Graceland Updates
1.Hedge funds have been
exiting the gold market, and shorting it.Most of the bearish analysis is
based on forecasts of crashing investor demand.
2.Many analysts are
claiming the gold bull market is over, and you should sell all your holdings.
3.I disagree.So does Merrill Lynch.Our
data shows that to sustain gold prices at $2,000/oz by 2016, investors need
to purchase an amount of gold similar to that purchased in 2008, when prices
hovered around $872/oz.-Merrill Lynch, quoted by Investing.Com, March
17, 2013.
4.Gold never declined after
President Roosevelt revalued it in the 1930s.The average retail investor
couldnt even buy an ounce of gold, yet the price remained high. Asian
central banks are engaged in what I view as market-based gold revaluation.Merrill
is forecasting that while investor demand for gold will plummet over the next
3 years, the price will go higher.
5.My long-held view is that at the
end of this gold bull market, American retail investors will not be lining up
in the street to buy, like they did in the 1970s.
6.Instead, they will more likely be
lining up in real breadlines, like they did in the 1930s.Central bank buying
will push the gold price higher and higher, and their balance sheets will
probably look vastly worse than they already do.
7.Please click
here now.That is Merrills forecast for investor demand.You can see that
they are forecasting what could rightfully be called a total wipeout of
investor demand.
8.Every 2 weeks, the Federal Reserve
releases statistics about their balance sheet.The next release comes later
this week.
Please click
here now.You are looking at the chart of the Feds balance sheet.Since
the sell-off in bonds and gold began in the fall, the balance sheet has grown
quite substantially.
9.Vice Chair of the Fed, Janet
Yellen, has recently been making extremely dovish statements.Chairman
Bernanke himself has clearly stated that the unemployment rate is totally
unacceptable.
10.Please click
here now.This chart gives you a closer look at the Feds balance sheet
growth.There is a clear uptrend in play.
11.Merrills report could be an
institutional game changer.Until now, most of the bearish analysis has
been predicated on the view that retail and hedge fund liquidity flows are
needed, to make the price of gold rise in a meaningful way.Many pension funds
will pay close attention to this important report from Merrill, and direct
their liquidity flows accordingly.
12.Sadly, most of the current emails
that I get from gold market investors are about how much lower they think
gold is going.There is a lot of talk about the need to wait for a breakout,
before applying capital into the metals market.
13.Unfortunately, this type of
thinking can destroy wealth, rather than build it.Fundamentals make
charts.The fundamentals of the Feds balance sheet are likely to make gold
and gold stock charts look very good, but only for investors who buy at lower
price levels, when it is uncomfortable to buy.
14.Japans central bank balance sheet
may be set to grow, tremendously.Also, Mark Carney appears to be committed to
growing the BOE balance sheet.
15.If Merrills report turns out to
be the institutional game changer that I think it is, the current disconnect
between the gold price charts and the Fed balance sheet chart may be about to
be resolved.
16.Either the Feds balance sheet
must shrink, or the gold price must begin to rise.The current conundrum could
continue for a bit longer, but I wouldnt bet too much money on that idea!
17.With both the Fed Chairman and the
Vice Chair calling the current unemployment situation totally unacceptable,
and Merrill Lynch stating that the retail investor can be almost entirely
jettisoned from the gold market, without harming the price, the bears
appear to be treading on ice that is thinner than a dollar bill.
18.How low could gold go, before
embarking on a rise that mimics the Fed balance sheet chart?Please click
here now.
19.Thats the monthly gold chart, and
Ive highlighted massive support that sits in the $1432 area.A decline to
that level would make the disconnect between the Feds balance sheet chart
and the gold price chart bizarre and surreal.
20.As unlikely as such a decline is,
investors need to be prepared for anything, in all markets.The new head of
Japans central bank, Haruhiko Kuroda, probably wont ramp up their balance
sheet for a few more months.That gives the gold bears a tiny window of
opportunity, to make their play.
21.Regardless, I expect to see
Chairman Bernanke become much more aggressive, in coming FOMC meetings.I
think this meeting will be the last time you see him discuss the costs
of QE very much, and rather than reducing the monthly purchases, hell
ultimately move towards accelerating them.
22.To view my short term outlook for
gold, please click
here now.Gold has likely broken out, upside, from a small symmetrical
triangle.The Fed meeting this week could cause enough volatility to push gold
down to the supply line of that triangle, in the $1580 area.
23.If Chairman Bernanke says
something wildly bearish, gold could begin a decline down to $1432, but I
think that is highly unlikely.I also think the some gold investors may be
over-focused on the events in Cyprus, and under-focused on the Japanese
parliament approval of Haruhiko Kuroda.Aggressive traders should wait for
this weeks FOMC statement before buying more long positions.
24.I think most of the ingredients
needed to begin a bullish trending move in gold, are now in place.Please click
here now.Thats the GDX daily chart, and Ive highlighted a peppy
ascending triangle pattern, targeting the $40 area, which is not exactly a
parabolic move, but its a start!
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