Gold: Tax Loss Season Or A Bull Era? Stewart Thomson
November 27, 2018
1. The next Fed meet (and rate hike) is December 19, and just weeks after that, US president Donald “The Golden Trumpster” Trump may be set to unleash a new round of inflationary and growth-crushing tariffs.
2. It’s not easy (to put it mildly) for American business to create new factories to replace the products made by highly productive Chinese factories.
3. So, for 2019, most top US bank economists and money managers are slashing their US GDP growth forecasts and raising their inflation forecasts.
4. Morgan Stanley’s global stock market weightings are legendary in the institutional world, and they just moved America to a horrifying “underweight” ranking for their global stock market positioning.
5. Most big-name economists in America see US GDP growth sliding to sub 2% by mid 2019 while inflation stages an “upside surprise”.
6. Please click here now. Goldman’s top economists clearly have the same view I do.
7. What’s particularly interesting about this forecast is that their top economist is also forecasting four rate hikes from the Fed in 2019.
8. Four hikes would put enormous pressure on the US government’s ability to finance its outrageous debt. It can be argued that these hikes are the Fed’s response to the insane growth of that debt.
9. Whether there are two rate hikes as Morgan Stanley predicts, three as I predict, or four as Goldman predicts, the growth of US government debt is clearly going to put vastly more pressure on the US government bond market (and the corporate bond market) in 2019 than it already has in 2018.
10. In the matter of “tax loss” season, I realise that many gold market investors are nervous that gold stocks will decline into December like they have in recent years.
11. Please click here now. Double-click to enlarge. I don’t see anything to be concerned about on this daily gold chart.
12. Please click here now. Double-click to enlarge. I don’t see anything on this GDX chart to be concerned about either.
13. GDX and most senior gold stocks are tracking the gold price quite nicely. Gold supply is limited, and top analysts at Goldman and other firms are predicting “Commodities will soar.”
14. Also, 2019 is an election year in India. Morgan Stanley just raised India to “overweight” in its global stock market weightings, as it moved America to that somewhat pathetic underweight ranking. While GDP growth nosedives to potentially under 2% in America, it should be at least 7% in India for 2019, and I’m predicting it could hit 8%. GDP growth and upside action in the Indian stock market is good news for gold. The bottom line:
15. Gold demand in India is rock solid, as it is in China. As commodities begin to rise, Goldman will lead institutional investors into more commodities investing. Gold, GDX, GDXJ, SIL, and related stocks should have a great year.
16. Please click here now. Double-click to enlarge this CDNX venture index chart.
17. Whether it’s MACD, moving averages, RSI, or a host of other technical indicators, gold and GDX look solid. Unfortunately, that’s not the case with CDNX.
18. Please click here now. That’s a look at the key buy (green) and sell (gold) signals for the high risk venture sector that I cover in my www.gracelandjuniors.com newsletter.
19. The CDNX and related stocks are susceptible to tax loss selling. Penny stocks are high risk (but also high potential reward) and I don’t expect to get a major buy signal for the CDNX index until gold trades at $1420 on a weekly closing basis.
20. Please click here now. Double-click to enlarge what just may be the world’s most spectacular price chart!
21. Barrick is chaired by former Goldman president John Thornton. Thornton has aggressively bought stock in the open market and has categorically stated that he is not selling a single one of his shares for short term gain.
22. Clearly, Thornton is not playing for peanuts. With the majestic bull wedge and inverse head and shoulders bottom in play, it’s obvious that this man is poised to see himself and all Barrick shareholders gain enormous wealth in what I call the “bull era”.
23. Thornton was the driving force of the Barrick-Rangold merger. That merger was approved by a stunning 95% of shareholders of both companies. The Chinese government has awarded him the government’s highest award for a non-Chinese person. Of foreigners who have contributed significantly to Chinese growth, the Chinese government views John Thornton as one of the fifteen most important people in the world.
24. Barrick shareholders are not just in good hands. They are in spectacular hands! A breakout from the bull wedge with a Friday close over $14 is a rocket launch signal for the entire gold mining sector. Rather than wasting time worrying about a tax loss season that is going the way of the dodo bird, I suggest that gold stock investors should be positioning themselves, as Goldman clearly is, for the rocket ride of a lifetime, in a fabulous gold bull era!
Nov 27, 2018
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is a retired Merrill Lynch broker. Stewart writes the Graceland
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