairly significant drop in the dollar over the last 6-8 months. I'm sure there is a very good conspiracy or manipulation theory to explain why "fundamentals" haven't been fundamentals.
Knowledge is the enemy of fear
Not too long ago it was SO close to $1300.00, my point where I thought I MAY sell a few ounces that I purchased for a bit less than 1K. More of a psychological thing for me, "Look, I made some money on PM's!"
I have no need to sell, always looking for deals.
'Have A Great Weekend'.
Everything and anything could be set for a big bounce...
My prediction PM;s will continue to drop as America gets Greater and GREATER! $4oo gold $6 silver Is my hope!
Don't worry, in the next 3-4 years I expect metals to go up...
I'll believe a big bounce-back rally when I see it.
I knew it would happen.
Gold $1900 and silver $47
Someday.
I may not live long enough to see it.
But it will happen eventually, probably
Liberty: Parent of Science & Industry
Doesn't an increase in interest rates cause an increase in the cost of servicing the national debt? Doesn't this require an increase in the amount of borrowing necessary to service this ever increasing debt? Doesn't this vicious cycle of ever increasing borrowing to pay the ever increasing debt cause a rise in inflation? What effect does rising inflation have on the price of gold?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
_Doesn't an increase in interest rates cause an increase in the cost of servicing the national debt? _
Ba-Boom!
I knew it would happen.
This is true, however, increased interest rates will also increase tax revenues and promote economic growth as a all that money on the sidelines-as derryb has noted-seeks higher return. The ability to service any added interest expense will be easily met.
Eventually the debt load will be too much, but this "collapse" the PM bulls eagerly await, is still far away.
Knowledge is the enemy of fear
Near zero interest rates are here to stay. The trillions in bets on interest rate related derivatives will keep rates down.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I'm thinking $900 range will be gold bottom range. Time usually heals all wounds. A smart person told me things seems to move in ten year cycles. 2018 may bring some big changes.
your chart is that of gold spot price. It reflects the supply and demand of futures contracts, not that of physical gold. Perception of the strength of the currency is what determines the value of physical gold. Interest rates, central bank balance sheets and most importantly debt are all factors in the rise and fall of the currency. Gold only reflects this rise and fall. While gold will proportionately keep pace with a slow moving currency devaluation, a rapid decline in currency value is normally met with much more rapid gains in gold price as everyone scrambles to get into gold.
How far away a major decline of the currency is is not as important as how rapidly it can occur. The window for those not already in metals will be very narrow. Holders of the dysfunctional Venezuela Bolivar recently learned this lesson.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
your chart is that of gold spot price. It reflects the supply and demand of futures contracts, not that of physical gold
You never cease to amaze me derryb.
Knowledge is the enemy of fear
Does anyone know someone in Venezuela that loaded up on PMs? How are they faring down there? Fat and sassy, I assume.
Not fat and sassy, but well protected from the currency destruction.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Does anyone know someone in Venezuela that loaded up on PMs? How are they faring down there? Fat and sassy, I assume
The folks that loaded up on Venezuelan equities did much, much, much better than those who loaded up on gold.
Knowledge is the enemy of fear
I'm not sure about the future. That's why I have different baskets. Even the eggs in them differ.
Those that got out of the country probably did the best. I don't even want to venture a guess as to how many ounces of silver a loaf of bread would cost, if any were to be had, and if it you could make a transaction with a reasonable expectation of not getting robbed or dying. But at least they have gold and silver.
You have effectively stated the major misconceptions of a currency devaluation.
Knowledge is the enemy of fear
Who is trying to sell investment newsletters this week?
Simple. There is no limit to the supply of precious metals futures contracts as long as there are interested buyers (longs) and sellers (shorts). Normally in a futures market the paper price is determined by the underlying asset's value and it's fundamentals, such as limited supply, can be applied when determining that value. In the case of precious metals the price of the underlying asset is being perversely determined by limitless futures trading. When a limitless supply of paper agreements is used to set the price of the limited supply of anything there are no underlying asset fundamentals in play.
