Submitted by Stewart Thomson:
- The latest gold price action is a near-perfect reflection of the current market fundamentals.
- Please click here now. Double-click to enlarge.
- Gold has arrived at my $1220 – $1200 conservative investor buy zone.
- The market is seasonally soft in the summer months, but two key price drivers are poised to create the next rally.
- The first is the US jobs report. It’s scheduled for release on Friday at 8:30AM. Market participants are going to be looking at wage price inflation as much as they are looking at the total number of jobs created.
- Gold has a rough general tendency to soften ahead of this report, and then rally strongly following its release.
- The $1220 – $1200 support zone is an ideal price area for gold bugs to buy in anticipation of a post jobs report rally!
- Please click here now. Double-click to enlarge this seasonal spot gold chart, courtesy of Dimitri Speck.
- This chart should be used by all gold bugs as a key reference chart to understand gold’s seasonality.
- In a nutshell, the summer is the best time to accumulate gold, and February is a great time to book some profits.
- The current price softness is seasonally normal, and it’s exacerbated by the decision of bullion banks to halt imports into India.
- They decided to halt imports until they got clarification about applying the new GST regime to the gold market. It appears that June imports were only about five tons.
- It’s almost impossible for gold to rally with Indian bullion banks importing no gold, but there is some great news.
- To view that news, please click here now. Imports are set to resume next week, and that resumption will coincide with upside pressure on the gold price that typically follows the US jobs report release.
- “I personally feel India is poised for double-digit growth, GST is an aid to it, even without GST we would have reached there. If you ask my personal judgment, post 2019-2020 we are poised for double digit growth.” – Rakesh Jhunjhunwala, one of India’s top investors, July 4, 2017.
- Gold demand in India is in a basing zone, and I expect the country’s gold market infrastructure to become as good as China’s in just the next three years.
- A floor of double digit GDP growth in India is going to create a “bull era” in gold demand growth. Simply put, it’s the greatest time in history to be an investor in the precious metals asset class.
- Please click here now. In any business cycle, growth generally peaks as the cycle peaks.
- The current US business cycle is about eight years old, and growth is quite strong, relatively speaking. This strength should now begin to create wage inflation, which is good news for gold stock enthusiasts.
- To understand why I use the phrase “relatively speaking”, please click here now. Germany and China have the biggest current account surpluses in the world. The US has the biggest deficit.
- It’s a “no brainer” to see why Europe’s most powerful nation (Germany) is joining forces with China. A current account surplus “cartel” is essentially being created. This is going to put enormous pressure on the Trump administration to devalue the dollar against other fiat currencies, and perhaps directly against gold.
- While gold is seasonally weak, investors should not let this distract them from the fact that gold is fundamentally and technically in a key buying area now. It’s poised to see very solid appreciation in the years ahead.
- Please click here now. Double-click to enlarge this GDX chart. In a deflationary crisis, gold and silver bullion are the best performers. Gold stocks tend to look like wet noodles, and silver stocks can look even worse. As the winds of inflation begin to pick up against a background of possible dollar devaluation, the mining stocks will be the leaders.
- I view the $23 – $18 area for GDX as one of the most important accumulation price zones in the history of markets. Investors who take action here are poised to be rewarded with gains that are not just big, but here to stay!
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