Gold and silver rebounds ( as expected due to drastic drop ) from low at 1321. On short term technical picture, certainly a floor has formed under the yellow and silver metal. But in the medium term, there are bearish technical signals forming. As far as the fundamentals are concerned, the tone is still very positive. My conclusion: don’t jump in yet unless 1520 in gold is taken out. Gold is not in prime time yet. More drop is expected after this technical rebound. Look at the chart below: Support (black horizontal line) clearly broken and unless 1520 taken out, gold remains in down trend. As being mentioned in previous article, the rebound was actually quite weak.
However, the long term bullishness in gold and silver remains intact. When time is up, price will reverse which means that gold and silver will move up in new phase of uptrend. So, be patient to wait for the prime time in gold and silver.
Meanwhile, much capitals are flowing ( from Europe) into US equities and USD because Europe’s current economic problems are more acute and apparent. Japan markets are celebrating due to weakening yen caused by massive money printing. However, we have to be aware that the “Party mood” that suck in inexperienced investors could end at any time, though in short term, I expect near term correction ( with some panic sell ) in DOW, and Nikkei but not ‘crash’ at all. After much needed correction, equities will move much higher but be careful with the historic crash that might happen in 2015-2016. Meanwhile enjoy the ride in equities and USD but one must take profits along the way to avoid short term cycle correction.
Back to gold and silver, aside from strong physical demand from the retailers ( public) , Russia. Turkey and Kazakhstan are snatching up gold for their sovereign funds and central banks. Prices are pushing higher with reports of increased physical buying worldwide. U.S. Mint and Perth Mint sale of gold coins is soaring.That is a good fundamental news for the gold and silver long term investors.
2 weeks ago, my lovely wife brought her guests from Malaysia to visit ABC bullion shop in Sydney but was told to wait for at least one and half hour for their turn to be served. However, we have to be aware that the conditions that are luring in physical buyers ( retail investors) could end at any time. Remember that, retail investors are not able to sustain the physical buying at all. Retail investors don't know much about gold's behaviour and gold cycle.
For price to stabilise and go up further, buying has to come from other big buyers Russia and Asian Central banks and other big players. But they are smart enough not to rush in to buy all. I believe they will average in when the price drop more. China is the secret force that should not be ignored, perhaps China is laughing if price keep on dropping. Mark my words here: China one day will announce their official gold holdings that will shock the whole world and send the price soaring to the moon. China’s YUAN will become the world reserve currency in 2032 or earlier. I strongly suggest you download my free ebook or buy my ebooks which provide comprehensive evidences why China need to buy more gold to back up “Yuan”.
Good Investing, john yii