Gold: Seasonals And The Jobs Report

From a seasonal perspective, gold tends to be a bit weak from late February until the end of the first or second week in March.  I see nothing out of the ordinary with gold’s current price action.

That’s a seasonal chart for gold, courtesy of Dimitri Speck.

Note the black arrow that I put on the chart.  Also, the US Employment Situation report is scheduled for release on Friday, and gold has a tendency to often decline going into that report, and then rally nicely for several weeks after the report is released.

Investors in the global gold community should be steady buyers in March, in anticipation of the rally!

That’s the daily gold chart.  I’m looking for a two day close over $1217, to ignite a rally towards $1252.

Note the buy signal that is flashing now, on the key 14,7,7 Stochastics series at the bottom of the chart.  It’s normal for the price to gyrate a bit as a fresh signal is generated, and that’s happening now.

Many economists appear to be unaware that most of gold’s seasonal price action is dictated by events in the Indian and Chinese jewellery markets.  That’s logical, since it’s where the most tonnage changes hands. 

Key religious and cultural events in China and India often produce enormous surges in demand that completely overwhelm supply. 

I think the technical situation I’ve highlighted on my daily chart fits nicely with the current seasonal action in those key markets.

The next big event for gold is the Indian wedding season and the key Akshaya Tritiya (Akha Teej) religious event on April 21.

Indians are essentially mandated by the Hindu religion to buy significant amounts of gold in the period leading up to Akha Teej.  That buying should help create a nice leg higher, in Western mining stocks!

It’s unfortunate that there are no dates on the Western calendar where citizens eagerly race to buy gold, to celebrate life.  

Regardless, gold stocks do look set to rally further.  That’s the GDX daily chart, and it looks superb.

After rallying in late December, from the $17 area to above $23, GDX has been consolidating, in a drifting bullish rectangle pattern.

Note the beautiful 14,7,7 Stochastics series buy signal now in play at the bottom of the chart.  Gold stocks tend to lead gold bullion, and I expect the traditional April rally in gold to be preceded by a rally in GDX.

That’s the GDXJ daily chart.  I’m looking for a two day close over $27 to reinvigorate the rally.

GDXJ is also close to breaking out to the upside, above a significant downtrend line.  Junior gold and silver stock enthusiasts should be eager buyers in the current price area!

This daily silver chart looks spectacular.  The bullish wedge pattern has a really nice shape to it.  The more aesthetic a price pattern is, the more reliable it tends to be, and this is a particularly good one.

Silver should easily outperform gold, if the April rally proceeds in its normal seasonal fashion.

The new London gold fix launch is just a few weeks away, and it will bring substantial and much-needed transparency to the global price discovery process. 

One of China’s banks is already the world’s largest gold retail bank, and its entry in the London market should enhance that powerful position, which is great news for the entire global gold community.

Stan Druckenmiller is an influential hedge fund manager.  He’s concerned that a delay in raising rates could result in a stock market crash, which is something that Alan Greenspan has also talked about.  My suggestion is to avoid the US market for now, but to buy it if there is a crash, which seems more and more likely as time progresses. 

Apple has a major news conference scheduled for March 9, about its special new watch.  The Wall Street Journal has stated that while the standard watch will sell for about $350 - $500, a special gold watch will sell for about $5,000, and may contain as much as two ounces of gold in it. 

JP Morgan has predicted Apple will sell about 25 million of the standard watches in 2015, and the Journal suggests that the company has plans to build a million gold watches a month, and sell them in Asia.  On March 9, the world will likely learn more about what the actual gold content of each watch is, and that time period is roughly when gold makes its March seasonal low.  If the Journal’s statements are even partially correct, the demand from Apple could be the catalyst that ignites the greatest gold market rally in a number of years!

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