Thursday, December 4, 2014

Market Alert: Buy Gold Now

It is rare that I post a buy or sell recommendation, however many indicators point to a near-term buy in gold or silver. Hey, you can cover your Christmas presents. This is a short window of opportunity. Gold will hit resistance at $1229. It is now around $1215. This signal came from the Swiss referendum that failed. Gold sank to $1240 area, but a strong rebound put it back over the $1200. level with volume on contracts. Dear reader, I'm a believer in volume. If you see a sale and the store is bursting at the seams, maybe you should investigate. If on the other hand, you see a sale and no one is buying, maybe there is a reason. Investigate the reason. This is what I did.
From the technical viewpoint as stated the buying in gold had a strong resolution. This is very good. Gold itself has resistance, and generally, the first attempt at resistance fails. This is the time to accumulate shares in companies like Gold Corp or a gold miner index. I brought shares in Silver Wheaton. Place a stop to protect profits or limit losses. If gold breaks through resistance, the next point is $1325- $1350 area. You could make nice buck or two.
The above is from charts. The following is from fundamental aspects with a lot of "ifs" and "maybes."
The recent decline in oil has many side effects. You see there are many shale oil companies. These are smaller entities that cannot secure funding from standard institutions. They get their drill money from junk bonds. They pay more interest and now, the value of their product is putting a squeeze on them. The total junk bond exposure is 20% of the market for these oil loans. Maybe someone is in trouble?
The ECU had discussed QE aspects. Now, they have put this discussion off until 2015. Maybe someone like Germany opposes the idea.
The Japanese yen is at 119 and heading for 120 as predicted in an earlier blog. The continuation of currency wars with the declining value of fiat money only allows the shine in gold to show forth.
Russia has started a verbal war with the West and another internal war with its own central bank. One leading politician called their central bank, "An enemy of the people!" The ruble has lost 40% of its value and a chain reaction to bonds is causing under the surface problems. Maybe something bad will be exposed?
In the US the Fed has stopped their QE program. They said that they will soon raise interest rates, however they keep changing the guidelines for the day that this will occur. They will have to put up or shut up. Maybe they will lose face as they say in Japan?
In China they have reduced interest rates after the slowdown to their economy. Funny, the reported GDP is always over 7%,and yet, we know those figures are fake. China has a building bubble and maybe something is popping?
India had a change of heart about gold. They ended their restrictions on it. This will cause more buying in gold.
Finally, the leasing rate for gold has fallen so low that it is being offered at give away levels. Many banks and companies use this as an asset to bolster their account balances. This rarely happens. When it occurs, a rally in gold follows.
If these and other aspects continue, gold will benefit. This could be the push that gets gold back to $1350 and a nice Christmas present to you. Peace and good luck!