Confirm 🔴 A Move Higher Than This Price Will Confirm The Gold Bull Market

A Move Higher Than This Price Will Confirm The Gold Bull Market

Economic conditions are ideal for higher prices, and this is what we’ll likely get over the next couple of years, so let’s watch this level for confirmation… This Will Confirm The Gold Bull Market

Gold is moving closer to confirming a multi-year bull market per my long-term comparison. A decisive mover higher than the $1375 area would be confirmation of the bull.

Below, is the updated long-term comparison:

I have marked two fractals (patterns) 1 to 5, to show how they might be similar. I have also marked the point where interest rates peaked (in 1981), and where they probably bottomed (in 2016).

If the comparison with the 1980s pattern is justified, and the current pattern continues in a similar fashion, then gold will continue in a long bear market. However, there are just too many fundamental obstacles to such a scenario, with the state of interest rates being one of them.

A breakout at the top red line (the high at point 5 – $1 375) would almost certainly signal or confirm the bull market. This would be divergence from the 1980s pattern, and likely cause prices to rise really fast once the breakout is confirmed (when dealing with fractals, the biggest price movements occur when two fractals diverge – a breakout at the top red line is a divergence).

A breakdown at the bottom red line, could mean that prices will continue to follow the 1980s pattern, and go lower than $1000. Which would mean we will have to wait many years (even a decade) for the next gold bull market (very unlikely).

It is my opinion that due to the fact that the early 80s pattern occurred around a long-term interest rate peak, and the current one around an interest rate bottom, the two exist in completely different economic conditions.

The current economic conditions are ideal for higher gold prices (as previously explained), and this is what we will likely get over the next couple of years.

You’ll Want to Own Some Gold in 2019/2020

Dear Reader,

You can feel the excitement: after a terrific finale to 2018 and a promising start to 2019, precious metal investors are revved up for what’s bound to be a pivotal year in gold. The economic factors that favor gold are numerous, but there are particular gold-positive elements that I’ll be watching extra closely in the coming months.

Before we address the fundamental macroeconomic factors, it’s worth mentioning the technical aspects of the recent price action in gold vs. the U.S. dollar. Finally breaking above the psychologically significant $1,300 resistance level has set the stage for more barriers to be broken:
 

If you’ve been in the precious metal market long enough to remember gold’s exhilarating run from 2009 to 2011 when gold reached the $1,900 level, you know what gold is capable of when it gathers up steam. Don’t be surprised if the $1,400 and $1,500 levels come swiftly now that $1,300 has been breached.

On a less technical level, Asian economies like China, India, Russia, and Iran have been dumping dollars (which are, after all, U.S. debt notes) and accumulating gold in its stead – a trend that has not slowed down as we enter the new year.

Central European nations, and particularly Hungary and Poland, have been accumulating their gold reserves as well. Less global demand for dollars and greater demand for gold are doubly bullish for gold since we tend to measure it against the dollar.

Price inflation will, as expected, continue unabated throughout 2019. CPI figures grossly misrepresent dollar price inflation, which has actually been averaging around 8% annually since gold’s peak in September of 2011.

With due bemusement, I’m watching for the Federal Reserve to accelerate the pace of its long-standing money-printing addiction. Let’s face it: no one is really expecting the Fed to control the trajectory of the FMQ (fiat money quantity), which has gone almost completely vertical since the commencement of the quantitative easing experiment:
 

I’m watching for the U.S. dollar to remain under considerable pressure all year long. This will be triggered by investors’ concerns about global economic growth, contention in a divided U.S. Government, and the ongoing trade war between the U.S. and China – all of which are net gold bullish.

Plus, there’s the return of the Powell put: Fed Chair Jerome Powell has no particular desire to cause another bear market in stocks – like the one that happened in the fourth quarter of last year when he threatened to raise interest rates four times in 2019.

Under pressure from President Trump, Chairman Powell halved his projection of four rate hikes to just two, and it wouldn’t surprise me at all if there are zero interest rate hikes, or even a rate cut.

Besides, with international trade contracting and the U.S. budget deficit increasing exponentially, watch for the domestic economy to slump. This will provide the perfect excuse for a whole new round of quantitative easing, with Treasury yields in the gutter and gold free to move higher.

Actually, quite a few things will be in the gutter in 2019: bond yields, the global economy, the dollar, faith in the government... but if you’ve got gold, it won’t all seem so bad after all. As the world’s economy pivots and investors pile into precious metals, faithful gold stackers can sit back, watch the freak show, and rest easy with a comfortable stake in the world’s greatest financial asset.

