Gold: Debates, Inflation, & Option Expiry Stewart Thomson
Sep 27, 2016
- If gold is to move substantially higher and retain the bulk of those gains, inflation needs to become a significant concern.
- Please click here now. Double-click to enlarge this eight hour bars gold chart. An upside breakout seems imminent, but patience is required.
- A breakout from that drifting rectangle pattern I’ve highlighted on the chart is significant, because it creates a much bigger breakout on the monthly chart.
- Please click here now. Double-click to enlarge. Gold is almost ready to begin a significant leg higher!
- The US presidential debate had almost no effect on the gold price, and that’s because most of the questions had nothing to do with the economy.
- On that note, please click here now. Double-click to enlarge this interesting 8 hour bars chart of the Dow.
- The US stock market initially rallied after the debate, but it’s since given back most of those gains.
- There’s a clear bear wedge pattern in play on the chart, and that follows a breakdown from a head and shoulders top pattern.
- The bottom line is that the September – October time frame is crash season for the US stock market, and the situation is grim.
- Who won the debate? Well, mainstream media is essentially socialist, and they say Hillary won.
- I agree, but please click here now. Social media statistics suggest that Trump won the debate, and that’s because social media was more focused on the economy than mainstream media.
- There are a lot of Trump fans in the Western gold community, and I suggest they focus on social media as much as mainstream media, to keep on top of the pre-election action.
- In regards to the potential for inflation, please click here now. Merrill analysts have just issued a blockbuster report, suggesting that a multi-year supply output squeeze is coming.
- I think they are correct, and this has significant implications for the price of oil, which is by far the single largest component of most commodity indexes.
- Please click here now. Double-click to enlarge this eight hour bars oil chart.
- Oil is coiled in a nice bull wedge pattern, and poised to surge towards the $50 area highs, and perhaps to $53.
- Some oil bears have suggested that electric cars could put pressure on long term oil demand. I agree, but they will put more pressure on oil companies to cancel new mega-projects.
- Electric cars will not produce a lower oil price, but, ironically, a higher one! There are many factors working synergistically to drive inflation higher, and oil is certainly one of them.
- I’m getting a lot of emails from investors who are worried that gold stocks could get hit hard if the US stock market crumbles. Here’s the bottom line:
- There’s no question that there appears to be more margin used in the gold stocks arena than the bullion arena, at the current time.
- It’s a different situation from 2008. In 2008, hedge funds were forced to liquidate gold to meet margin calls caused by the OTC derivatives crisis.
- Now, a loss of confidence theme is brewing, with the focus on central banks and government treasury bonds. That means that institutional money managers are much more likely to buy gold in a market meltdown event. Gold stocks can decline initially if the stock market crashes, but they will soon follow gold, and move higher.
- Please click here now. Double-click to enlarge this GDX chart. Note the position of the Stochastics oscillator, at the bottom of the chart. GDX is more solid here than most investors think.
- While the presidential debate received a lot of attention, I’ll dare to suggest that tomorrow’s COMEX option expiry is much more likely to be the catalyst that produces a fresh leg higher for gold, and for stock in the companies that mine this mighty metal!
Sep 27, 2016
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