Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

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

6 Critical Money Making Rules