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Update 17th of June 2013
 
Arguments for lower prices:
- Still valid MACD sell signal for Gold on the monthly chart.
- Gold still in well defined downtrend.
- If Gold moves below US$1,340.00 we should see a test of US1,320.00 followed
by a break of the multi-year uptrend. Already hourly close below US$1,359.00
would be critical.
- Investors still moving out of Gold ETFs. The SPDR Gold Shares Fund (GLD)
is now holding only 1,003.53 tons of Gold .350 tons of Gold have been sold
since beginning of this year.
- During Fed Meetings Gold tends to be very weak.The next FOMC Fed Meeting
will be held this week during June 18th & 19th. The rate announcement
will be on wednesday 19th of June.
- India increases tax on Gold imports again. This could cut down indian
gold demand by up to 75%.
- Although gold and silver performed contra-cyclical in recent months (when
compared to stocks), the correction in equities could push down precious
metals as well (risk off...).
Arguments for higher prices:
- Gold seems to be working on some kind of double bottom. Confidence in
a new rally is still very small therefore every attempt to rally is quickly
being sold. But despite the recent sell off one week ago, gold is holding
well above US$1,375.00 so far. As well US$1,340.00 has not been violated.
Gold is producing first series of higher lows and higher highs.....
- Bollinger Bands are tightening. Current range is US$1.361,87 to US$1,416.31.
A big move is brewing.
- Weekly SAR indicator gives a buy signal with a weekly close at US$1,423.00.
This would be first buy signal since october 2012 !!
- Potential W-formation shaping in gold. Confirmed if gold closes above
US$1,480.00.
- On the daily chart for the Dow Jones/Gold ratio the indicators MACD & RSI
are not confirming latest new high at 11.30 points. Negative divergence
points to a trend change!!!! Between mid of november 2012 and mid of may
2013 the Dow Jones Index outperformed Gold and the ratio went from 7.286
up to 11.297 points. The RSI indicator on the weekly chart for this ratio
has never been more overbought since mid of 1999 !!!!
- Strong positive divergences (RSI & MACD) in HUI Gold mining-Index
increases chances that the bottom indeed is in place. Short-term we are
seeing some weakness but after current minor correction the index should
soar.
- The latest Commitment of Trade (CoT) reports have improved again (especially
for silver). According to www.sentimenttrader.com every
time speculators were holding a combined position below 75,000 contracts
Gold was on average 22.2% higher a year later. Personally I haven't seen
a more bullish setup anytime in the last 10 years. Sentiment continues
to be at oversold extremes (Gold Public Opinion & Hulbert Gold still
at multiyear lows).
- If gold & silver should continue to move contra cyclical towards stock-markets,
a recovery is in the cards as the stock-markets are starting to correct.
- Germany changes VAT for silver coins. From 1st of January 2014 germans
will have to pay 19% VAT on all silver coins. The new tax rate applies
to silver bullion coins such as Chinese Panda, Australian Kookaburra, the
austrian Silver Philharmonic and as well on silver collector coins. It
could lead to a spike in silver coin demand in Germany until end of the
year.
Conclusion
- Guys, as you know I am writing these free analysis since 2009 more or
less on a bi-weekly basis. I am into the precious metals sector since 2002.
I started investing in 1995. Based on my experience & knowledge I have
never ever seen a more bullish setup in gold and silver as of today. I
think there can be made fortunes in the next couple of years. The sector
is completely beaten down. Especially the Dow jones/Gold Ratio reminds
us of the bigger trend still in place.
- Soon or later the market will realize that the FED and other central banks
can not withdraw from QE. They have maneuvered themselves into a dead end.
You should read the following statements from the last "Record
of Meeting of the Federal Advisory Council and the Board of Governors": "There
was nearly unanimous consensus that the sequestration has had little direct
business impact so far. With the specific exception of the Washington,
D.C., metro area, no member indicated material measurable impact from the
sequester. Two members noted specific impact on major defense contractors'
activities in their regions. One suggested the impact of sequestration
would be difficult to assess, with only 3% of business respondents reporting
a direct effect.... There is also concern about the possibility of a breakout
of inflation, although current inflation risk is not considered unmanageable,
and of an unsustainable bubble in equity and fixed-income markets given
current prices."... Further, current policy has created systemic financial
risks and potential structural problems for banks.... Uncertainty exists
about how markets will reestablish normal valuations when the Fed withdraws
from the market." Now it is clear that there will be no recovery in 2015
and that central bankers have run out of tools to patch over the structural
problems and the can can no longer be kicked down the road. The emperor
has no clothes.
- Gold & Silver are bottoming out and are at least due for a technical
bounce up to strong resistance at US$1,485.00 and US$1,525.00. The current
week might see some more initial weakness but as we are moving closer and
closer to july the expected rally should start very soon. I personally
believe that this will be the beginning of a wave that ultimately will
Gold catapult towards US$5,000.00 to US$8,000.00 within the next 4 to 5
years. The conditions now are so extreme that this sort of move is becoming
more and more likely.
Long term:
- Nothing has changed
- Precious Metals bull market continues and is moving step by step closer
to the final parabolic phase (could start in autumn 2013 & last for
2-3 years or maybe later)
- Price target Dow jones/Gold Ratio ca. 1:1
- Price target Gold/Silver Ratio ca. 10:1
- Fundamentally, Gold is still in 2nd phase of this long term bull market
1st stage saw the miners closing their hedge books, 2nd stage is continuously
presenting us news about institutions and central banks buying or repatriating
gold. 3rd and finally parabolic stage will bring the distribution to small
inexperienced new investors who then will be acting in blind panic.
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