In our last editorial we presented the bulletproof evidence that the gold stocks had put in a major bottom. We included a historical chart that was supplemented by a major reversal at a Fibonacci strong target and on record weekly volume. At the end of that piece we noted that the sector could correct before it would accelerate to the upside. Looking at historical rallies from major bottoms we noticed that there tends to be a consolidation or correction around the 50-day moving average. The sector is two weeks into that correction. Don’t worry bulls, this is exactly what happens following the initial rebound.

The chart below shows the progression of gold stock recoveries in comparable periods (1970, 1976, 2000, 2008 and 2013). The current recovery is in black. Note that each recovery didn’t truly accelerate until after the middle of August. (That is using the current time scale). Thus, don’t be impatient. It could be a few more weeks before the sector begins its next leg higher.

While it may take a few weeks for the next impulsive advance to begin, that doesn’t mean one should wait to participate. Gold stocks have declined for six consecutive days and are nearing what should be strong support at GDX $25. Take a look at the chart below.

As far as Gold, its correction began when it reached $1350, which was formerly support. Gold is facing some trendline resistance as well as lateral resistance at $1350. If and when it breaks $1350 it will have very little resistance on the way to $1500. Gold should continue to consolidate for several more weeks. The big move will occur after it breaks $1350.

In our last piece we concluded:

Those who missed the initial pop could use the correction or consolidation to capitalize on the next and much larger leg higher. The bottom line is if we do see a correction or consolidation, don’t let it frighten you or cause you to question the major bottom. History argues that it is an excellent buying opportunity.

To conclude, the gold stocks are two weeks into their correction. These corrections or consolidations typically last four weeks. The gold stocks have declined six days in a row and are very close to what should be strong support at GDX $25. We could see a bounce over the next few days followed by a brief consolidation. For those who missed the initial rebound, now could be a great time to initiate or add to positions. If you’d be interested in our analysis on the companies poised to lead the next bull market, we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com

Produced by McIver Wealth Management Consulting Group

Mark Jasayko, CFA,MBA, Portfolio Manager with McIver Wealth Management of Richardson GMP in Vancouver.

www.McIverWealth.com

The Equities Bull Market is about to End & it will be a big Mess

 Speaking to attendees at the fourth annual Innovative Alternative Investments conference in Denver yesterday, Jim Rogers   said “I’ve never seen a bull market [in any asset class] that goes on forever,” Rogers said. “There may be one, but I’ve never heard of it.”
Speaking of the current bull market in U.S. equities, Rogers told advisors, “Enjoy it, but be prepared. I do know it will end, but not when. We’re getting close to the end.”
The day that happens won’t be a pretty one. “When it ends it will be a big mess,” he continued. “This will be worse than 2001 and 2008-2009.” – via The Financial Asvisor Magazine

GOLD : could fall to $900 an ounce, we have not had the final bottom yet

“Gold has gone up 12 years in a row, which is terribly unusual for any asset, so it would be an anomaly if there was not a correction.”Rogers believes the correction should be around 50% of the peak (which was $1,950 in September 2011), which is where he gets his $900 figure from.“I fully expect the bull market to end in a bubble some day, and some day is not here yet,”“if it falls or if it gets down [to $900], then I hope I will be smart enough to buy more.”I don’t think in a recent The Financial Times interview we’ve had the final bottom in gold but we must be nearing it in sugar. Sugar is down 75% from its all-time high – there’s not much in the world that is down 75%.” – 

Jim Rogers on Commodities, The Agriculture Boom, & Perilous times ahead

Friday, July 26, 2013

Sunday, August 4, 2013

Jim Rogers: Bubbles can go on and on. Hard to tell when it pops

Fusion: Over the last six weeks, the action in the emerging markets fixed income market has been scary. Many believe this started when the Fed hinted at tapering QE. Up until now, the Fed’s ZIRP and infinite QE policies have investors chasing higher overseas yields.  But that seems to be reversing, and liquidity is coming out of emerging markets the last 4 weeks. What is your take on this ?

 

Jim Rogers: As I said, bond markets worldwide are in a bubble for the reasons you just stated. Bubbles can go on and on. Hard to tell when it pops. But at some point markets won’t take central bank policies anymore, and interest rates go up regardless of how much bond buying they do. Market timing is tough. As for the fix income market, I’m short  junk bonds. In any market, the marginal stuff goes first. This could precede problems with sovereign debt.

 

About Jim Rogers

 

Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%. 

 

 

 

Eric spoke to the incredibly fragile Western financial system, and pointed out the one event, which when it occurs—will completely take the lid off of gold.

When Tekoa Da Silva asked Eric Sprott what catalyst will send gold much higher, Eric noted that, “The one event in my mind would be when it becomes apparent to everyone that having a deposit in a bank is a very risky situation. We saw that in Cyprus where the depositors got nailed on the bail-in. We’ve seen all these proposals to have bail-ins as the solution to the problem in the US, in Canada, in Britain, in New Zealand and in Europe. All the paperwork has been laid out.” 

….read the entire interview HERE

Treasuries rallied after American employers added fewer workers than anticipated in July, damping speculation the Federal Reserve will trim bond purchases. Benchmark U.S. stock indexes rose to record highs, extending yesterday’s rally, while the dollar weakened. Gold prices were probing below near-term support on Friday ahead of the read with the print fueling a rally back above the $1300 level when the U.S. Dollar came under pressure.

The employment report was weaker than expected and “increases the likelihood that tapering may be delayed,” said Paul Herber, portfolio manager of the Forward Commodity Long/Short Strategy Fund “Any delay in reducing monetary stimulus has been seen as a positive for gold.” 

Silver closed higher, putting an end to three sessions of weakness. The September contract closed up 29 cents, or 1.5%, to $19.91 an ounce — 0.7% higher for the week.