Gold Market Review

Market Update

As expected gold has been moving sideways in a confusing and volatile fashion. Staying at the sidelines was the only right thing to do. Neither bulls nor bears had an easy time. Now that we are already in spring I think gold is finally ready to dip below $1,200. I have been repeatedly saying that we need to wait for a dip into $1,180 - $1,190. It now looks like gold will do us this favor during the next couple of weeks. BUY THE DIP.

The gold and silver miners instead have been on fire...and are far away from any reasonable entry points. They will come back, but I guess we have to accept much higher levels to buy them. Currently there is surely no need to chase them. Let´s wait how the next 2-3 months unfold.

Overall the surprise will be on the upside in all markets. I expect inflation to rise dramatically over the next 12-24 months.

With the new portfolio & watchlist I want to help you in understanding that the outcome of the next trade is always random. But the occurrences of our edge over a series of trades and investments is what makes us consistent and profitable.

The Midas Touch Gold Model neutral since March 14th

Compared to my last public report we have five new bullish signal:
Gold USD - Daily Chart
Ratio Gold/Silver
Gold in Indian Rupee
Gold in Chinese Yuan
GDX Goldminers - Daily Chart

Two new bearish signals are coming from:
SPDR Gold Trust Holdings
GDX Goldminers Sentiment
US-Dollar Daily Chart

One signal has shifted to neutral:
US Real Interest Rate

My model has been neutral for more than five weeks now. Its conclusion remains to stay at the sidelines.

Gold´s consolidation could morph into a correction but the mantra remains to buy the dip

Gold continued its consolidation and has not been able to establish a clear and sustainable trend. It´s been dancing around the falling 3 year downtrend line ($1,247) since mid of February. Last week´s top at $1,262 probably marked the begin of the expected pullback and gold might now roll over until June/July towards its rising 200MA ($1,141). Note that gold moved below its 50MA ($1,233) for the first time since early January. This confirms that the bulls are running out of power which is very typical in spring.

There are currently a couple of super bearish analysts out there and to a certain extent I can comprehend their arguments. Indeed a Head and Shoulders pattern is possible. However you could argue for a classic ABC-correction pattern as well. Without a doubt gold´s CoT-numbers are awful too but as I explained last time we can not approach the CoT-report with bear market standards anymore. The massive physical ETF demand has transformed the gold market and during a bull market the commercial short position has reached levels north of 300k contracts many times. 

Therefore, I definitely don't see Gold crashing below $1,140. My 1st target remains $1,180 - $1,190. This is a zone where we can start buying again...and from which Gold already could embark towards $1,325. The second dip has to be bought whenever Gold is reaching its 200-DMA. I guess we will get two chances until July/August to buy into a dip.

Action to take: Buy the VelocityShares 3xLong ETN (UGLD) below $10.00

Stop Loss: $8.50

Profit Target: $18.25

Timeframe: 8-10 months

Risk ($1.50) / Reward ($8.25) = 1 : 5,5 (very good ratio)

Position Sizing: Don´t risk more than 1% of your equity

Investors should buy physical Gold with both hands if prices move below $1,150 again until you have at least 10% of your net-worth in physical Gold and Silver.

Regarding silver my advise for all the impatient goldbugs came right in time. If you followed my recommendation three weeks ago you should have bought silver below $15.00. Silver opened at $14.88 just 2 days later and we are currently up 8.87% already. Be aware that silver has the tendency to move late in a precious metals cycle so the recent spike in silver is in line with my expectation for a slightly weaker gold price until summer. Continue to buy physical silver with both hands whenever prices move below $15,00 again. The Gold/Silver-Ratio has topped and silver has a huge potential over the next couple of years. I recommend to split your full physical precious metals exposure into 2/3 in gold and 1/3 in silver.

Long-Term personal beliefs (my bias)

Officially Gold is still in a bear market but the big picture has massively improved and the lows are very likely in. If Gold can take out $1,307 we finally have a new series of higher highs. If this bear is over a new bull-market should push Gold towards $1,500 within 1-3 years.

My long-term price target for the DowJones/Gold-Ratio remains around 1:1. and 10:1 for the Gold/Silver-Ratio. A possible long-term price target for Gold remains around US$5,000 to US$8,900 per ounce within the next 5-8 years (depending on how much money will be printed..).
 


Fundamentally, as soon as the current bear market is over, Gold should start the final 3rd phase of this long-term secular bull market. 1st stage saw the miners closing their hedge books, the 2nd stage continuously presented us news about institutions and central banks buying or repatriating gold. The coming 3rd and finally parabolic stage will end in the distribution to small inexperienced new traders & investors who will be subject to blind greed and frenzied panic.

Bitcoin could become the "new money" for the digital 21st century. It is free market money but surely politicians and central bankers will thrive to regulate it soon.

If you like to get regular updates on our gold model, gold and bitcoin you can subscribe to my free newsletter here: http://bit.ly/1EUdt2K

© Florian Grummes 2016 all rights reserved

Hohenzollerstrasse 36, 80802 Munich, Germany

Disclaimer & Limitation of Liability

The above represents the opinion and analysis of Mr Florian Grummes, based on data available to him, at the time of writing. Mr. Grummes's opinions are his own and are not a recommendation or an offer to buy or sell securities. Mr. Grummes is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in the Midas Touch. As trading and investing in any financial markets may involve serious risk of loss, Mr. Grummes recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Florian Grummes is not a Registered Securities Advisor. Therefore Mr. Grummes's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. The passing on and reproduction of this report is only legal with a written permission of the author. This report is free of charge. You can sign up here: http://eepurl.com/pOKDb

Hinweis gemäß § 34 WpHG (Deutschland):

Mitarbeiter und Redakteure des Midas Touch Gold Newsletter halten folgende in dieser Ausgabe besprochenen Wertpapiere: physisches Gold und Silber, Bitcoins sowie Gold-Terminkontrakte.

Imprint & Legal Disclosure

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Herausgeber und verantwortlich im Sinne des Presserechts / inhaltlich Verantwortlicher gemäß §6 MDStV 

Florian Grummes 

Hohenzollernstrasse 36 

80801 München

Germany

E-Mail: [email protected] 

Website: www.goldnewsletter.de