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Gold: Vulnerable Until Rates Are Hiked

 -- Published: Tuesday, 8 November 2016 | Print  | Disqus 

Graceland Updates

By Stewart Thomson


1.    Gold is vulnerable.  Itís technically overbought, and a developing top pattern is a concern. 

2.    Please click here now.  Double-click to enlarge.  The $1305 - $1320 resistance zone is significant, and in my professional opinion, the rally to the $1380 area was not big enough to turn that resistance into support.

3.    Iím still a seller at $1305 - $1320.  If gold reaches $1425, Iíll then be a buyer at $1320, if there is a decline into that level.

4.    How vulnerable is gold right now?  Well, for some further insight, please click here now.  Commercial traders (aka ďthe bankstersĒ) are carrying a massive short position, as the latest COT report clearly shows.

5.    Also, thereís a perception that a Republican victory in todayís US election would be good for gold, but not all economists agree; some believe that a US dollar rally is more likely.

6.    Please click here now.  Famed investor Jim Rogers has this view, and he is followed by many money managers.

7.    Of particular concern to me are the developing head and shoulder top patterns that are in play across the gold sector. 

8.    On that note, please click here now.  Double-click to enlarge.  Given the commercial trader positioning in the COT report, which includes significant mine hedging, my technical target in the $1100 area seems realistic.

9.    If such a decline were to occur, gold stocks may go to new lows before the end of the year, while gold and silver bullion would likely hold well above their 2015 lows.

10. In the big picture, Iíve adamantly argued that gold stocks have been in a bear cycle against gold since 1996, because money velocity and bank loan profits have been in a bear cycle since then.

11. Most of the world has been in a deflationary vortex since 1996, and the vile QE program contributed significantly to that vortex. 

12. The good news is that Iíve predicted gold enters a bull era in the summer of 2017.

13. For America, Iím on record predicting a December rate hike this year, and two more in 2017. 

14. These rate hikes will end the bank loan profits bear cycle and end the money velocity bear cycle.  That will create a new bull cycle in inflation.

15. Please click here now. In regards to inflation and rate hikes, some of the worldís greatest economists clearly have the same outlook that I do!

16. A fairly quick rise in US interest rates to even four percent could create significant problems for US stock market investors.  As inflation rises, lenders want a higher interest rate to compensate for that inflation.

17. If inflation were to rise significantly, itís unknown what level of interest rate would be required to stop banks from moving enormous amounts of money out of government bonds and into the fractional reserve banking system.  Lenders may want vastly higher rates than they are getting now.

18. A US government bond market panic is becoming a potential event that serious money managers will need to think about very carefully.  I would suggest they start thinking about itÖ now.

19. Silver held its ground remarkably well during yesterdayís gold price decline, and that is also likely because the winds of inflation are beginning to blow. 

20. Please click here now.  Double-click to enlarge.  Silverís price action on this short term chart is impressive.

21. Many silver enthusiasts are frustrated with the gold versus silver ratio.  That frustration is understandable, but in a world where deflation is king, gold will always shine brighter than silver. 

22. In a world where inflation is king, silver takes the leadership baton from gold.

23. Please click here now.  Double-click to enlarge this GDX chart.  Was the huge rally in gold stocks just a flash in a deflationary pan?  I donít think so.  Fundamentals make charts, and the unfortunate truth is that Janet Yellen refused to raise rates this year, after promising four hikes.  That refusal to hike has delayed the end of the bank loan profits and money velocity bear cycles, and caused the swoon in gold stocks. 

24. The spectacular gold stocks rally in the first half of 2016 was likely a small taste of what is coming in 2017.  Thatís because inflationary winds are set to blow much harder in 2017 than they did this year, and keep blowing harder for many years after that!






Stewart Thomson 

Graceland Updates


Note: We are privacy oriented.  We accept cheques, credit card, and if needed, PayPal.


Written between 4am-7am.  5-6 issues per week.  Emailed at aprox 9am daily.  




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.


Risks, Disclaimers, Legal

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:  

Are You Prepared?


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