Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Stocks Boom During 2010

Commodities / Gold & Silver Stocks Nov 10, 2009 - 06:23 AM GMT

By: Neil_Charnock

Commodities

Best Financial Markets Analysis ArticleGold has just breached US$1100 after a strong move following the purchase of 200 tonnes of gold bullion by the Reserve Bank of India from the International Monetary Fund.  This overhang had been troubling “ye of little faith” observers of gold. 


The same day the Reserve Bank of Australia raised rates by 0.25% whereas many had factored in a 0.5% rise so the AUD temporarily dropped with the gold surge – and away went the gold stocks Down Under too.  Gold has been languishing in AUD terms as our currency strengthened over these past few months but I see some positive signs ahead.

I have drawn some corresponding lines and circles on the chart below and the largest circles mark the tops in the AUD gold price at almost $1,600.  There was negative divergence between price and RSI at this top and the reverse pattern has emerged over a period of many months now enforcing the power of these trend reversal signals. 

Also note the MACD has now reached the “0” level and may shortly cross over which is also a positive signal.  It is hard to see the $1200 rise on this chart but it is there and it could point the way to a solid AUD gold price rally ahead in the coming months.

The Economy and Ramifications for Aussie Gold Stocks

Despite some promising figures coming out of Germany on industrial production and exports we are still seeing major corporate and bank stress in the USA.  The US Fed has just reported that GMAC was only one of 19 stress tested banks that required (in May) a capital injection to meet obligations if (?) the economy softens.

As a major player in the US auto industry, GMAC has already received $12.5B and has been unable to raise the $11.5B that regulators said it needed back in May this year.  Now it has its hand out for more bail out money and they are not alone.  However Timothy Geithner (Treasure Secretary) stated that the capital raising success of the other companies in the credit markets showed that the financial sector has stabilized since January 2009.

He then went on to suggest that credit is coming back “but we need to reinforce that improvement and ensure that small and medium-sized business can borrow and create jobs.  The jobless nature of the “recovery” has so far indicated this has not yet happened – credit is for the “A List” at this stage as I have been stating for some time. 

No wonder the Indian CB and others have chosen to become net buyers of gold.  Diversification away from and an unwinding of paper asset weightings in foreign reserves is a high priority but the trick is to do it secretly or at least slowly so as not to upset the status quo.  This is a delicate game being played out and I am sure India was delighted to get the chance to purchase this parcel to add to their already healthy gold reserves.

On the home front - consumer confidence in Australia is at a high level which will probably be good for Christmas sales.  There are many mixed signals emanating from various parts of the world at this time and some investors have been left wondering what to do and when.

Many years back Japan was in a similar situation (down hard – interest rates near zero and things better elsewhere) and the zero interest rates on offer were taken up “large”.  Borrowers were happy to borrow massive amounts of Yen and “carry” that to other countries where they could invest for a fixed return – easy money on a highly significant scale.  This assisted to drive economic activity outside Japan for several years.

Now we have the USA in the same unfortunate situation that Japan was in and interestingly we have Germany, India, China, Russia, the Middle East, Brazil, Canada and Australia all doing much better.  The UK and the Pound are also in a similar situation to the USA in terms of the magnitude of their deficit and bank debt levels.

This imbalance offers opportunity for a massive carry trade to swell and once again provide bubbles in these other countries.  The USA and possibly a quiet UK carry trade will increase as these two economies struggle to gain traction enough to increase their interest rates without an economic implosion.

Fortunately many US corporations have operations offshore that will benefit from this activity and the US & UK banks gain valuable time to trade for profits and begin to slowly unwind bad debts.

Any exogenous financial event of magnitude would cause capital to flood back to the US and the USD to rise sharply exacerbating the unwinding of this dangerous trade in these other countries so don’t underestimate the risk here.  But for now the framework is in place for new bubbles to form and there are great rewards on offer in 2010 if the system holds together. 

I suspect it will hold together for now and everybody will get time to become really bullish before we reach the inevitable point when the debt and inflation piper must be paid. 

The struggle between paper and gold will be on in full force and I see very little to stop the rise in gold in all currencies.  Confidence in the USD and the Pound (and all paper for that matter) is shot to pieces at the higher levels in banking and amongst savvy investors so we will just keep building our precious metal holdings at every opportunity we get.

The Chinese are just about to take over as the largest consumers of gold in 2010 ahead of India.  We have seen this coming a long time as the Chinese were only just allowed to own gold a few years back after decades of a basic denial of this right.  The sales infrastructure has been rolling out for years now and this program is now coming to fruition for the Chinese.

Currencies will fluctuate and so will gold but the trend is clear – we are going up in gold value in all currencies.  Throughout 2010 a bubble will form in equities and this will include gold stocks all over the world.   This is never a straight line and personally I thrive in such conditions so I am more than happy with this situation.

Short term I am seeing the expected selling into price rises from the funds and the choppy November is shaping up as I thought.  I am fully expecting a slightly weaker second half of November and a relatively quiet December for gold stocks but only within an overall uptrend.  Individual stocks will be topping throughout November for shorter term traders and this can be profitable to play.

We are running a special bonus time promotion for our Gold Members area until the end of November and also have a rewards program for subscribers.  We aim to educate investors with these articles and provide even deeper education for subscribers.  Site work has been intense lately and I am looking forward to getting stuck back into this area with renewed vigor. 

We created a file to assist global investors to find the Aussie gold stock codes in the international markets and it is available for subscribers along with an array of other helpful and time saving investment tools.

This gold bull has long legs and it is only just getting exciting for those that can see the full picture.  I hope you can join in the feast for 2010 and maybe into 2011 on these gold stocks.  Of course we have to watch the trends and market dynamics as they unfold to ensure we stay on the right side of the trade at all times – only Mr. Market is right & it is our job to stay with it.

Good trading / investing.
Regards,
Neil Charnock

www.goldoz.com.au

GoldOz is currently developing a Member area and has added further resources for free access. We have stepped up our research and stand by to assist investors from all walks of life. We sell an updating PDF service on ASX gold stocks from only $AUD35 for 3 months – the feedback is grateful and enthusiastic because we are highlighting companies that have growth potential and offering professional coverage of the sector. GoldOz web site is a growing dynamic resource for investors interested in PGE, silver and gold companies listed in Australia , brokers, bullion dealers and other services.

Neil Charnock is not a registered investment advisor. He is a private investor who, in addition to his essay publication offerings, has now assembled a highly experienced panel to assist in the presentation of various research information services.  The opinions and statements made in the above publication are the result of extensive research and are believed to be accurate and from reliable sources. The contents are his current opinion only, further more conditions may cause these opinions to change without notice. The insights herein published are made solely for international and educational purposes. The contents in this publication are not to be construed as solicitation or recommendation to be used for formulation of investment decisions in any type of market whatsoever. WARNING share market investment or speculation is a high risk activity. Investors enter such activity at their own risk and must conduct their own due diligence to research and verify all aspects of any investment decision, if necessary seeking competent professional assistance.

Neil Charnock Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in