Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Dow Stock Market Dow Trend Forecast Current State - 22nd Apr 21
Gold Rebounds Amid Positive Economic Reports - 22nd Apr 21
China's record first quarter fuels strong expansion in 2021 - 22nd Apr 21
Gold Price Next Key Level - 22nd Apr 21
Here's What to Look For When Hiring a Real Estate Agent - 22nd Apr 21
Ethereum EIP 1559 and Raven Coin - 21st Apr 21
Gold, USDX: The Board is Set, the Pieces are Moving - 21st Apr 21
World Economies Need to Find a Lot More COPPER! - 21st Apr 21
DogeCoin CRASH! Time to Start Mining BOODGIE Coin! Crypto Mania 2021 - 21st Apr 21
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold – The More Hate, The More Bullish We Become

Commodities / Gold and Silver 2015 Aug 03, 2015 - 01:02 PM GMT

By: SecularInvestor

Commodities

After gold’s breakdown on Sunday July 20th, we have seen an avalanche of negative commentaries. Admittedly, from a chart perspective the breakdown does not bode well. We have to get that straight. The technical breakdown is going to lead the price of gold in US dollar terms towards $1,000 /oz, potentially lower.

But if we compare this breakdown in gold with the one in April and June of 2013, we would say the one from last week is a small dip on the long term chart while the one of 2013 was a real collapse. However, the negativity that was triggered by the latest small price drop is much stronger.


Consider the following mainstream media headlines of the last week:

  • “Let’s Be Honest About Gold: It’s a Pet Rock” (Wall Street Journal)
  • “Gold is Doomed” (Washington Post)
  • “Gold Is Only Going to Get Worse” (Bloomberg)
  • “Two Reasons Why Gold May Plunge to $350 an Ounce” by (Market Watch)
  • “Gold’s tumble is far from over” (CNBC)
  • “Deutsche Bank says gold’s fair value is $US750 an ounce” (AFR.com)
  • “Wall Street Bets Gold Drops Below $1,000″ (Barron’s)
  • “Are There Any Reasons to Own Gold?” (Bloomberg)

From those articles, we selected the three most impressive quotes:

  • “Gold is a weird relic of antiquity.”
  • “Gold won’t just drop below $1,000 an ounce but, eventually, to a far, far lower price.”
  • “Gold is out of fashion like flared trousers: no one wants it.”

News headlines are a great way to gauge sentiment. And they are simply telling a ‘hate story’ currently.

In particular, that one last quote of the ones above is very interesting: “no one wants it.” Really? Nobody? As in, “this time must be different?”

Let’s face it. Markets can become extreme, but markets do not remain endlessly at extreme levels. They also do not trade endlessly in one and the same direction.

Along the same lines, sentiment as measured by statistical methods is simply confirming what we see in the news headlines. Sentimentrader’s optimism index for gold stands at 12 on a scale from 1 to 100 (the latter being the highest value). And guess what, gold has currently the lowest reading from all assets (including currencies, commodities, stock market sectors).

The bullish percent index for gold miners, which measures the number of stocks in a bullish trend, is standing at zero.

The sentiment surrounding gold can’t almost get worse. But if ‘everyone’ is bearish, and there are no more sellers left to sell, what will take place in such an environment? Indeed, buyers will pop up.

Although we do not believe that markets trend higher or lower based on ‘reasons’, we still think there are two signals that indicate there is not much downside left for gold.

First, there are smart market participants, always. They also see the current sentiment. If the majority of market participants do not want to buy gold, then smart investors will do the opposite at the time selling is exhausted: go long in that market.

We believe those ‘smartest’ participants are the commercial traders in the COMEX futures market. Please note that we do not promote COMEX, as we firmly disagree with the way COMEX works (price discovery in gold is meaningless given the futures market). But the positions of market participants at COMEX provides interesting insights. Today, we see that commercial traders are writing history: they hold the smallest net short position ever (since the COT report has been published in 2006).

In other words, they are positioned for a rally. And they are doing so right at the time the mainstream media is screaming that “no one wants gold.”

Source: Sharelynx

The second indicator we rely on is the top of crude oil and gold in 1980. Even if gold would go towards $850 /oz, it would be acceptable to believe it remains in its long term bull market, as it would simply retest the 1980 high.

From a secular point of view, the 1980 top was the highest point of the previous secular bull market.

We find a similar situation in the crude oil market. The price of crude oil peaked in 1980, after which it was tested 24 years later (when it broke out) and 29 years later (support did hold). Crude is now close to test that price level again.

Source: LY Advisors

Let’s not forget that the price of gold and crude oil are reflecting the world around them. The only possibility to have oil and gold prices in the trading range of the 80s and 90s, is a deflationary bust of historic proportions. The monetary masters of today are doing ‘whatever they can’ to avoid deflation, and that should, in the end, translate in the price of oil and gold.

Please mind that we are not saying that gold is about to start a strong bull market right away, similar to the one between 2004 and 2007. Our point is that the downside is limited. Even after a bear market rally which we anticipate in the short term, the price decline can continue, but it should have sufficient stopping power around the $850 /oz level. That makes for a 15% to 20% downside potential.

So rather than panicking, we look at the level of hate surrounding the gold market, and we become more bullish by the day.

We believe that smart investors should be preparing their shopping list right now, instead of reading mainstream media headlines about gold. At Secular Investor we are providing assistance by selecting the very best gold and silver miners.

Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.
 
Follow us on Facebook ;@SecularInvestor [NEW] and Twitter ;@SecularInvest

Source - http://goldsilverworlds.com/

© 2015 Copyright goldsilverworlds - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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