What's Broke In Gold & How To Fix It

Western demand for physical gold has never been very large, and now it is declining.  Seasonally, gold often rallies in mid-November, because of the Indian festival season. 

Unfortunately, heavy-handed government import restrictions there have crushed demand. 

As a result of these barbaric government actions, gold market stakeholders around the world have become demoralized.  Indian jewellery and Western gold mining stock charts look almost identical.  They resemble mangled victims in a gold market horror movie.

There is realistic hope for change. The latest opinion polls in India’s national election race show that Narendra “Mr. Development” Modi is now the frontrunner.

Modi is endorsed by both the Bombay Bullion Association and the All India Gems and Jewellery Trade Federation.

Against a background of QE tapering in the West, prompt restoration of Indian gold imports is critical to restoring the health of the Western gold community’s mining stocks. 

On that note, please click here now.   Modi has embraced high technology, and India’s youth is clearly responding. 

Please click here now.  Traditionally, votes have been bought with an Indian version of food stamps, but the time is ripe for change.  The time is ripe for the world’s largest gold buyer class to rise up and say, “We’re mad as heck and we’re not going to take this anymore”.

The national elections of India are about five months away.  There are no COT reports or technical chart indicators that can replace the gargantuan amount of lost physical demand for gold from India.  Janet Yellen can’t fix what is broken in the gold market.  The T-bond chart can’t fix it.  The gold exploration discovery cycle doesn’t matter either, if physical mine supply suddenly overwhelms physical demand, as it has. 

Only Indians can fix what is broken in the gold market, and they are working maniacally to do it.  Give India’s gold buyer class the time they need to really fix what is really broken in the gold market, and they will get the job done.

During this period of extreme gold market pain, the only thing that a long term investor in the West can do is maintain a portfolio that is truly diversified.

You are viewing the Uranium Participation Units weekly chart (u.to).  There’s a powerful breakout from an enormous bullish wedge pattern in play. 

Uranium is a key fuel for nuclear reactors, and supplies from Russian stockpiles are running low.  As part of the “Reform Revolution”, the Chinese government is committed to reducing its carbon footprint.  The Chinese nuclear plant expansion program is booming.

This chart is a shorter term view of uranium.  That’s the daily uranium (u.to) price chart. Over the past few weeks, it’s moved about 15% higher, while gold has refused to rally at all.

Uranium traders should be booking profits now.  Re-buy orders can be placed in the $5.25 area, which is near the Fibonacci 50% retracement line.

Precious metals fans who believe that 2014 will feature more robust global GDP growth may want to look at platinum and palladium. 

These metals tend to be bought by institutions during economic upswings.  That’s the daily chart for the Sprott platinum and palladium trust.

While gold and silver have made new minor trend lows this week, SPPP has not.  Note the position of my stokeillator (14,7,7 Stochastics series), at the bottom of the chart.

If SPPP can rise above the red downtrend line, a decent trending move to the upside could commence almost immediately.

I’ve received a lot of emails about bitcoins and other cryptocurrencies.  I call them “private money”, and I own some of them.  “The special Bitcoin would be part of the Royal Mint’s commemorative collection, which includes limited edition coins and stamps that are normally bought by collectors. It would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse.” –FT.COM, November 29, 2013.  The stunning announcement from the Royal Mint in England that it is considering a proposal to mint physical gold bitcoins adds legitimacy to the private money movement. 

My main market motto is, “Already trade smaller than you know is rational!”, and if investors apply that thinking to private money investment, risk can be professionally managed.  At this point, private money investment is high-risk speculation, but a Royal Mint issue of private money in physical gold form could be a game changer.

That’s the daily gold chart.  There is some technical failure, but it’s relatively minor.  A breakout from a bullish wedge failed, and the stokeillator is experiencing a “flat line” event. 

A pause at the sell-side HSR (horizontal support and resistance) in the $1252 area was expected, but the violent sell-off that followed was disappointing.  Many bank analysts are forecasting even lower prices in 2014, and of course that is possible with India’s gold buyer class being temporarily locked in “handcuffs”.  Regardless, it’s important to remember that most bank analysts are simply trend followers.  When gold was rising in the $1800 area, most major bank analysts were forecasting much higher prices.  Now they are forecasting lower prices, because the trend is down. 

My main technical focus in the gold market are the key HSR zones on the weekly or monthly chart, more than what the bank analysts are saying.  When gold arrives at one of these key HSR zones, investors can’t know whether gold is going lower or higher.  Failure to buy there can mean that the next major buying opportunity doesn’t occur for a very long time.   This simple chart really tells the entire gold price story; gold has arrived at key buy-side HSR in the $1228 area, and so it must be bought.  There’s no way to know if gold will now decline towards even bigger buy-side HSR at $1033.  It could begin to rise as easily as it could fall further.  While there’s no way to predict what comes next, professionals are buyers here, and I invite you to join them!

********

Special Offer For Gold-Eagle readers:  Please send me an Email to [email protected] and I’ll send you my free “Get Me Diversified!” report.  I’ll show you a number of key assets I like that can move higher when gold really spikes higher.  They can also move higher when gold declines, which is very interesting indeed!

Stewart Thomson 

Graceland Updates

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 qualifed 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?