Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17
Protect Your Savings With Gold: ECB Propose End To Deposit Protection - 14th Nov 17
Gold on the Ledge, Trend Forecast - 14th Nov 17
The Unbearable Slowness Of Fourth Turnings - 14th Nov 17
Silver Sign’s Confirmation & More - 14th Nov 17
Could This Be The End for Tesla? - 14th Nov 17
Harry Dent’s Fourth Cycle: More Evidence of Stock Market Downturn - 14th Nov 17
Why Having Good Credit Is Important If You Want to Invest - 14th Nov 17
The Bitcoin Bubble Explained in 4 Charts - 13th Nov 17
How the US Has Secretly Subsidized China to Produce Eco-Unfriendly Solar Panels - 13th Nov 17
The Increasingly Unstable Middle East Must Be On Every Investor’s Radar - 13th Nov 17
Stock Market Critical Supports are Being Challenged - 13th Nov 17
The One Chart All Investors Should See Before 2018 - 13th Nov 17
Short-Term Stock Market Uncertainty Following Recent Rally, Will Stocks Continue Higher? - 13th Nov 17
Is Hillary Just the “Fall Guy” for the Intel Agencies and their Moneybags Bosses? - 12th Nov 17
Stock Market Correction Phase - 12th Nov 17
Finally, The Fall Of The House Of Saud - 12th Nov 17
Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - 11th Nov 17
E-franc, E-krona... E-volution? - 11th Nov 17
Gold Investment Stalled - 11th Nov 17
Smart Ways to Get Loans Online - 11th Nov 17
What Can Pot Teach Us About Economics and Government? - 10th Nov 17
Can Stocks and Bonds go Down at the Same Time? - 10th Nov 17
Gold Market 2017 Will We See a Replay of 2015 and 2016? - 10th Nov 17
Oil markets turn bullish with shift to backwardation - 10th Nov 17
The Strange Behavior of Gold Investors from Monday to Thursday - 10th Nov 17
Where to Start Your Cryptocurrency Company - 10th Nov 17

Market Oracle FREE Newsletter

Forex Trading Free Week

Gold Mining Stocks on Verge of Breaking Out!

Commodities / Gold & Silver Stocks Jun 30, 2010 - 10:41 AM GMT

By: Claus_Vogt

Commodities

Best Financial Markets Analysis ArticleThe long-term story for a gold and a gold mining stocks bull market is clear and easy to grasp: Dubious monetary policy and irresponsible fiscal policy with government debt rising all over the world are a surefire recipe for a surging demand in gold.

Toss in stagnant or even declining supply, and you have all the ingredients for much higher gold prices.


But …

I Don’t Like Being a Gold Bull

That’s because rising gold prices are a byproduct of lousy economic and political conditions.

Indeed, gold does not create wealth. Yet it can help conserve your capital in complicated times. Then when the economy finally hits bottom and a new long-term up trend emerges, you’ll be in the ideal position to take advantage of the turn around.

However, now is not the time to dream of the next long-term up swing. Instead, it’s the time to prepare for the next cyclical slump while the …

Recession Warning Is Getting Stronger

That’s the signal the Economic Research Institute’s leading economic indicator is sending us. Last week I drew your attention to this important indicator when it declined to minus 5.7 percent, a reading low enough to be interpreted as a recession warning.

Now … it’s down to minus 6.9 percent, strongly amplifying the message of a coming recession.

With this background the behavior of the bond markets starts to make some sense …

You see, longer-term government bonds would normally be considered extremely risky whenever there are inflationary implications of high and rising government debts, which would send interest rates soaring. And that is indeed our situation today.

But interest rates haven’t risen this year; instead they’ve been falling! Take a look in the chart below.

30 year T bond Chart

So why aren’t interest rates rising?

During times of uncertainty, short- to medium-term buying pressure for safe haven investments, including long-term Treasuries, can trump longer-term inflation fears. And that is exactly what has been going on during the past months, which tells me the economy is headed for a recession.

Gold Bugs Index On the Verge of a Breakout

At the same time Treasury yields have been dropping, gold and gold mining stocks have been rising. How is this possible?

Well,

  • Maybe the gold market is considering the short- to medium-term potential of a double dip recession.
  • Maybe the gold market is already reacting to the longer-term inflationary implications of the above mentioned monetary and fiscal policies.
  • Maybe the two markets — Treasury bonds and gold — are currently playing different time frames. And maybe this decoupling will continue.

At least one thing is crystal clear: On the chart below you can see the Gold Bugs Index is at a very important juncture. It has crept back up towards major technical resistance at the 500 to 520 area.

A breakout above this massive resistance would send a very strong bullish message for the gold market.

Gold Bugs Index Chart

Classical chart analysis tells us that the breakout scenario has a high probability. Price action since December 2009 looks like a triangle. And triangles are trend continuation formations.

In the bigger picture, the price movements since March 2007 looks like a huge cyclical correction ready to break out to new, all time highs.

Bellwether Newmont Mining Looks Ready for a Breakout, Too!

The bullish chart pattern of the Gold Bugs Index gets support from bellwether Newmont Mining (NEM). As you can see on following chart, it’s zooming upward.

Newmont Mining Chart

My suggestion: Keep a close eye on NEM. On Monday it hit a new high of $62.62. If this stock gets enough interest to establish itself above this level, it’ll probably signal the next strong up leg in the gold bull market.

Best wishes,

Claus

Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2017 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

Catching a Falling Financial Knife