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It Could Finally Be Time For Gold To Really Shine

Scorpio

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#1
It Could Finally Be Time For Gold To Really Shine

Jesse Felder December 2, 2016


A version of this post first appeared on The Felder Report PREMIUM.


Over the summer I noted that gold, after a great run during the first half of the year, was running into important long-term resistance. A few weeks later, in a conversation with Grant Williams for RealVision, I noted that sentiment in gold had also gotten far too euphoric. The precious metal needed a pullback before it would be able to embark on its next leg higher.

To be clear, I still believe gold has started a new bull market. Furthermore, the case for owning gold has not diminished because of Donald Trump’s election victory. If anything, it has strengthened. The prospect of rising deficits and inflation enhance the bullish case for owning gold, especially when you consider the fact that the Fed, or any other central bank for that matter, is not likely to change dramatically from its incredibly dovish bias any time soon.

And thanks to the “Trump Triumph Trade,” we have now seen a healthy pullback in gold accompanied by a complete shift in sentiment. Outflows from the gold ETF have persisted every day for nearly three straight weeks since the election. Headlines have become very bearish again, similar to what we saw as gold bottomed late last year. From a contrarian standpoint this is all very constructive.

What might matter most to the price of the precious metal, however, is the path of the dollar as they normally move inversely to each other. On a long-term time frame there are some significant bearish momentum divergences at play in the greenback. These are very similar to what we witnessed at the 2002 peak in the dollar. In fact, that 3-year analog is 92% correlated to the last 3 years’ trading in the greenback. Furthermore, this comes just as the Dollar Index tests the 61.8% Fibonacci retracement of its long-term decline since then. Technically, it looks ripe for a major reversal.



But the bullish case for gold does not just rest on the direction of the dollar. Gold is also an, “investment in monetary policy failure,” as Michael Lewitt wrote this week, or at least a hedge against it. And for anyone paying attention, it is becoming very clear that the “policy stakes are now very high,” to quote William White from a recent speech he gave in which he discusses in brilliant detail the waning efficacy and growing risks of the central bank experiment we have witnessed for the better part of the past decade.

The bottom line is the case for owning gold has only grown stronger over the past few months even while prices and sentiment have reversed. To me, technicals and sentiment have once again aligned to create what looks like a terrific opportunity to take advantage of what could be the very early stages of a major shift in the long-term trend of outperformance by financial assets over real assets.

https://www.thefelderreport.com/2016/12/02/it-could-finally-be-time-for-gold-to-really-shine/
 

tom baxter

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#2
Back in the day, back in 2005~6 when I was a member of GIM under another tag I was buying aussie gold @ about $550 an oz, silver at $6.50. I remember wondering how high it would go and wishing it went to the moon. Then in the 00's I listened to a FSN podcast with marc Faber and he said the best thing for gold is that it goes up, but not too quickly. I could see the logic in that and when gold dropped recently from $1800 aus to $1560 I had no problem. It had gone too high too fast IMO. In for the long haul, or as nailbender would say, I'm a keeper.
 

stonedywankanobe

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#4
I still believe gold is too expensive and will fail many believers, not touching that useless crap. Silver is a good buy though, great feckin buy actually, such a good deal, very undervalued considering just how goshdamned useful and rare the stuff is.

Serious, they got the stuff backwards in regards to value. At 1000 + per oz troy and let me get this straight, it doesn't even kill germs? HA! Suckers!
 

Irons

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#5
I still believe gold is too expensive and will fail many believers, not touching that useless crap. Silver is a good buy though, great feckin buy actually, such a good deal, very undervalued considering just how goshdamned useful and rare the stuff is.

Serious, they got the stuff backwards in regards to value. At 1000 + per oz troy and let me get this straight, it doesn't even kill germs? HA! Suckers!
GSR.jpg
 

stonedywankanobe

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#6
There is no feckin way that gold hoor meme is accurate.
What is that like a kilo of gold crap? Sheesh! Look at all the swellver there! Way moar useful pile IMVHO.
 

Irons

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#7
There is no feckin way that gold hoor meme is accurate.
What is that like a kilo of gold crap? Sheesh! Look at all the swellver there! Way moar useful pile IMVHO.
EDIT: I'm pretty sure you have that silver half in the picture now Wanka!


goodsir.jpg
wanka1.jpg
WANKA2.jpg
 

stonedywankanobe

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#9
Yep, I did have that half. Gave it to my little bud who thought it was the coolest coin I had last time he looked through my stash. He's 9 now and the closest thing I have to a son.
I've been pumping silver to him since he was 5 and he still don't get it, as soon as I gave him the coin he asked what it was worth and tried to sell it back to me!
 

<===Foolsgold

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#10
See Irons this thread attracts the white copper boys like a moth to a flame.
 

smooth

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#11
Moral of the story = If you buy gold you wont need a pallet jack.
 

tom baxter

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#12
I still believe gold is too expensive and will fail many believers, not touching that useless crap. Silver is a good buy though, great feckin buy actually,
Silver doesn't do well in times of great deflation, that has been proved over and over. But it's ok to have if you can't afford gold. Silver is the poor man's gold.
 
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#13
Silver doesn't do well in times of great deflation, that has been proved over and over. But it's ok to have if you can't afford gold. Silver is the poor man's gold.
Yeah , you are absolutely correct. Silver is poor man's gold because they can't afford buying Gold.Here in London there is a pawn shop , from there you can buy gold on installments and in case of Instant Cash ,you can sell them back the item you get from them. They will give you the same price as you have given to them.
 

tom baxter

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#14
Unfortunately the average person has massive debts and can't even put any savings aside let alone buy any gold. Their hope is that the future will be brighter but every action they take debt wise assures it will be darker, personally and collectively.