Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18
Stock Market Investing 2018 - “I Hope I’m Making a Bad Buy” - 11th Jan 18
S&P 500 Fluctuates As Stock Market May Be Topping, Or Not? - 11th Jan 18
SPECTRE Microprocessor Security Flaw - Big Brother = You - 11th Jan 18
7 Market Forecasts 2018 from the Brightest Financial Minds I Know - 11th Jan 18
It’s Not Enough to Be Contrarian - 11th Jan 18
Stocks That Take One for A Roller Coaster Ride Through the Thick And Thin Of Every Single Investment Made - 11th Jan 18
Police Arrest Tree Protester on Meersbrook Park Road, Sheffield - 10th Jan 18
Stock Market Aggressive Sell Signals - 10th Jan 18
The 2018 Decline in Precious Metals - 10th Jan 18
Gold Hits All-Time Highs Priced In Emerging Market Currencies - 10th Jan 18
TMV : 3X Leveraged Short on US Treasury Bonds - 10th Jan 18
Here are the Key Levels in Gold & Gold Miners - 10th Jan 18
Investment Advice That Probably No One Gave You Before - 9th Jan 18
S&P 500 Sets Another Record, But This May Be Short-Term Top - 9th Jan 18
Failure of War Party Foreign Policy - 9th Jan 18
Buying a Land Rover Discovery Sport HSE Black - Interior Review - 9th Jan 18
More Important Than Gold’s Bottoming Price - 9th Jan 18
Getting Bullish on Gold - 9th Jan 18
Share Market Is One Of The Most Encouraging Opportunity For Young... - 9th Jan 18
Stock Market Close Call... - 8th Jan 18
If You Hold VT Or Any Other Global ETF, You’ve Put All Your Eggs In One Basket - 8th Jan 18
Blowup with China or North Korea Could Change Almost Everything Overnight - 8th Jan 18
The Real LORAX and Once-ler's of Sheffield's Street Tree Felling's - 8th Jan 18
Share Trading is an Interesting for Everyone - 8th Jan 18
The Way to the New Cold War - 8th Jan 18
A little Stock Market Euphoria? - 8th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

13 Reasons Why to Own Gold After Breaking Above $1300

Commodities / Gold and Silver 2017 Sep 01, 2017 - 01:07 PM GMT

By: Submissions

Commodities

Michal Matovcik writes: Gold is showing decent strength going into the end of summer breaking above strong psychological and technical level of $1300 per ounce which can finally confirm the beginning of long-term bull market. At the same time, gold reached new highs for 2017.

There is no lack of fundamentals supporting the move upwards. But as gold traders got used to during recent years, the "fat fingers" smashing gold to the downside during ridiculous trading hours in low liquidity markets has no limits. So I always remember the old saying used by many long time traders, "Markets have the ability to stay irrational longer than our accounts solvent". 


Following are 13 main drivers of the coming long term precious metals bull cycle:

  1. Unlimited quantitative easing by all major central banks with no end in sight.
  2. Bond market long term bubble supported by artificially suppressed interest rates.
  3. Stock market bubble supported by easy money and stock buybacks.
  4. Geopolitical risks at the record high and still growing.
  5. Algorithmic trading systems accounting for the majority of liquidity in many important markets.
  6. Fake accounting of real losses in the banking system.
  7. Housing market bubble re-created by long-term interest rate suppression.
  8. The bankruptcy of many countries and states worldwide is slowed down only by central bank interventions in many markets.
  9. Central banks propping up the stock markets.
  10. Derivatives markets risk not addressed by any monetary institution.
  11. Lack of responsible behavior by many major world leaders.
  12. Media outlets spilling propaganda about the real state of affairs and economy.
  13. Crypto currency fans have the same motivations as precious metals investors.

The list can continue, but is sufficient to understand why many smart investors and families continually invest in precious metals for wealth preservation. With more debt and debased currency you can create nominal growth you like for  a very long time but you just can’t replace wealth generation. This realization is probably the strongest factor that will be supporting the gold success story in the future.

But the shocking part is that I can't see any real and honest efforts to resolve the above mentioned issues. So every year that we witness postponement of dealing with  it, helps accumulate more pressure in the gold market. And we all know when the pendulum starts to move from one extreme, it almost never makes a stop in the middle but swings to another extreme. In western world, the wealth holders of today didn't witness this situation for several decades.

