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
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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