Most people do not realize that the COMEX does not facilitate the buying and selling of precious metals. It is simply a platform for hedgers and speculators to trade derivatives. Unfortunately the volume and direction of these paper contracts, and not fundamentals of the underlying asset, currently determine the price (not to be confused as the value) of the real stuff. The value of the real stuff, while not currently in agreement with the price, is determined by it's fundamentals. The difference in price and value of physical metals is what continues to make them a screaming buy. They will remain extremely underpriced as long as the COMEX maintains control over this inverted pricing mechanism. PM fundamentals are not dead, they are only being pushed under the rug by an out of control and broken pricing mechanism - a mechanism that free markets tend to fix.
Many stackers are preparing for economic or political chaos. But there are some, in addition to seeing a need for currency protection, that simply see great opportunity in the approaching COMEX precious metals mayhem. This is what will produce gold's biggest rally.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Now, if only one could predict such mayhem.....
Well, predict WHEN such mayhem will commence... that it will is fairly predictable. Cheers, RickO
Some die hard "stackers" have been predicting imminent financial Armageddon for as long as I've been a forum member. If you are still around, you know who you are. I've learned to ignore, what I consider, extremist views on all aspects of life. Live long and prosper.
It's not wrong to prepare for the worst. Stacking silver and gold is a bad way to go about it though.
Financial crisis comes in many forms. Financial Armageddon is at the extreme end of the scale and highly unlikely as there will always be a form of money for barter. A much lesser form of financial crisis surfaced in 2008 and gold doubled in price. A constant, hidden crisis is the slow devaluation of the currency. Do not confuse foresight of financial crisis with that of the end of the world prediction. Financial crisis in some form will always be on the horizon until sound monetary policy surfaces and until the economy is no longer ruled by debt and unaccountable bankers.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Derryb, there is so much wrong in your comment a few posts above that it's not even worth correcting.
The USA has been through many financial crises in its history. PMs, while performing well, have always been an also ran vs other assets.
You seem excited in thinking gold doubled, yet ignore that equities quadrupled.
All assets go up and down, but productive assets will always outperform nonproductive assets.
Knowledge is the enemy of fear
until bubbles pop. Funny how the nonproductive assets seem to be the safehaven choice when those productive assets become overbought.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Gold was up like 2 bucks in 2008...
...gold was up like 200 bucks in 2009 when the real estate financial crisis settled.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
And so those productive assets drop to a level they were at just a few years prior and quickly rebound...where as when nonproductive assets bubble it takes decades to rebound.
BTW----there are no "mass asset" bubbles anywhere. Surely a few equities are overowned and pockets of real estate (mostly in Canada) are high, but the overall respective markets are not close to bubblicious.
Knowledge is the enemy of fear
So was the SP500.....and it paid a dividend.
Knowledge is the enemy of fear
I'm resigned to the fact that "they" can create as much money out of thin air as they want with no impunity, and that "they" can suppress the price of gold as needed with naked shorts up the wazoo with apparently no ill consequences.
That being the case, they still can't kill gold as money. Which is one reason I still buy it, and silver, and platinum. I'd still much rather have precious metal than bogus notes and promises from people who continually show that they have absolutely no integrity whatsoever.
I knew it would happen.
Now, now. You shouldn't feel that way.
"They" can get your gold, silver and platinum, too.
Here's a warning parable for coin collectors...
The Gold Reserve Act of 1934, as amended in the 1970s, establishes the U.S. Treasury Department's Exchange Stabilization Fund and authorizes it to trade secretly in all markets.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Time for one of these...
Boo!!
Knowledge is the enemy of fear
No one is after you.
You're making progress. Now open the other eye.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
You and I will be both be long dead derryb. I wish you would open your eyes and see that.
Knowledge is the enemy of fear
Deflation on deck? What that means for gold
"Contrary to popular belief, gold is not an inflation hedge. We had inflation every step of the way from 1980 to 2000 with gold falling from $850 to $250 along the way."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Some on this board have said gold isnt a very good inflation hedge a long time ago.
