Gold Stock Leaders: Barrick & Newmont

The gold market is very firm, given that most Indian players are in “wait and see” mode.  Demand in India has slowed tremendously in recent weeks…in anticipation of the February 28 budget release. 

That’s the daily gold chart.  When I issued a “book profits now” signal in the $1305 area, I did so because Indian demand was drying up quickly, and because the 14,7,7 Stochastics oscillator was above the 90 level.

During the ensuing decline from the $1308 area to the $1190 area, the Indian central bank announced more major changes to its gold market policies. 

Banks can make loans to jewellers again, and gold coins can once again be imported.

This is very good news.  Once the budget is announced on Saturday, I expect demand to begin to rise almost immediately, and certainly within a week or two.  Also, the March – June wedding season is almost here, and there is a strong possibility that the import duties will be reduced in the budget.

Koos Jansen follows the Shanghai Gold Exchange (SGE) very closely.  It’s welcome (and expected) news, to see that India will be the largest partner of the Shanghai Gold Exchange.  Clearly, the world gold community has a very bright future, regardless of what happens in America.

In 2015, gold stocks are acting much better than gold itself, as I predicted they would.  I expect this outperformance to continue for many years. 

That’s the daily chart for Barrick.  There’s a superb inverse head and shoulders bottom in play.  Also, note the beautiful buy signal occurring now, on the 14,7,7 Stochastics oscillator.

Newmont looks even better!  That’s the daily chart.  There’s a powerful momentum-style buy signal in play on the Stochastics oscillator, and it comes as Newmont stages a spectacular breakout from a pennant formation.

Newmont is acting like gold is about to leap $100 higher, and after the Indian budget is released… maybe it will!

That’s the GDXJ daily chart. While gold has declined about $118 from $1308 to $1190, junior gold stocks have consolidated in what is essentially sideways price action.

Wage hike pressures in the United States are growing, and I’ve predicted that rate hikes will be required to counter the inflation produced by higher wages. 

Mining companies are in a sweet spot now.  Game changing events are occurring on the demand side in both India and China, inflationary pressures are rising in America, and lower oil prices are reducing the costs of mining.

That’s the daily chart for oil.  Most investors never thought oil could fall the way it did, and now many of them are trying to call the bottom. 

I think they are wasting their time and money.  The chart looks horrific, and I expect it to look that way for many years, keeping fuel costs low for mining companies. 

Institutional money managers want to invest in markets that have stability, and the changes in India and China are bringing tremendous stability to the world gold market, as is the price of oil.

There’s more good news for the Western gold community.  I’ve never subscribed to the view that banks are carrying giant COMEX short positions that are so big they will blow up the banks, if the price of gold rises.  Having said that, banks do operate substantial gold price hedging programs for their clients, and they have a vested interest in seeing their clients make money on those hedges.  

Probes in London have resulted in fines for gold price manipulation, and the LBMA price fixing has been revamped.  The new fixing mechanism is much more transparent than the old one.  Transparency makes institutional money managers comfortable about placing sizable client money in the gold market. 

Added transparency in the gold market is a good thing.  The US Justice Department probe that is underway now should add even more transparency, and that will attract even more money managers to gold stocks.

This is a nice snapshot of the latest COT report for gold.  I’ve highlighted the action of the commercial traders (banks) in green.  They have been sizable buyers of gold, into the current price decline. 

It appears they are betting on a duties cut in the Indian budget, but whatever the reason is for their current buy program, the commercial traders have a winning track record.  Amateur investors who are shorting gold now, are essentially taking the other side of that trade. 

That’s a dangerous and reckless approach to take in the gold market.  As the Indian budget is released, the bearish amateur traders are at great risk of receiving a serious financial beating!

Janet Yellen is probably best described as the “Queen of fiat”.  Statements she makes can affect T-bond prices quite dramatically, and in turn that can have some effect on the price of gold.  Janet is scheduled to make some important statements today, and the T-bond chart suggests she will sound dovish.

Note the blue downtrend line on this daily T-bond chart.  I predicted that bonds would stage an upside breakout from that line, and they have.  I think Janet’s speech today will be the trigger that creates a buy signal on the 14,7,7 Stochastics oscillator.  I’ve highlighted that at the bottom of the chart.  A surge in T-bond prices is almost always accompanied by a nice rally in gold!

******** 

Special Offer For Gold-Eagle Readers:  Please send me an Email to [email protected] and I’ll send you my free “Silver Wheaties For Breakfast!” report.  I cover the fundamental and technical price drivers in play for key silver stocks like Silver Wheaton, and for 3 interesting junior plays!  Email me today, and I’ll send it to you tonight!

Note: We are privacy oriented.  We accept cheques.  And credit cards thru PayPal only on our website.  For your protection.  We don’t see your credit card information.  Only PayPal does.  They pay us.  Minus their fee.  PayPal is a highly reputable company.  Owned by Ebay.  With about 160 million accounts worldwide.

www.gracelandupdates.com   

www.gracelandjuniors.com  

www.gutrader.com   

Email: [email protected]  

Or: [email protected]  

Rate Sheet (us funds):

Lifetime: $799

2yr:  $269  (over 500 issues)

1yr:  $169    (over 250 issues)

6 mths: $99 (over 125 issues)

To pay by cheque, make cheque payable to “Stewart Thomson”

Mail to: Stewart Thomson / 1276 Lakeview Drive / Oakville, Ontario L6H 2M8 Canada

Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form.  Giving clarity of each point and saving valuable reading time.

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?