The Gold Market Review

Market Update

Given all the potential risks in the markets, you need to own gold and other alternativ investments. The extreme and worldwide experiments by central bankers are a  huge threat to our society although they claim to save us with their negative interest rates and waves of fiat money liquidity. In the end not even one of those experiments has ever worked out in mankind´s history. Why should it this time?

Therefore one of my favorite investment remains gold.

Finally the gold-market has started to work off its overbought situation after the spectacular start into the new year. Besides any short-term noise $1,046 very likely marked the bottom of the five year bear-market and gold should already be on its way towards $1,500. The fact that gold has held up well above $1,000 during this necessary bear-market is a hint of extreme strength and underlying buoyancy to me.
Now that optimism is falling again remain patient and wait for the dip towards $1,180 - $1,215.

Besides gold and silver I am interested in mining stocks as well of course. Today I am going to present another very interesting silver small cap which will be followed by some senior and junior gold stock recommendations during the next couple weeks.

The Midas Touch Gold Model bearish since May 23rd

My Gold Model finally changed to the bearish mode yesterday. The trigger was a new sell signal on the weekly chart for Gold.

Compared to my last public report we have two new bearish signals:

Gold in USD - Weekly Chart

Gold Volatility CBOE Index

Two signals moved to neutral:


Gold in $, €, £, ¥

GDX Goldminers Sentiment

The model has a strong trend following tendency so it is not surprising that we got this bear signal kind of "late". Gold is already down $60. But this might just tell us that the current move down is only a countertrend move.

However the bulls have quite some work to do before the model will shift back to a bullish result.

Gold - Point & Figure chart support around $1,180 - $1,190

Looking at the P&F daily chart for gold tells us that a pullback towards $1,180 - $1,190 is still very likely but at the same time should be the worst case. A lengthy sideways consolidation in the coming weeks and months could push the support zone higher but gold will very likely test the blue uptrend-line before the next rally can start.

Gold - finally has started the long awaited pullback

The summer doldrums are right in front of us and gold finally is acting along its seasonal pattern. According to the statistics over the last 40 years gold should find a low within the first two weeks of July. Sometimes it happens earlier and sometimes it can take until August. But that´s the timeframe to get ready and to finally buy the ongoing pullback.

No matter what short-term forecast I draw into the chart the only thing that will make us money is to "buy low and sell high". Since failing below last year´s high at $1,303 gold is nearly $70 lower! That´s good but probably not enough after the $257 rally since last December.
The daily chart is getting oversold and should be ready for a short-term bounce - maybe even back towards $1,260. If the sell off doesn't stop here gold would be sliding down along its Bollinger Band looking for next support around $1,220 - $1,225.

Yet the weekly chart is still very overbought and needs much more consolidation/correction so I remain patiently waiting for the chance to buy the dip between $1,180 and $1,215. Do the same!

Action to take: Wait until you can 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 $1,190 again. As well buy silver below $15,80. Buy both metals until you have at least 10% of your net-worth in physical gold and silver. But do not over expose yourself neither. 25% of your net worth should be the absolute maximum. If you want to be more aggressive put 2/3 into silver and 1/3 into gold.

Fortuna Silver Mines - Buy the coming pullback/dip

As promised I am going to present another silver stock that I like. Probably due to its great fundamentals and a very strong management Fortuna Silver Mines has held up pretty well during the five year silver bear market. From its January low the stock has been up 235% and is close to its all-time high. But some form of a pullback has likely started which might bring it back towards one of the typical retracement-levels. I think this stock is a great buy on any larger pullback/dip. I do recommend to use a "scale-in" tactic by placing at least two buy limits.

Action to take: Buy Fortuna Silver (FSM), 50% below $4.70 and 50% below  $4.25

Stop Loss: $3.00

Profit Target: $7.50, $9.50, $14.25

Timeframe 12 - 48 months

Initial Risk($1.47) / 1st Reward($3.03) = 1 : 2.06 (acceptable ratio)
Position Sizing: Don´t risk more than 1% of your equity.

Portfolio And Watchlist

Long-term personal believes (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 and gold, 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

Anbieterkennzeichnung gemäß § 6 Teledienstgesetz (TDG)/Impressum bzw. Informationen gem § 5 ECG, §14UGB, §24Mediengesetz 

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