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Graceland Updates
By Stewart Thomson
1.Sell the rumour, and buy the news!The rumour was a
possible IMF decision to include the yuan as a component of its SDR.
2.Please click here now. The news is out, and
the news is good; the IMF has decided to include the yuan in its SDR
virtual currency basket.
3.Donald Trump and other "protectionists"
have argued that the yuan is undervalued against the dollar.In contrast, I've
argued that it is overvalued, and with the IMF decision out of the way, the
PBOC will likely cease its short term support.
4.That means the yuan should quickly begin a modest
decline against the dollar, and that should produce a noticeable increase
in Chinese citizen demand for gold.
5.Chinese New Year celebrations are also coming soon, and
gold buying tends to accelerate significantly during that time.In addition,
the Chinese stock market has sold off recently, while gold has been
reasonably stable.With a potential decline in the yuan ahead, gold demand
in China is poised for a hefty boost!
6.In the West, a number of factors are appearing that
should also be supportive for the price of gold.The next US jobs report is
scheduled for release on Friday.Gold often stages significant rallies in the
days and weeks following the release of that report.
7.Also, the latest COT reports were released yesterday,
and I like what I see there.To view the COT report for silver, please click here now. While the banks
reduced both their longs and shorts (probably due to December futures expiry
approaching) there is a net reduction of bank short positions, and that
tends to happen in advance of nice price rallies.
8.To view yesterday's COT report for gold, please click here now.Small investors
(non-reportable positions in the report) are now net short gold. These
"dumb money" investors tend to use a lot of leverage, and bet
against the smart money banks.
9.The banks reduced their net short position, and it's
only modestly larger than their long position now.That's very good news.The
funds added more short positions into the latest decline, which is not a wise
decision, given that the banks are reducing theirs.
10.Please click here now. That's the daily gold
chart.There could a bit of a scary pullback to retest the $1050 area lows
ahead of the jobs report, and gold is likely to remain range bound in the
$1050 - $1095 area, until the FOMC decision on December 16th.
11.The lead line on my key 14,7,7 Stochastics series
oscillator, which I call "Tony the Tiger", has moved above
the 20 line, which is definitely good news.
12.Regardless, while gold may rise a bit or fall a bit
over the next two weeks, it's very important that gold investors think hard
about the upcoming FOMC decision.Here's why:
13.Western investors became a key force of demand, when
the Fed initiated its QE program.They believed it would spur significant
inflation.They were wrong.
14.They were wrong because while QE reduced overall
interest rates, the Fed agreed to pay commercial banks interest on their
reserves, at a higher rate than the Fed Funds rate.
15.That single policy turned QE into a horrific
deflationary fireball.Instead of reversing money velocity, the Fed caused it
to implode.
16.The December 16th FOMC decision is critical
for gold, because the Fed may decide to raise the Fed Funds rate, while
keeping the ERR (excess reserves rate) static.
17.If that happens, the banks will remove money from the
Fed, and begin loaning it to each other, creating a new bull market in
money velocity.
18.Please click here now. That's the daily GLDX
chart.It's an ETF for gold exploration stocks.The volume is very bullish, and
a significant rally appears to be imminent.
19.There is a massive bullish non-confirmation in play
now between gold bullion and gold stocks.In November, gold bullion
significantly penetrated the July lows, while silver barely did.
20.Most importantly, while bullion makes new lows,
many gold stocks are trading far above theirs!On that note, please click here now.That's NYSE-traded
Seabridge Gold, and while bullion languishes, it's one of many gold stocks
displaying fabulous price and volume action.
21.In my professional opinion, the Western gold community
is on the cusp of a watershed reversal in money velocity, and it will be
unleashed by Janet Yellen on December 16th.
22.Please click here now. Goldman's top
economists predicts four very modest rate hikes over the next year.For the
first time in history, because of the ERR/Fed Funds spread, rate hikes are
bullish for gold.
23.QE could have worked, should have worked, and would
have worked, to reflate America, if Ben Bernanke had not incentivized the
banks to hold reserves with the Fed.Ben probably should have been fired for
incompetence, but that's all water under the bridge now.
24.On December 16th, Janet Yellen is set to
reverse Ben's destructive policy, and usher in a new era for money velocity,
gold stocks, silver, and gold!
Thanks!
Cheers
st
Stewart Thomson
Graceland Updates
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Stewart Thomson is a retired Merrill Lynch broker.
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Risks, Disclaimers, Legal
Stewart Thomson is no longer an investment advisor. The
information provided by Stewart and Graceland Updates is for general
information purposes only. Before taking any action on any investment, it is
imperative that you consult with multiple properly licensed, experienced and
qualified investment advisors and get numerous opinions before taking any
action. Your minimum risk on any investment in the world is: 100% loss of all
your money. You may be taking or preparing to take leveraged positions in
investments and not know it, exposing yourself to unlimited risks. This is
highly concerning if you are an investor in any derivatives products. There
is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion
written off officially. The bottom line:
Are You Prepared?
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