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A Long Painful Wait
How long have we been waiting for a day like yesterday in the junior golds? In 2012, one had to really question whether we were crazy in our belief in gold, given the beating that we all took in our junior golds. Gold was up over $50 yesterday, and in my opinion this is the perfect storm for gold given the following 5 reasons:
--> The Fed meets in June, as their last meeting before taking the summer off. You can bet they will be feeling the pressure from Obama to say/do something to provide further support before the election.
--> There has been an uptick in short interest lately in gold, so watch for a bear trap and a royal squeeze of the shorts (as we saw part of this yesterday).
--> No where else to hide. Europe still stinks, US treasuries are at all time lows, the stock market stinks....All of this provides a funnel into gold and gold equities.
--> Gold equities are near record lows as compared to gold prices. Look for them to lead the way higher, and provide a circular spiral higher.
--> The USD has been strong in 2012, as this weakens that will provide further flow into hard assets.
We may just yet approach our 2011 high in gold, and make it 12 straight up years in this gold bull market.
Have a great weekend.
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Re: A Long Painful Wait
Friday was a big day. But I still think the juniors have significant risk only because the big markets could. I think the Dow could crumble on Monday.. If the major exchanges continue to crakc how will the venture hold? I was happy friday but feel we are a long way from out of the woods
Re: A Long Painful Wait
Thanks for your thoughts Southpen. There should be good support for oil at $80, so the downside is minimal at this point. If it breaks $80, watch out. For it to do so, there would have to be major problems over in India and China. As well, it would likely indicate the US heading into recession in Q4 or Q1.
Watch for tons of speculation regarding what the Fed is going to do next. They meet June 19-20 and we'll see what the minutes have to say. If you want to play the Fed jumping back in, I think the junior golds provide the greatest bang for your buck given the risk return they now provide.
Re: A Long Painful Wait
Schiff. You certainly could be right however there are alternatives. 1. The price of OIL is low and OIL equities even lower .With the ME still in turmoil ,Russia seemingly becoming more involved in Syria ,Iran,we could have another supply scare.Wars of any kind over there would send OIL up .Saudi's NEED the price of OIL at 85/B,to support their social network
2.Even though demand seems to be slowing around the world for everything ,it is exactly at those times that people with a lot of cash buy the most needed commodity or companies that produce that commodity and although I agree in the near future Gold will be an absolute necessity ,I don't think this is the time.Oil could stay flat all summer for the good of the worlds economy but speculators are driven by the ME and the politics there and in Europe. Who supplies Europe? Russia and the ME and right now Russia has become part of the political powdercake in that area.
3.Maybe Gold and Oil will move in unison for a change or maybe OIL has been driven down so top speculators can refill,while Gold becomes the obvious diversion.This is an American election year and neither candidate wants Gold up ,so in my opinion the liklihood of a sustained gold rally throughout the summer is bad,although we could have some teasers.I think OIL being a far larger commodity globally is the focus of possible big volitility.Natural Gas and NGL's wait in the wings for OIL to become too expensive.NGL's are the producers choice and the one to watch going into 2013.