Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver Hold Steady While Oil Slumps 7%
By: Chris Mullen, Gold Seeker Report

Market Tactics For A Golden Smile
By: Stewart Thomson

A surprise jump in investor and central bank gold demand
By: Michael J. Kosares

The Failure of a Gold Refinery
By: Keith Weiner

Is Silence Golden?
By: Arkadiusz Sieron

Ten Points or Ten Miles to ‘Bridge Out’?
By: Andy Sutton and Graham Mehl

A Palpable Sense Of Panic
By: John Rubino

Midterm Elections: Gridlock Was the Best Possible Outcome
By: Frank Holmes

Asian Metals Market Update: Nov 13 2018
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Fall with Stocks and Euro
By: Chris Mullen, Gold Seeker Report


GoldSeek Web

Is the Gold Rally Doomed?

 -- Published: Wednesday, 18 May 2016 | Print  | Disqus 

By: Sovereign Investor Daily

I have some really bad news to tell you. You know those big investment banks … the ones that just can’t wrap their heads around gold?

It turns out that they don’t hate it so much anymore. In fact, a few of them even love bullion now.

Imagine turning on CNBC last week and seeing a top strategist at JP Morgan expounding on the wonders of gold — “$1,400 an ounce is a cinch for 2016.”

But, wait a minute, why is this bad news?

Because it means that the great, glorious gold bull-market blastoff — the biggest such rally in 25 years — will soon take a well-deserved (though temporary) rest…

It’s all a matter of timing.

As a former Wall Street reporter, I made a career talking to people inside investment banks and large brokerage houses. Opinions don’t change, at least not quickly or easily. But when the price jumps 20% in a matter of three or four months, that tends to force the issue.

A committee meeting is called, and someone says: “What are we going to do about this thing with gold? It’s a rocket. We can’t keep telling clients to ignore the rally.”

If you’re famously anti-gold Goldman Sachs, you grudgingly announce (as it did last week) that you are raising your target price (while still maintaining that there’s “limited upside” to owning the stuff).

Or, if you’re Citigroup, which, as of late April, is now über-bullish on gold and other commodities, you say: “The flow of investor money back into commodities has happened much more quickly than we thought it would.”

But all of this takes time. Since investment bankers all look at the same charts, visit the same restaurants and don’t want to be too far out of step, they all tend to arrive at the same conclusion at roughly the same time.

So when a large bank or brokerage finally gets fully behind a new idea, such as “central banks are failing their mission — buy gold and gold stocks,” the proverbial train has already left the station. And the passenger cars on that train? They’re as crowded as a Tokyo subway at rush hour.

Gold Catches Its Breath

That’s why I believe that the sector is overdue for a pullback in price. The price of bullion is up more than 20% from last year’s lows, and the major gold stock indexes have doubled in price.

When any stock or commodity gets too wildly popular, it’s vulnerable to a sell-off. That’s especially so with gold after a sharp opening rally in a new bullish cycle, such as the one we’ve seen since the start of the year. You can find plenty of similar examples from the starts of earlier bull markets — 1986, 1993, 2001, 2008 — where gold pulled back 20% to 30% … and sometimes more.

It doesn’t mean the long-term rise in gold is over by any means. If you’ve gotten in on gold stocks or bullion, as recommended by The Sovereign Society’s own Jeff Opdyke and Paul Mampilly, congratulations — you’ll have a second chance to buy even more at lower prices.

But a sell-off — taking place over a period of days, weeks or months — is a necessary, healthy part of any enduring bull market. It clears out the speculators and unbelieving “weak hands,” and paves the way for much higher prices in the future.

Kind regards,
Is the Gold Rally Doomed?
JL Yastine
Editorial Director

| Digg This Article
 -- Published: Wednesday, 18 May 2016 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2018 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of, its affiliates or advertisers. makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, is strictly prohibited. In no event shall or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.