Buy Signal In The PM Sector

It looks like gold and silver stocks bottomed on Monday, April 21, and that gold and silver also bottomed this week.

Really? The usual reaction is, “the stocks have been hammered, gold is off over 30% from its highs, and silver is down nearly 60%. Sentiment is low, few people are interested, and gold and silver will probably crash again in a few weeks.”

Exactly!

We have been conditioned to expect lower prices in spite of:

• Massive demand for gold from the Chinese Central Bank
• Massive demand for gold and silver from the public in both China and India
• Reduced supply from mining
• Increasing public demand for both gold and silver in the US and Europe
• Increasing realization that paper currencies will inevitably be devalued more each year. “Inflate or die” is the central bank mantra.
• Weakening US dollar and increasing shift away from the dollar by China, Russia, Iran, India, Brazil, and other countries.

And don’t forget that central banks everywhere are openly and excessively printing their paper currencies to encourage inflation, politicians are fomenting wars, and the global monetary system is more unstable every day. Accidents can happen, and those accidents will justifiably encourage people to shift assets to something solid and real – like gold and silver. But, you have heard it all before.

So, listen to an excellent technician: Nicholas Migliaccio does his own brand of technical analysis, and his comment is, “DON’T MISS THIS RALLY!!!” Why? Price movement, breadth, and volume, and he has the graphs and analysis to support his statement.

My view is shown in these three graphs of daily data for the XAU (gold stock index), GLD (gold ETF) and SLV (silver ETF).

The XAU, gold, and silver look like they have bottomed. Asian demand is strong, and we have been assured by central banks that they will devalue their currencies to create inflation. Gold, silver, and their stocks will benefit.

Consider Nick’s article, ignore the nonsense that gold is dangerous, and buy coins or bars.

GE Christenson
aka Deviant Investor