The last time that I spoke about gold was in my 20th of May piece. The main point that I stressed was the trend. It was up. It still is. Not only that, the continuous contract reveals more volume which means new buyers. Everyone has the knowledge that the Federal Reserve will continue its excessive printing. It is putting the dollar in jeopardy, especially with its role as the world's reserve currency.
Cornerstone point
The Fed, like I mentioned in that previous piece, took 94 years to reach the first trillion in printing. Since the financial crisis of 2008, they have printed another $9 trillion or 10x the previous amount. They are destroying our currency, standard of living and our future economic welfare. Their existence and use of fiat money for our currency is in violation of the constitution. Since nothing will change by either of our government's political parties, to end the power or reign of the Federal Reserve, we can take confidence with our trust in the metal that never tarnishes.
Golden Outlook
Gold ended the second quarter at $1800 on good contract volume. Silver failed to break its previous high that touched $19, however it broke $18 and it has held price at that level. There are other indicators that are even more promising.
HUI and XAU...
are the two gold indexes. They are both making new highs. Using Fibonacci levels, the price of gold will break its all-time high of $1910 set in 2008. In my previous piece, Fibonacci ratio called for gold to reach $1856 in the future. Dear Reader, the future is here. Gold futures already hit that price projection last week. It gets more crazy when I used the two gold indexes and Fibonacci to project future prices. There is no resistance coming in the HUI which closed last week at 291. It could blast all the way to, are you ready for this? = 529. Yowzah! The XAU could run from 127 all the way to 196. Super Duper!
It gets better...
The ETF for gold mining stocks is GDX. At present, it is around $37. It is projected to rise to $52. This is a huge move and it will raise the mining stocks in its fund like AEM and WPM. And a rising tide lifts all boats.
Need a 2cd opinion?
In a report by A. Nalavi, of MKS, SA, says if $1790 price of gold holds, the rally will blast through $1807. Hey, buddy, it already has.
In another report by Bernard Dahdah of Natixis, the analyst has increased his price projection for gold to $1950 by the second quarter in 2021. However, he does not feel the price will hold and the metal will slowly decline from that point. He could be right as the banking industry is anti-gold and they will attack the metal.
By the way, here at Evolution, we see gold breaking its old high of $1910 and reach $1940. At that point we need to see the volume in the trend. Gold, like Dahdah sees, could temporarily run out of gas.
Nevertheless, the Fed "put" will turn out to be the foundation for gold. The Fed is being forced to keep printing from pressures by the president and Congress. It has even greater pressure in the hope that the bond market won't implode. The other sad truth and another uplift for gold is the basic building block of government borrowing. When rates are normal, people prefer to save rather than risking their hard earned money in the stock market. With low rates and negative yield, savers are forced to turn to the market. The Fed over-borrows. When you look at the aspect of total savings that the Fed at one time utilized, the savings rate was 75% in ratio to the GDP. Now, it is 1.4% of GDP.
Four gold stocks we like...
My list takes in the point that we all have different levels to invest. I offer gold miners from low entry price and up.
1) Argonaut Gold (ARNGF) A Canadian miner to which is a very important point as socialist government's could take over a free market mine. A $1.75 - $1.80 would be a good entry point. The company has a strong pipeline of mines to develop. It is already a mid-tier producing firm.
2) Newcrest Mining (NCMGY) is an Australian miner. It has strong production and $21 would be a good entry level. It pays a dividend. Only negative is its big mine with a robust outlook, but not a reliable government. This mine is in another nation.
3) Wheaton Precious Metal (WPM) This is a great streaming gold company. It has a dividend and a good reinvestment dividend program. Any pullback to $40 would be ideal.
4) Agnico-Eagle Mine (AEM) has a history of solid performance. It pays a dividend. $60 would be a good entry point in this rising gold price market.
