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1.I've talked at length about the relationship between US
money supply velocity and interest rates, and done so in a positive way.
2.A modest rise in nominal interest rates encourages
banks to make loans, and it makes those loans profitable.Most of the QE money
has either just sat in bank coffers, or it has been inefficiently invested in
US government bonds.
3.I've strongly suggested that modest nominal rates can
reduce real rates, by creating inflation.That's negative for the US
dollar, and positive for gold.
4.On that note, please click here now.That's the COT report
for the US dollar, released yesterday by the CFTC.
5.Clearly, the deep pocketed commercial traders (banks
with "thundercash") are building a massive short position in
the dollar, probably in preparation for an inflationary rate hike from Janet
Yellen, on December 16th.
6.Please click here now. The COT report for
gold is in sync with the report for the dollar.The market-leading banks are
buying gold aggressively into the current price weakness, and eagerly booking
profits on a lot of short positions.
7.I suggested shorting some gold in the $1170 area, and
with the price about $100 lower now, it's important for all gold price
enthusiasts to be buyers.Short position profits also need to be booked.
8.It's a waste of time for amateur investors to read
bearish analysis now, while giant banks buy gold with both aggression and
size.
9.The bottom line is that Western gold community
investors can feel very comfortable, here and now, with their accumulation of
the world's ultimate asset!
10.In my professional opinion, Janet Yellen is an "inflationist".Rather
than using aggressive rate hikes to halt inflation, she plans to use very
modest rate hikes to increase it.
11.Please click here now.The COT report for
silver is also looking very good, and in an environment where inflation
begins to rise, money managers will embrace this mighty metal with open arms.
12.On the big picture front, China continues to make
spectacular progress towards internationalizing the yuan, and making it a
key world reserve currency.
13.Please click here now.It's important to
compartmentalize gold's price drivers.Many analysts appear to have tried to
fit a "love trade circle" into a "fear trade square".
14.That can't work.China's central bank has a stated goal
of internationalizing the yuan, and gold plays a stated role in making that
happen.The internationalization of the yuan is clearly good news for gold.
15.Unfortunately for fear trade enthusiasts, yuan
internationalization won't produce a "gold price parabola".It
will produce modest and sustained upwards price pressure, for many years
to come.
16.Please click here now.That's the daily gold
chart. Note the beautiful position of my 14,7,7 Stochastics series
oscillator, as gold glides into key support.I'm an eager buyer, alongside the
banks!
17.The internationalization of the yuan, and its
relatively quick ascent to global reserve currency status, should also turn
gold stocks into the world's most respected equity asset class, and certainly
into one of them.
18.Please click here now. That's a monthly chart
of the Dow.Consistent accumulation of strong assets, on price weakness, creates
wealth that is retained during good and bad times.
19.While I run a highly successful gold-oriented swing
trade service at www.guswinger.com, investors should only have a portion of their investable assets
devoted to such endeavours.Trading is one part of a complete investment
strategy portfolio.
20.Also, not every market decline is the same.Some are
short and violent.Others are Chinese water torture. Some are very modest.It's
difficult to know what form a decline will take when it begins, but
professional investors know the decline must be bought.
21.Amateur investors focus on their drawdowns during the
accumulation phase, and professionals focus on the task at hand.For amateur
investors that want to take themselves to the professional level, they need
to reach deep into themselves, and find a higher level of intestinal
fortitude.
22.I'll ask all investors in the Western gold stocks
community to think hard about that, and to take another hard look at the
10,000 area on my Dow chart.Amateur attempts to avoid drawdowns and pick
"final lows" isn't a proper way to build wealth.It's
financial poppycock.Intestinal fortitude in 2008 at Dow 10,000, and in gold
stocks now, is what builds wealth that is here to stay.
23.On that key note, please click here now. That's the daily GDX
chart.I affectionately refer to my 14,7,7 Stochastics series oscillator as
"Tony the Tiger".Tony looks spectacular right now, and is
ready to roar a very loud "Buy!" signal, for all gold stock
enthusiasts.
24.Using Fibonacci retracement lines from the January
highs near $23, to the September lows near $13, I've set an $18 target, which
is the 50% retracement line.Gold stock champions (current and prospective) in
the Western gold community should be eager buyers now, ready for mega-bank
buying signaled by the COT reports to launch gold and gold stocks nicely
higher.In the longer term, the role of gold in yuan internationalization will
be one of the key price drivers, of a gold stocks bull era!
Thanks!
Cheers
st
Stewart Thomson
Graceland Updates
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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
qualified investment advisors and get numerous opinions before taking any
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