Precious Metals Analyst Says 2019 Could Be Gold’s Year

This week, Your News to Know rounds up the latest news involving precious metals and the overall economy. Stories include: 2019 could be gold’s year, silver’s versatility could boost prices in 2019, and long gold is Goldman’s favorite commodity play.

After a lengthy slumber, 2019 could be gold’s year

With only a month into the year, gold is already looking like one of the best assets to own as the metal’s price continues to rise, reports CNBC. Gold’s move up comes after being held back by a strong U.S. dollar for much of 2018.

And while the greenback remains fairly robust, gold’s fundamentals appear to be more so. Different analysts have pointed out that recent stock market wobbles have caused a familiar flight to safety among investors. Some experts view these equity lapses as the first signs of a looming crisis, further strengthening the case for gold.

Suki Cooper, a precious metals analyst at Standard Chartered Bank, thinks 2019 could be gold’s breakout year. Cooper expects any pullback in prices to be temporary, as her bank sees the metal holding firmly above $1,300 for most of the year. To many, this is a bullish indicator as $1,300 an ounce represents a key resistance level.

While Cooper’s bank sees gold trading around $1,325 in the fourth quarter, the analyst thinks that the metal could just as likely reach $1,400 towards the end of the year. Jim Steel, head of precious metals at HSBC, also reaffirmed his bank’s optimistic stance on gold.

Steel said that as many as 23 central banks bought gold in 2018, a highly supportive trend that is likely to continue. Along with an increase in Asian jewelry buying, Steel said that a return of volatility will be a main ingredient in gold’s rise.

Trade conflicts are another bullish prospect for the metal, as diminished trade leads to higher inflation, a weaker dollar and weaker assets, which are all beneficial to gold. HSBC predicts that gold will hit a high of $1,350 this year, and that 2020 could be even better for the metal.

How silver’s many uses could shrink supply and boost prices in 2019

Silver’s versatility is often cited as one of the main reasons for owning the metal, as the plethora of buyers assures a steady source of demand. Yet a recent Bloomberg analysis showed that silver’s many uses could soon deplete the metal’s reserves and cause a spike in prices this year.

Silver prices already climbed 9.1% in December, the highest gain in nearly two years, as investors began to turn to safe-haven assets. The real gains, however, could come from a combination of high manufacturing demand and a lackluster supply picture.

Bloomberg’s survey of 11 traders and analysts saw a consensus that silver could spike up to $17.50 this year as global economic uncertainty prevents miners from starting new projects. Robin Bhar, a London-based analyst at Societe Generale SA, predicts that 26,000 tons of silver will be produced this year. If true, it will be the lowest figure since 2013 and guarantee that demand continues to outstrip supply.

“Supply growth has started to slow, more than for any other precious metal,” noted John LaForge, the head of real assets strategy at Wells Fargo Investment Institute.

This comes as industrial demand for silver, which accounts for 55% of the metal’s overall demand, is expected to intensify. Bloomberg Intelligence analysts Eily Ong and Tobias Nystedt believe that manufacturing demand for silver in high-end electronics will give the metal a 50% upside by 2023.

In the meantime, silver is sure to benefit from geopolitical tensions and possible dovish changes in Fed policy. Both gold and silver have performed exceptionally well in the past two months as volatility made its comeback, and the trend of heightened interest in precious metals will likely continue throughout 2019.

Goldman: Long gold is best commodity play right now, will hit $1,450 this year

According to Jeffrey Currie, global head of commodities research at Goldman Sachs, long gold is one of the best plays investors can make as risk aversion becomes the theme of 2019, reports Kitco. Currie affirmed gold’s position ahead of other commodities, stating that recessionary fears and heightened central bank purchases will give a heavy boost to the metal.

Having previously called for $1,425 this year, Currie now sees gold shooting up to $1,450 as defensive appetite strengthens. With weaker-than-expected global growth and historically-recessionary central bank policies, concerns that another crisis is on the way could be validated.

Past that, Currie reminded investors that gold’s price, like other assets’, increases when there is heavy buying. Last year’s central bank acquisitions certainly qualify as that, as governments around the world blew away previous forecasts with their bullion purchases. Currie singled out India’s 70-ton gold acquisition in 2018, together with an expected increase in buying by the People’s Bank of China.

Bart Melek, the head of global strategy at TD Securities, agreed that central bank gold demand will play a key role in gold’s upcoming upturn. Having increased their holdings by 3,900 tons, or 13%, since 2009, central banks are expected to buy an additional 800 tons in the next two years, with defense and diversification as the primary motives. To Melek, this could have a dramatic effect on gold’s price and push it above the already-bullish predictions.

