-- Published: Tuesday, 31 March 2015 | Print | Disqus
By Stewart Thomson
1. Since rallying from the $1142 area to about $1219, gold has retraced about half those gains. Bloomberg reports that investor short positions are now at the highest levels since 2006.
2. On that interesting note, please click here now. Thatís a snapshot of the latest COT report. Incredibly, retail investor short positions on the COMEX, are now larger than their long positions!
3. At the same time, savvy commercial traders (aka the ďbankstersĒ) are carrying a very modest net short position of less than 75,000 contracts (shorts minus longs).
4. The average retail investor is highly leveraged, and can only withstand perhaps twenty dollars an ounce of price movement against their position before they get a margin call. Clearly, the gold market window is open, for a violent short covering rally!
5. Please click here now. I did short gold as it surged above $1200, but Iím booking profits quickly now, as it trades under $1185.
6. Because it is the ultimate asset, Iím always net long the gold market. Shorting is best applied to gold as a tactical tool, rather than as a perceived holy grail.
7. In 1980, I sold gold and silver near the very top of the market, after buying them in the early 1970s, but the nature of the precious metals markets is very different now. Because of the long-term industrialization taking place in China and India, I donít believe there will be any ďfinal topĒ that needs to be called. Simply put, gold is a much more solid asset than it was in the past.
8. Why is gold soft right now? Well, most seasonal movements in gold relate to the ebb and flow of gold jewellery demand in India and Dubai (offshore India). The first three weeks of March featured incredibly strong demand, but that has peaked for now.
9. Please click here now. Iím very pleased to see more respected bank economists focused on key events in China and India. The Akha Teej (also called Akshaya Tritiya) festival in India takes place on April 20th. Commerzbank is acutely aware of the substantial rise in demand (and thus price) that this key event will create in the gold market.
10. Also, as of tomorrow, Chinese mining companies will be allowed to import gold into China, to compete with the bullion banks. Thatís superb news, and I expect it to further reduce ďyo-yoĒ action in gold, because jewellers will get more consistent supplies.
11. Please click here now. This seasonal chart for gold, courtesy of Dimitri Speck, shows that Commerbank economists are wise to focus on Akha Teej. Gold has a long history of staging great rallies in April!
12. Please click here now. Thatís the monthly GDX chart. Next, please click here now. Thatís the monthly chart for DUST-NYSE. While GDX fell from about $65 to about $16, DUST (which is a triple-leveraged bet against GDX) fell from about $23 to $18.
13. If DUST canít even rise while GDX is in a substantial downtrend, it is likely to be delisted or reverse-split repeatedly, if GDX mounts a serious rally.
14. I think itís the dawn of a new era not just for the love trade, but for the entire Western gold community. Rather than using amateur chart analysis to gamble in questionable items like DUST-NYSE and NUGT-NYSE, a new focus on great individual mining companies that are poised for upside action is rightfully starting to take centre stage in the community!
15. Please click here now. This is a very important chart. It shows the relationship between mining exploration expenditures, discoveries, and production. Note the green exploration spending line on the left side of the tables. Despite spending vastly more money in the 2004 to 2007 period than in the 1990s, much less gold is being discovered.
16. Chindian jewellery demand forecasts look like the mirror image of the mine production chart; from 2016 forwards, demand should grow steadily for many years!
17. Please click here now. Thatís the daily chart for Alacer Gold, on track to produce about 150,000 Ė 200,000 ounces of gold in Turkey, at an all-in sustaining cost of about $825 an ounce. Turkey is traditionally the third or fourth largest gold market in the world.
18. Just since November, investors could have used my Keltner line buy and sell signals to buy and sell this great stock three times in a row, with nice profits! Itís in both the GDX and GDXJ ETFs, so thereís solid institutional interest. The companyís main gold mine in Turkey has a 25 year mine life, and almost 4 million ounces in reserves!
19. As a current investor ďbonusĒ, the stock has surged over the past week, while gold has swooned. Itís clear that the professional mine builders at Alacer Gold are likely to be creating great wealth for shareholders, long after questionable items like DUST have been delisted.
20. Please click here now. Thatís the daily silver chart. I view silver as the second greatest asset in world history. As the love trade grows in dominance over the fear trade (Shanghai silver trading volume has already surpassed COMEX volume), I think silver will become less volatile.
21. That diminished volatility should attract institutional investors to silver stocks. It also means that while silver appears set to outperform gold, investors need to be open to a mild uptrend that lasts for decades, rather than wild price swings.
22. A lot of investors wonder about the impact of the US dollarís rally, on the price of gold. On that note, please click here now. The huge rally in the dollar has had only minimal impact on the price of gold. I agree with the WGCís take on the situation, and Iím predicting that the dollarís downside impact on gold will continue to diminish, until it becomes less worrisome than a fly.
23. In my professional opinion, the US dollar will become ďthe ultimate gold call optionĒ, as its ability to lower the price of gold on rallies disappears, but its implosion will create a massive spike in goldís price.
24. Gold is rallying as I complete todayís report, perhaps giving the Western gold community a mouth-watering appetizer of what Akha Teej and the new Chinese mining import rules will bring to the price, in April!
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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
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-- Published: Tuesday, 31 March 2015 | E-Mail | Print | Source: GoldSeek.com