Gold price technical picture

Gold is looking technically well positioned, having tried to break above the 200-day moving average 4 times this year. For the past 30 days, we were moving above all of the commonly watched averages,  50, 100 and 200-day moving average. 

Also, we can see some most basic long term buy signals like the crossing of the 50 and 100 day moving averages above 200 MA. All of the averages were retested several times in the past few month so gold is free to move up.  

$1300 level in gold marks the April and June top of the market and it is the price where we oscillated right before Donald Trump was elected in November 2016.

On 28th of April gold broke this important barrier. What is more important gold was able to reach $1325 and close the session above $1300 and hold there two consecutive session what may be a confirmation of true break-out. It is expected that there will be at least one if not more attempts to retest this level from above.

Interesting news for gold investors from around the world

Gold smuggling into Japan rising expontentially

Glad gold is safe! 

Suddenly there was a need to publicly present that gold is still in Fort Knox. 

The American public is so lucky it can take the word of a former Goldman partner who would be only the third secretary of the Treasury to go inside the  Fort Knox vault since it was created in 1936 by President Franklin Delano Roosevelt.

Germany repatriated gold from US ahead of schedule

Why such a rush to make it 3 years ahead of schedule?

Germany's repatriation of 674 tonnes of gold - or 53,780 bars of gold - is complete, lifting the amount of gold held domestically to 1,710 tonnes or 50.6% of the total. Going forward, Germany will still have 1,236 tonnes held at the NY Fed, and another 432 tonnes of gold at the Bank of England.

Gold mining output at its lowest level since the financial crisis says Australia and New Zealand Banking Group.

Gold production has fallen 2 percent in the first five months of 2017 from the same period a year ago, Hynes added, citing data from the World Bureau of Metal Statistics. Production in the month of May alone was down 3.1 percent from a year ago.

Which is lowest mark for global gold production since the financial crisis of 2008.

According to the World Gold Council, total bar and coin demand grew 13 percent in the second quarter of 2017, driven by a strong 56 percent increase in Chinese demand.

Australia & US Gold Mine Supply vs Exports

Gold production costs not attractive for new mine development

Today’s prices (red dotted line below) are not much above production costs for a majority of mines. The average mine pays $1,083 to pump out an ounce of gold, leaving a couple hundred dollars of profit at current rates.
 
The chart above shows the global cost curve for gold mining — in terms of all-in costs. That includes operating costs, sustaining capital at mines, and development costs to bring new ounces of production online.
 

That equates to under a 20% profit margin. Not terrible, but not likely to spur a lot of new mine development.

Commitment of Traders (COT) Reports Now Fairly Bearish For Gold And Silver

In gold especially, speculators (always wrong at big turning points) have loaded up on long futures contracts while closing out their short positions. The commercials (always right at big turning points) have done the opposite, closing out long positions and going aggressively short.

Another point that bears repeating is the temporary nature of this indicator. Eventually, fundamentals in the form of surging demand for physical precious metals will swamp the paper market. Gold and silver will soar regardless of which futures players are long or short.

 Update on the various segments of gold (and silver) demand from around the world, You Are Being Lied To About “Low” Gold Demand.

This clearly signals that institutional investors—the primary buyers of gold ETPs—see a crucial need to have exposure to gold.

Gold Exchange Traded Products Inflows 2017

Will the world awaken to gold this winter?

We are coming close to the end of summer and with the break above $1300 level, we put the first dent in the 6 months sideways movement of gold. I expect gold to continue in an upward trend from here and hold above $1300.

Not because the negative trends in economy and world society are new to anyone interested in gold, but other investment opportunities are getting so limited and crowded that even gold can become a savior for masses looking for wealth preservation and profit. Everyone needs to remember that gold market is so small that even small money relative to bond and stock market can move it up pretty quickly.

Holding physical gold, high-quality gold junior miners, or mineral banks is a way how I prepare myself to profit from current market situation.

Still what surprises me most is that I often find recommendations even from gold bugs to hold around 5-10% in gold exposure. I don't really understand why would I hold such a small exposure considering the issues facing the world. Facts supporting reasons why people invest in gold mentioned in the beginning threaten the stability of almost every major market. So why would I want to be exposed to these other markets more than to gold?

By Michal Matovcik

https://www.pinealend.com

© 2017 Michal Matovcik - 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.


© 2005-2018 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