Gold Ownership: A Golden Wave Stewart Thomson
Sep 19, 2017
- Several weeks ago, I surprised most investors by issuing my “Book Profits Now!” call for the precious metals asset class.
- When I did so, head and shoulders top formations immediately formed on gold and GDX, and prices have swooned.
- Rumours of a sudden drop in Indian dealer demand appeared to become a concern for commercial traders on the COMEX.
- India’s monsoon season has turned out to be a bit of a “bust”, with both flooding and drought. Farmers buy gold with a portion of their crop profits. With only another week or two left in the monsoon season, crop sales may not be very good.
- Of further concern to me was the fact that the demand drop was occurring as gold arrived at the $1352 resistance zone. That resistance was created by Modi’s cash call-in that took place in November of 2016.
- The upcoming Fed meeting will probably mark the end of the decline related to those concerns, but there could be additional weakness until the next US jobs report is released.
- Please click here now. Double-click to enlarge.
- For investors, this gold chart tells the entire tactical story. The $1270 - $1260 area is the target of the H&S top pattern.
- Investors should use a two-pronged strategy to profit from the coming rally that should take gold back to the “Call-In Day” resistance around $1352.
- I’ve outlined the $1315 - $1295 price area as the first key buy zone. Eager accumulators can buy right now.
- Janet Yellen’s handling of the imminent launch of quantitative tightening (QT) at this Fed meeting is critical.
- It will almost certainly determine whether gold bounces from the $1315 - $1295 buy zone or first proceeds down to the H&S target zone at $1260 -$1270.
- If gold moves to that lower zone, investors need to consider taking more aggressive buy-side action.
- That’s my personal strategy as well as my recommended one for gold bugs around the world.
- Please click here now. Double-click to enlarge this GDX chart.
- The technical picture for GDX is very similar to gold. Note the small but positive wedge pattern. I’ve highlighted it with thick black trend lines.
- While the target of the H&S top pattern is about $22.50 (similar to the $1260 - $1270 target for gold), the wedge formation could send GDX and most gold stocks higher from current price levels.
- Please click here now. Double-click to enlarge this US dollar versus Japanese yen chart. My important 14,7,7 series Stochastics oscillator is now overbought, and that’s happening just ahead of the Fed meeting.
- Heavyweight analysts at Japanese bank Nomura are predicting a collapse in the dollar down to the 105 – 100 target zone by the end of the year.
- That’s also been my target zone for quite awhile, and it’s because the dollar is trading in a rectangle between 108 and 114.
- The technical odds of a breakdown to 100 -105 are about 67%. Also, rallies tend to be week when oscillators become overbought quickly, and that’s what’s happening now.
- Please click here now. This chart tells the entire story for the precious metals asset class. It’s dramatically under owned, and there’s a beautiful double bottom pattern in play.
- Gold and associated assets are clearly poised for an enormous increase in institutional ownership. I call it “The Golden Wave”. This buying is not event-based. It’s based on portfolio allocation to gold as an asset class, and that means the buying will be sustained.
- Gold bugs around the world can use my key prices zones of $1315 - $1295 and $1260 - $1270 now to get tactically positioned in key gold stocks to surf the golden institutional wave!
Sep 19, 2017
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is a retired Merrill Lynch broker. Stewart writes the Graceland
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