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1.The world is about 24 hours away from key BOJ and Fed
meetings that could create a sea change in global markets.
2.Please click here now. Double-click to
enlarge.This daily bars gold chart shows gold drifting majestically in a
rectangular pattern.
3.Strong handed gold investors don�t appear to be worried
about the BOJ and Fed meetings, and with good reason; a rate hike from the
Fed would create panic in the stock market, and investors would flock to
gold, just as they did after the first rate hike in December.
4.If the BOJ announces deeper negative rates, that�s also
good news for gold, from a competitive cost of carry perspective.
5.If the BOJ announces �operation twist�, where it
buys more short term bonds than long term bonds, institutional money managers
will view that as inflationary because it boosts bank lending.That�s more
good news for gold.
6.Indian festival buying is also now in play, and demand
is likely quite a bit higher there than official numbers indicate, due to the
rise of the black market�s share of the market.
7.That festival demand is likely a big reason why gold
feels so firm.
8.When the Fed hiked rates last December, gold stocks and
the US stock market sold off temporarily, and then a huge rally began.
9.If the Fed hikes rates tomorrow, I would suggest that
both the stock market and gold stocks will fall again, but it�s likely that
only gold stocks recover quickly this time.The bottom line:
10.It�s possible that a rate hike tomorrow marks the end
of the US stock market bull cycle.It�s really been treading water since early
2014, when Janet Yellen began tapering QE.
11.Please click here now. Double-click to
enlarge.This monthly bars chart of the Dow shows an ominous broadening top
formation may be forming, as the RSI oscillator negatively diverges.
12.Next, please click here now. Double-click to
enlarge this daily bars chart of the Dow.
13.From a technical perspective, it�s a horrific
situation.There�s a H&S top pattern in play.It�s similar to the
formations on the gold stock ETFs, but it sits within a huge bear wedge
formation.
14.What about gold stocks?Sadly, Indians don�t buy gold
stocks for their festivals.They buy bullion.Gold stocks looked a little shaky
recently (with some great exceptions), when global stock markets fell after
key Fed representatives spoke.
15.I generally mandate myself to a 30% gold stocks limit
for my portfolio.I realize that many gold bugs like to hold much higher
amounts of capital in their favourite mining stocks.
16.Significant intestinal fortitude is required to
operate with a �go big or go home� approach to gold stocks, but the
potential rewards are gargantuan.
17.Please click here now. Double-click to
enlarge this daily bars GDX chart.
18.Technically, GDX has a head and shoulders top pattern
like the Dow, and the same pattern has appeared on the GDXJ and SIL entities.
19.Gold stocks can be viewed as a canary in the Fed�s
coal mine, and it makes sense that a rate hike could bring some pain to gold
stock enthusiasts around the world.
20.Regardless, I think that pain would be very temporary,
and I�m in some great company in my view.
21.On that note, please click here now. This is a truly
spectacular summation of the gold stocks sector in the �here and now�
time frame, and it comes from Goldman Sachs� highly influential research
team.
22.The bottom line is this: Fundamentally-oriented
liquidity flows from institutional money managers create the chart patterns
that technicians see on their charts, and one rate hike from the Fed cannot
undo all of the balance sheet repair work that gold mining companies have
achieved.
23.While the H&S top patterns and infrequent rate
hikes from the Fed need to be respected, the ability of most productive gold
mining companies to generate 5% - 8% free cash flow yields for many years is
something that commands vastly more respect.
24.It�s going to be an action-packed day tomorrow. I
invite all gold stock and silver stock enthusiasts to cast fear aside now,
and join myself and top Goldman analysts in placing buy orders slightly below
the current market prices, in preparation for tomorrow�s BOJ and Fed
announcements!
Thanks!
Cheers
St
Stewart Thomson
Graceland Updates
https://www.gracelandupdates.com
https://gracelandjuniors.com
www.guswinger.com
Email:
stewart@gracelandupdates.com
stewart@gracelandjuniors.com
stewart@guswinger.com
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
qualified 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?
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