What would be really nice to see would be a graph equities and real estate since 1971 with the superimposed comments like he shows with gold. I think then investors would have a much better view of the long term trends of other assets. The cycle for gold shows a few violent but short term rallies followed massive collapse and years and years of stagnation. This trend completely removes the most powerful force of investing----compounding.
But, just as we have all this "future promise and potential" for gold, we have the same for equities and real estate---upward trends that have been in place for centuries.
Knowledge is the enemy of fear
We had inflation from 1980 to 1982, 1989 to 1994? News to me. Recall the massive housing bust by 1988-1989. That didn't bottom until 1993-1996. Not much "inflation" either in summer 1987-spring 1988 during the stock market flash crash. That generally led into the malaise of the 1989-1993 bear markets/recession. Just because stocks were generally going up doesn't mean there was inflation throughout the economy.
What seasoned, accurate, and long time gold analyst ever said gold is an inflation hedge? Gold is hedge against lack of confidence in the govt/it's currency/it's economy/it's total sovereign debt. It tends to mimic real interest rates. Gold has rallied during either inflationary or recessionary times. But, there's more to the equation than just those.
Ever since the big banks/FED/CB's decided in 2013 to take QE to infinity (Central Bank of Japan in particular), there's really been no limit to where stock markets, and the upper 1% of collectible markets can rally to. As long as the CB's (using key-stroked fiat money) and private corporations (via cheap debt from the same key-stroked fiat money) are the biggest buyers of the world's stock markets, the "sky's the limit"....lol....until those guys decide to turn off the lights and sit back on all the cheap tangible assets they've bought over the past 5-10 years.
Silver rallied from 1993-1998. Gold likely would have done the same thing if not for reintroduction of the old London Gold Pool (G7 from 1961-1968) in the new form of the Rubin/Summers strong dollar policy of 1994-2001. They even had the major gold miners fully hedging their own production for profits. Barrick gold made $BILLIONs shorting gold in the 1994-2002 period. Ironically, the Rubin/Summers Gold Pool 2 (Rubin was a member of the orig LGPool) lasted about the same 7 years as the first one....until they ran out of other's people gold to sell, lol. The Bank of England from 1999-2001 had to sell over half their gold reserves (400+ tonnes) to bail out the short gold bets of European bank(s) (rumored to be Deutsche). The 1999 gold spike on a probably derivative's bet failure (to $325+) probably was the first shot over the bow to begin the next gold bull market. As I said earlier, it would have begun in 1993 as silver did....if not for the antics of the US Gold Pool and it's G8 buddies. Silver in fact had a typical 18 year bull market rally from 1993-2011....very similar to the 1962-1980 rally.
In reviewing a ton of charts the past few months, I agree with some of the better chartists/analysts that gold has seen its low. Commods in general have seen their lows....and markets are generally headed up together in a blow off top of sorts, stock market leading the way. The one thing that bothers me is that gold had an unfilled break away gap back in 2009 at $1040-$1045. It was specifically mentioned shortly after it occurred by analyst Howard Katz....who said by not needing to go back for that gap....gold was showing incredible strength. In fact, that was what happened the following 2 years. It didn't come back near that gap until Nov/Dec 2015 when gold bottomed at $1046. I thought that gap fill would be a slam dunkeroo....maybe even back to $1030, $965 since gold took all that effort to get back down there. Very disappointing it didn't fill because of that huge importance....and a dark cloud still out there.
Well golly, i wish you would be right about gold going up so i could sell a couple double eagles and buy a Sea Doo
Liberty: Parent of Science & Industry
The first upcoming big rally will immediately follow an overdue equity correction.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I wish you would be right
Liberty: Parent of Science & Industry
Since crypto currencies have have joined the precious metal war against fiat currency, the effort to contain CCs might weaken the effort to contain precious metals. Metals should benefit from the threat CCs impose to the king's money.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
That would be great if you were right and it turns out any of that ever happens
Liberty: Parent of Science & Industry
The collapse that will trigger PMs will not be one of debt, it will be one of confidence in central bank policy. A collapse from debt will be reflected in the value of the currency. Loss of faith in economic policy/direction is much closer.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey