Doc’s thoughts on when the gold price will move higher
Click download link to listen on this device: Download Show
A war will not move gold as a general rule. Not in predictable ways anyway such as “when there is a major international conflict gold always rises” or some other such nonsense. This one is not even a real war anyway. Just a proxy battle that is more politics and posturing than anything else. Why do so many get hung up on this absurd idea. We really have to do a better job of dispensing with the news/price relationships so many people are addicted too. Those are just good ways to lose money if you ask me.
An expensive war funded by deficit spending is very good for gold and very bad for the currency of the nation doing the funding.
If you really want to smoke the currency, spend as much as possible on a war while slashing revenue (taxes) at the same time. Since so few sheeple can put two and two together, why not? Do the masses really think that net taxation under Bush was low?! Sadly, the answer is yes.
An expensive war funded by deficit spending is very good for gold and very bad for the currency of the nation doing the funding.
If you really want to smoke the currency, spend as much as possible on a war while slashing revenue (taxes) at the same time. Since so few sheeple can put two and two together, why not?
http://stockcharts.com/h-sc/ui?s=$GOLD&p=M&yr=15&mn=0&dy=0&id=p11544197167&a=366074617&listNum=1
Oops, sorry about the double post. 🙁
When gold rises in a single currency it is meaningless to the rest of the world. We need gold to be rising in all currencies.
I agree but don’t hold your breath,
Can’t see that happening anytime soon.
Gold HAS risen against all currencies in this secular bull market. This trend is about to continue.
Short term trend only. I would not bank on anything too serious though. Not yet anyway.
Is ten years short term?
Was referring to the word continue, not to past history.
Off Topic:
Australia to join NATO and send troops to Afghanistan.
My comment: It will be a neat trick to move their island into the North Atlantic! One biiiig tugboat required!
Australians must be so proud of their Iraqi involvement and now they are given a ticket into the club for being so faithful to the cause of spreading peace and democracy.
I love Ozzies. It’s those bloody British that are the real piss ants.
I love Ozzies but their leadership stinks,according to Aussies I know well.
Yanks under training,is what my Aussie friends call their politicians.
Hardly reassuring,given the record.
I love Aussies too 🙂
LOL…but thats because I am one !!!
God bless the Brit’s Rev,
Got to have an old / good opponent for cricket & rugby other than the Kiwi’s.
Cheers.
Thanks a lot BM!!
Ditto the Brits Skeeta, apart from the fact that most seem to hold few sane opinions about anything!
Oops! Sorry Andrew. That comment was not meant to slag you personally. Just my general impression of Brits after having lived in London a few times. What a bunch of wankers they are. I was surprised at how hostile, indignant, argumentative, inflexible, territorial and defensive people were. The whole country needs an enema and a good steam bath.
Actually our current conservative Australian government has repealed our mining super profits tax…also canned our carbon tax.
Both of which were brought in by the previous drunken spending socialist morons we had in office beforehand.
I understand some don’t like our current leader (especially his Christian values).
But as a small business owner (the backbone of our society down here) he is making inroads…slowly
Maybe Aussie friends are those who suck from society rather than actually produce ?
Dollar has all but topped out.It has flirted at the 82.70 oversold level since August 25th.
Bankers and brokers are back to work today and looking to make a year’s wages in a week.
Same story every year.Pity to those that lost their positions to the legal theft circus.
GOLD is dead till next year……..
That’s what I heard last year. And the year before….
At least! This war, as many others will not help gold. The one thing that will help ghold is the ever strengthing economy. Too bad it is growing slowly.
real slow…………going to take another 5 years, if not longer………….
I agree with Doc that gold (and the miners) will drift lower for around a couple weeks and then begin a nice rebound. The SPX may be topping now and be ready for the much anticipated correction of about 15% (+/-5%). If the SPX is topping now, that may help shorten the decline in gold.
Mike, I’ve mentioned this before. WATCH THE DOW/GOLD ratio. We continue to close in on the 13.65-13.70 figure I’m looking at for a triple top. If we start to move off that, the odds are very good that we’re now on the next leg down for this ratio. If it takes out the above mentioned figures, then the PMs may be in trouble and the conventional markets could be in nirvana.
Doc, I agree with watching the Dow/Gold ratio, but since the miners lead the metal (usually by quite a lot), I prefer to look at the Dow/Gold Miners ratio for an earlier signal. By this measure, it’s essentially over for the Dow in my opinion.
http://stockcharts.com/h-sc/ui?s=$INDU:$GDM&p=M&yr=15&mn=6&dy=0&id=p40663072382&a=366126583
Matthew; now that’s an interesting ratio which I haven’t looked at before. It certainly looks promising.
Hello RIchard,
Just wondering on what basis are you saying that the miners will start another leg up as soon as late Sept/early October? Is it based on the seasonality of precious metals? Last year GDX gave back all of its gains from late August to mid October before starting up again. Although it is different this year, I am wondering what you see as the catalyst for the next leg up. Some argue seasonality for miners started and ended ended early this year and to expect consolidation for many months. Thanks.
Richard, I notice you did not comment on my remarks that I think your approach to buying gold and miners now (in advance of an obvious termination pattern) strikes me as more premature than preemptive.
I did not write those remarks to irritate you but rather to point out I thought it imprudent to suggest to listeners that front-running the odds of a directional change harbored equal hazards and opportunities.
Just so you know…I appreciate the hard work you put into your daily analysis. What I do not like is your particular investment strategy because it has serious pitfalls that newcomers may not be wary about. There is little to be gained by risking capital when a market is still trading sideways.
So are you prepared to stick your neck out and say point blank that gold will now abruptly resume its secular bull market trend? Gary did that and lost. See how that worked out? I understand you are comfortable with your own purchases of course. That is your own money. Can you really advise others to follow your own course of action with confidence though?
See that’s the thing about having a newsletter and advisory service. You will get the guilt and accusatory remarks when calls go bad. Don’t go there. I want to very strongly encourage you to focus not just on technical’s aspects but to also give consideration to practical strategies for making money……for not losing money.
There is a worn out old phrase on Wall Street. “The trend is your friend”. I hope you get to know what that means before laying out a framework of buying timelines with picks and company names BEFORE encouraging future subscribers to invest based on your chart conclusions.
Nobody gets it right all the time. Newsletters are a tough business. You get real respect by showing restraint and teaching others the ropes. You get staying power not by just hitting a few good timing peaks that bring short term fame but by offering consistency, sensible approaches and risk aversion advice.
I really like you. I want you to make a success of what you are embarking on. Rick’s endorsement is a credit to your smarts as a technical strategist that won’t be ignored. But listen to this…….If you are wrong on gold right now, you will have made a big mistake that will be costly to you from the outset.
So I will ask again……are you really sure the secular trend is about to resume?
Bird, I did respond to your first paragraph when you brought it up awhile back. I’ll try to repeat again what I said back then. So far this year, I’ve always mentioned when I was purchasing and selling PM stocks. I did it both times at the lows and highs. I do this to provide everyone transparency—-so folks can’t say later that I’m not being upfront with them. I am never giving investment advice since I often don’t mention what stocks I’m purchasing. I also mention that I can reverse my positions when I see technicals that advise me. Most of the listeners aren’t capable of doing this since they don’t engage TA. If you’ve been following me lately, you know I’ve consistently over the last 3-4 weeks warned listeners that the PM sector as a whole were going to head south again—–and most of them have. I also have warned that the PMs were heading south again—-as you’re aware, I’ve also mentioned that I’ve still been purchasing some stocks but these are stocks that technically are very strong right now and won’t show much of a percentage move down even if the metals were to completely capitulate at this point in time. My picks are very focused and I’ve been saying as much with a warning for weeks that the move up in most of the stocks wouldn’t last. You might say I’ve done quite well the last 6 months since I’ve been very close to the calls on the 2 lows and 2 highs in the PM mining sector. We’re at a crucial point on the charts for the PM stocks and the metals. I can take risks some others can’t because of the plethora of indicators I follow which also allow me to change direction in a nanosecond to avoid significant losses—I keep emotion out of the equation and am never wed to a position. I’ll always tell listeners what I am personally doing (generally) since I want complete transparency and honesty. If they want me to be more specific, they ask me and I respond more directly. The reason I’m so positive on the PM stocks is that the charts as mentioned to Aida are showing that they’re separating from the metals themselves. For me there is minimal risk. I pretty much know when to purchase and when to sell. Also, with most of the good stocks now selling for less then book and because of other factors such as cost cutting etc., it appears to be a great time to take a basic position in some of the better companies on this most recent pullback—which isn’t quiter finished yet. Sorry to bore you, but I hope this helps you out a little—-anymore questions and I’ll answer them. Doc.
Always interesting to hear from you, Doc. I am an avid listener. What had gotten me fired up though were comments regarding the obvious narrowing pattern in gold we are seeing. I don’t have a good feeling about the outcome which could arrive anytime in the latter part of this month as the wedge seeks completion. My conclusion: wait and see before committing capital. On thing I notice about gold buyers is that some are really anxious to see the bull trend resume. They throw caution to the wind and forget the basics as they possess a high degree of certainty they are correct gold is about to come roaring back to life. But the attitudes are really a reflection of the same sentiments that did not allow them to sell all the time gold was in decline. As August rolled on I started reading more and more comments reminiscent of what got so many gold buyers in trouble the last time around. Your remarks really just offered a good chance for a sounding board but they were meant for the group as a whole. My point was only this…the bear market has been going on for years. There is no danger or risk in letting the chart signals play out a little longer to be assured of the directional change before jumping back into the fire. I think as a group we would all like to be on the winning side of the trade that is coming and not be nursing some sore losses if this sucker turns around and bites us on the ass one more time, as I anticipate it will do.
Aida, good question. As a technician, I am not particularly concerned about catalysts or fundamentals that might move certain assets, stocks, bonds, etc. That is why I prefer TA with fundamentals as a backstop to them. Technicals like the conventional markets often look in the future and predate fundamentals. I’ve been mentioning for weeks that I expected a fallback in GDXJ and GDX again along with selected PM stocks. That obviously has begun and we should see more in the next 2-3 weeks yet. Some will see more pullback then others. It appears that GDX will see the same pattern as last year as far as the timeframe for the pullback. However, we’re now embarking on the time when the miners (stocks) will outperform the metals. A good chart to look at and show the beginnings of this reversal is the $hui:$gold ratio chart. It bottomed on the weekly charts way back in December of last year. The monthly chart now shows a turning up of the momentum indicators. I’ve been purchasing stocks as I’ve mentioned in the past on every pullback. In fact, as I’ve mentioned in the past I’ve sold my gains a couple of times. I’m waiting for the bottom of this pullback and will purchase again and this may be the last time I sell since I in all likelihood will become a long term holder from this point on—-with the caveat of always considering the technicals. I agree with those that feel we may be in the beginnings of a long consolidation for the miners based on the fact that I feel gold will not “go to the moon” anytime soon. However, there is good technical basis to believe that gold after this sell-off could start a slow trudge up over time. I think a good example of the bottoming of these stocks would be the Newmont chart. Even with the sell-off of gold today, the stock didn’t capitulate; in fact, Newmont’s chart is a thing of beauty with a bowl like formation taking place. It’s at least $6.00 from its’ low and appears to be showing a beautiful base. The last 3-4 months have been the first time I’ve explicitly stated that I feel good about the PM stocks. I’ll mention on Al’s show when I feel the odds are good that many of these stocks are again bottoming. I believe the fundamental catalyst for these stocks to move higher without a concomitant increase in the price of the metals is the fact that many of the miner leadership are cutting costs to the bone. This will only continue in the future and slowly drive their “all in costs” lower. I believe this will be what will support many of the PM stocks now and ultimately allow them to wrenchingly move higher in the near future. Then when you get the metal bull to resume; watch the fun begin.
Bird, very good advice, as a real estate broker I saw many doctors make and then lose fortunes flipping, and developing. My advice was always…stick to your profession and stop looking for get rich schemes. Most have thanked me as their colleagues went broke.
When it comes to understanding birdbaths bird is an expert.
I will resist offering a similar silly remark referencing your own posting handle, Dick.
Bobby….have you read where the banks are starting to buy up housing to rent in Spain, check out zerohedge…………maybe a deal to go international with the real estate brokerage…..
My wife would love to return to Spain and live there again so you never know.
Bobby, good advice. I say the same thing with compatriots of mine. I also had a real estate business over the years and did well. In fact, I sold my last apartment complex (100 units) in 2007 before the real estate crunch. I sold it to 3 fellows from New York that ran a REIT. I couldn’t believe what they paid for it since I knew the financials well and knew the cash flow couldn’t support the price they paid along with the subsequent mortgage. Like anything, if you’re going to get out of your line of business, you had better study and start small. Years ago, I started with a duplex and grew from there. I’m in the position I am today from a financial perspective because of that business and not my medical practice. Of course, my capital came from savings from my practice. However, I didn’t do as well as other physicians in medicine since I refused to compromise my ethics and play the “fee for service” game of unnecessary procedures, diagnostics, upcoding, etc. I figured I would compete like everyone else in the real market place and settled on real estate. I might add that I received a call about 4 years after I sold that last 100 unit apartment complex—the call was from a property manager that knew me. She asked me if I would like to purchase the units back from the bank for a third of what I had sold it for. Since I didn’t look forward to a divorce, I politely declined. I knew I could have probably discounted the price even further with the bank.
DOC….I bet you loved collecting the rent on the first…….of each month…., been there done that………….he, he…….
OOTB; especially when your vacancy rate is small, you don’t have any major capital expenditures coming up and your mortgage principal is next to nothing. You’re right; it’s a satisfying and great feeling which makes up for the years of expenses and struggle.
Real estate will be back, and be in play again…….timing is everything…..
Shall I repeat the story of our condo over here in Semi. Boy Doc, talk about taking it in the shorts!
Jer, it’s already back in soCal!
Thanks Bobby for the info………I am starting to lean that way my self….thinking only, …Have some ground that I would like to develop ….Do not know whether to put a nursing home, elderly care, or retirement homes….maybe a timeshare for the elderly.
Yes doc, hard work is the key.
KST and a PPO configuation I devised have bottomed on silver and topped on the USD.
Sure enough,the banksters close up theft shop for the day and the dollar falls and PM’s rise.
http://www.ino.com/
Now, that is an interesting observation, Matt!
CFS……..are you out there……….Just read GERMANY is hot and heavy into RENEWABLE ENERGY……a topic for our lively debate of the 1970’s Jimmy Carter era.and on going OIL situation…………..
The coming of electric cars coupled with urbanization will change the storage situation and make solar panels too expensive.
that is why renewable ….like grass, apples, potatoes, ….vegy oils….will fuel the German cars of the future…..not solar….Winters and overcast are a problem in Germany…..Realize the Germans gave the Brazilians the technology to run their ethanol plants in the 70’s…..the Brazilians were 100% ethanol from sugar cane, and avoided oil/gas during the 1970’s oil crisis. The GERMANS have been working on renewable ethanol since 1939……..Hitler ran his tanks on ethanol during WW2.
Noted fact…….there are over 1700 breweries that are capable of making ethanol in Germany………..out of renewable waste……….
That’s true Jerry, but remember The Germans only got there during WW2 by using slave labor. Tesla is very close to perfecting battery technology and this coupled with a charging system hooked into your home will allow utility companies to charge these units when power is cheap at night and during the day with most people living in cities using the car only occasionally will mean they can sell that power back at higher rates during the day or power devices in the home. Remember technology is changing so fast that what looked good in 1939 is no longer valid.
Hitler ran his tanks on diesel fuel which came from coal gasification.
not all DT…..check out at the end….ethanol from the brewery….I was told first hand in 1970 , by the owners of some of the plants that I visited…….
ELECT ….911 TURBO………..no way……..
Thanks Jerry,
We will call a gentleman who is pretty knowledgeable on this sector and bring him on. (Dave Z, by the way>)
What is his background?……..If he is an American , might be second hand knowledge.
BTW……just heard today………in IOWA….there is a cellulose plant…BIG CHANGE IS ABOUT TO HAPPEN…………..
I have been involved and developed a few plants around the USA. , with the help of German technology., I have a little experience in this area………
Matthew, as your chart shows, palladium may be topping and is due for a correction. Another signal of this potential is that a palladium stock I’ve owned for some time looks like it is on the cusp of a correction which like the other metals and stocks moves before the metal.
I think gold is about to show more strength than many anticipate…
http://stockcharts.com/h-sc/ui?s=$GOLD&p=M&yr=13&mn=10&dy=8&id=p67193749972
Those were some ugly declines in bonds the last two days. Talk about getting smoked square in the side of the head. My sympathies with anyone who never had time to exit positions before the carnage. Today we have inside days all over the commodities charts. Really interesting to see so many appear at once so big moves are shaping up now that summer is over and traders are back on the job. Dollar looks ready to reverse course by my reckoning.What a weird day yesterday was.
A great article just published by Martin Armstrong. I am really taking a shine to that guy. He s a genius in my books and just keeps hitting the mail on the head with so many of his topics. Anyway, most here will likely disagree with his discussion about gold. I will post it anyway.
Will Gold Go to $5000? (of course it will).
http://armstrongeconomics.com/2014/09/02/will-gold-still-go-to-5000/
For such a “guru” I can’t believe he makes comments like this one:
“Those who tout the German Hyperinflation omit the fact that ALL tangible assets rose not only gold and the replacement currency people accepted was backed by real estate not gold. So the rally in gold will be part of an asset rally – not gold by itself, which has never taken place even once in history.”—–
Is this guy serious? I can’t imagine anyone thinking that only gold rises in a hyperinflation.
How about this one: “Money is ONLY a medium of exchange it has NEVER been a store of value for money has NEVER retained a specific buying power from one day to the next EVER! I understand people hate me for saying this for they just have to cling to their myths and theories to justify their losses.” —-
Wow, I thought this guy was a historian. Of course, he CAN hide behind a few words he threw in there: “one day to the next…” That’s right, the very short term is precisely the riskiest for gold. When talking about the safest asset on earth, the very short term means one day to as much as a few years. And no, Martin, you DON’T measure purchasing power by comparing gold to the Dow as you did the other day! Since when should a vehicle for savings, safety and liquidity track risky assets? Idiotic. Further, the dollar is also not a good way to measure gold’s purchasing power over a long period (like 1980-2000, for instance). Also idiotic.
Of course gold’s value is cyclical like everything else (duh), which is why it, too, has bull and bear markets. It fluctuates between cheap and expensive, but its swings from one to the other are narrower and more likely to repeat than those of all other assets. For just one little example, gold was very cheap in terms of oil in 2008 despite being about $1,000/oz. Conversely, gold was very expensive in terms of oil in 1999 despite being about $260/oz.
Gold is at its best for long term savings because it is not subject to the same market pressures as any other commodity and is negatively correlated to the economy. Even platinum can’t compare since it is just an expensive base metal. Gold finished up nearly 6% in 2008 while platinum and commodities in general were crushed and finished down nearly 40%.
The point is, no other asset will maintain its net purchasing power with the same degree of certainty as gold will. Marty can whine and even make fun all he wants; facts are facts. He should be embarrassed if not ashamed for some of what he spews.
Gee whiz, I loved his last posting. It warmed my heart. By the way, he did say ALL tangible assets rose in the hyperinflation. Maybe it is his writing style that made the message confusing. I have to work at it usually. He definitely needs an editor.
Yes, I know he said ALL. He’s setting up a straw man with the claim that anyone has omitted “the fact that ALL tangible assets rose…”
And then we have our friend Trader Dan who nails it again on gold. It’s the dollar, of course. That was what caused some of the big players to finally just cash out and take their lumps yesterday and it perfectly explains the sharp selloff. Once the buck starting moving up yet again it triggered the computers and we saw the big sell offs in crude, gold, silver and other commodities. I have been harping on a similar tune here that keeps being ignored by the board. Do so at your peril though. There is tremendous pressure on the way for the commodities sector with the ECB being so determined now to weaken the Euro. Inversely the dollar will rise of course and the way the machines are programmed it might not be pretty. I will again repeat a comment from last week. It is time to rethink most strategies with the dollar/euro pair in mind because what is happening in Europe will soon affect everything else in your portfolio.
Strong Dollar Finally Catches Up to Gold – Dan Norcini
http://traderdannorcini.blogspot.com/2014/09/strong-dollar-finally-catches-up-to-gold.html#comment-form
No need to assume you’re being ignored, Bird. We all post plenty of opinions that go without a response.
Mathew, double ditto, I know I can now expect a response.
True enough Matthew. I sometimes think some developing trends are worth more of a discussion on the board though. Commodities are getting kicked in the teeth lately. What do you make of my theory we are going to see a big boost in bottom line profits next year which will keep propelling markets higher and higher?
I think it’s possible if there’s a healthy correction first, but any boost in profits will likely be on a per share basis due to share buybacks shrinking the float. In other words, I don’t expect much growth even nominally, much less real.
IMHO gold is finding a fair value and the stocks are holding their own because the sub $1000 level is being taken out of the equation. The biggest black swan to kill the price of gold is the mysterious 170,000 tons of gold holding Hawaii down. I think a bullish impulse is forming but not at Clive’s target for silver. Ridiculous. Lots will happen before silver gets there and the scrap hitting the market would be enormous. Grannies’ tea pots and all.
http://www.kitco.com/ind/Maund/2014-09-02-Silver-Market-Update.html
I have to disagree, Dan. $100 silver in a few years is very likely in my opinion. In the 1970s, silver went up 35 fold and there was a lot of scrap coming to market. This bull started with silver at $4. A repeat 35x advance would take silver to $140 and I’ve maintained for years that this cycle will ultimately dwarf the 1970s warmup. The drivers now are vastly more powerful and global.
Currency values hide reality and cloud judgement. Still, it’s best to take this market one step at a time. The miners will do extremely well if silver just goes to $26. Who woulda thunk?
This is interesting:
http://www.silverdoctors.com/silveroil-ratio-indicates-silver-to-explode-to-new-highs/
Thanks Matthew, I respect your opinion. I think whenever a commodity increases it raises red flags for central bankers and politicians to the point any and everything will be done to fix the runaway price. Innovation, substitution and conservation should be the way higher prices are addressed but in this nanny state of western affairs the bankers control the politicians.
The neat thing about silver is that it is simultaneously a bet on the continuation of both positive (innovation/technology) and negative (debt/currency debasement) outcomes.
It’s the perfect investment for a true realist since constructive and destructive elements always co-exist.
I just heard on BNN a guy talking of medical marijuana and he said they use the buds and the rest of the plant is waste. Really? Waste? I smell opportunity.
The Ukraine situation is getting worse and that may kick gold up.
In the meantime Ukraine needs another 19 billion dollars so be prepared to pay up tax/inflation serfs!
http://globaleconomicanalysis.blogspot.com/2014/09/ukraine-to-need-another-19-billion-from.html