Before we list our opinions on the gold market, we want to emphasize that many “cycles” are forecasting a huge move up in gold bullion should commence soon. Also do not forget that there no longer are  “market makers” who in the past would bring support to the market….so gold stocks now drop to prices even lower than they did in the past. However, that does offer private investors  opportunities to accumulate stocks at even lower prices than in the past when market makers were major participants and would bring in buying support during declines. 

 

 1-The technical analysis of the gold market and the mining stocks has been confusing for several years; it has suggested that some stocks were in basing formations and should be accumulated. Actually some stocks performed superbly and were taken over at huge premiums. Yet some gold companies’ charts have given no indication of upside potential-yet, other than they were and still down in price.

 

2-If one will merely look at trading volume and the transactions themselves, one can see “manipulation” engineered to keep the price of gold down. For example, on a Friday morning in September, on the Comex in New York, Gold futures’ contracts with an approximate dollar value of $1,200,000,000 were sold ( it was more than 10,000 December gold futures contracts, each representing 100 ounces). It caused the gold price to plunge and it was all done within one minute!  

   In our opinion, it was designed to create an image of weakness in gold. Note well that they were “paper sales” and not true gold bullion. The volume of the transactions was approximately 30 times the 100-day volume average for that time of day. Again our view, it was “dumped” to create weakness in the price of gold.

 

3-“By the way” Four years ago, there was a confidential meeting of major bankers in a large east coast city who determined that the price of gold bullion had to be kept below $1300 as a rise above that could have disastrous effects on the stock market and the bond market. Thus the ongoing manipulations in the gold bullion.

 

4-“When prices are high, they run to buy, when prices are low, they let them go.”   Some frustrated gold and mining stocks’ investors have lost patience and have been selling their shares or near their multi-year price lows. This is a normal occurrence. When a stock is selling at or near its yearly or multi-year price low very often the frustrated shareholders are getting out……but other investors who have done their research are  saying “what a great opportunity this is” and buy those shareholders’ stocks.

 

5- Napoleon Bonaparte once advised to “never interfere with an enemy when he is making a mistake.” His advice would suggest that if a shareholder is making a mistake by selling a stock that you find undervalued and bottoming, say nothing, don’t share your view and quietly accumulate the shares that you have done the research on that merit investment.

 

6- The U.S Dollar is the “Key to the Kingdom”…It is probably the most important influence in the price of gold and the interest in gold stocks! So here are the numbers:

   In 2011 the U.S. Dollar contract was at about $74, Gold was selling at $1800

   In 2015 the U.S. Dollar contract had risen to  the $100 range, Gold was selling at $1100

  Today the U.S. Dollar contract is selling at 96.9…the chart seems to indicate that it is finishing making a top…

 

7-Junior Mining stocks generally need to see gold bullion at the $1400  to $1500 an ounce level to engender investor interest in the Juniors. While the investing public is not paying attention to the gold market, Central banks are taking advantage of the price weakness and accumulating the gold bullion.