Gold’s Safe Money Appeal to Thrust the Metal Into a Bull Market This week, Your News to Know rounds up the latest news involving gold and the overall economy. Stories include: Gold looks like safe money amid rising inflation, gold’s technical picture is looking better by the minute, and Brexit fears have triggered an Irish gold rush.

Gold looks like safe money amid rising inflation

With numerous analysts stating that U.S. stocks have turned bearish, the gold market is looking to snatch the bull title away. But, as Forbes’ Rainer Michael Preiss states, there is much more to gold’s bullish turnaround than stock market worries.

While fading equities have certainly done their part in reigniting gold demand, other sources could bring even more favor to the metal. The recent government shutdown that earned the title of longest shutdown in U.S. history disrupted the lives of millions of Americans and caused enough panic to give attention to bullion.

Preiss, however, sees a spike in inflation as the possible deciding factor to thrust gold into a bull market. Some speculate that the U.S.-China trade war could persist for years, potentially heralding a significant rise in consumer prices. This will form a perfect storm for the metal as central banks around the world reduce liquidity by moving towards quantitative tightening. As Preiss explains, fiat money is looking increasingly questionable.

“Gold is an economic constant. It will never become worthless, nor will it decline due to inflation over time like a fiat currency. Gold carries no risk of default, nor can it go bankrupt,” he explains.

Preiss’ last point is particularly interesting amid rising global debt levels. Fed Chair Jerome Powell recently acknowledged that U.S. debt is a major issue, one that is exacerbated by China’s status as a primary creditor. Powell’s concerns come as analysts lower their rate hike expectations for the year to two hikes, down from a previously-forecasted three.

The Fed’s dovish shift might come too late, as many have pointed out that nearly every U.S. tightening cycle in the past has triggered a recession. The reduction of liquidity by central banks around the world strengthens fears that another global crisis is around the corner and gives more weight to gold’s bullish prospects in 2019 and beyond.

Technician: Gold is forming a “golden cross”, could bounce even higher

Although the trading pattern known as the “golden cross” isn’t limited to a particular asset, it just so happens that gold could be the beneficiary of this highly bullish signal. The phenomenon occurs when the 50-day moving average crosses its 200-day moving average, and Cornerstone Macro technician Carter Worth sees this happening in the gold market.

The metal is up 10% since August, but Worth says that the technical picture suggests gold could go much higher. Talking to CNBC, Worth explained that gold’s long-term chart shows built-up pressure that is likely to be resolved to the upside.

To back his forecast, Worth points out that gold is beating the overall commodities market, something the technician sees as a testament of strength. The feat is especially notable after gold outperformed the long-running bull market in stocks in December.

Like other analysts, Worth sees the $1,300 level as a key threshold for gold’s move up. Once this resistance is breached, Worth thinks that a jump to $1,350 an ounce is imminent.

Brexit fears have triggered an Irish gold rush

Britain’s vote to exit the European Union gave gold plenty of short-term momentum in 2016 as investors grew worried over the potential ramifications. Fears appeared to have simmered down since, as the British Parliament began a lengthy process of brokering a deal with Brussels that will be beneficial to both parties.

But with such a deal now looking unlikely to materialize, Kitco reports Brexit-related fears are once again gripping citizens of the United Kingdom and the global market as a whole. After the Parliament overwhelmingly rejected Prime Minister Theresa May’s proposition last week, the prospect of a no-deal Brexit and a subsequent devaluation of the pound sterling appears increasingly probable.

According to Ireland’s Merrion Vaults, Irish citizens aren’t waiting for the March 29 deadline as they rush to exchange their fiat currency for bullion.

“Customers are taking money – physical money – out of the bank and they’re buying gold bullion with us to store it, and it’s a hedge,” said Seamus Fahy, co-founder of the Dublin-based bullion dealership and storage facility.

Merrion Vaults has seen a 70% increase in clients from Northern Ireland in 2018, attesting to the depth of concerns surrounding May’s ability to achieve a smooth transition. The creation of a hard border with Ireland could be one of the consequences of a hard exit from the EU.

For many, a more severe consequence would be the major sell-off of the sterling that would soon follow, translating to an immediate devaluation. As Fahy explained, flights to the safety of bullion are common whenever a currency’s value is placed into question, and the company’s recent sales figures of gold bars and coins are a prime example of this.