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Strong indications that Gold is at the bottom of the cycle...
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Last week Gold hit its lowest level since June 2013 (and before that we hadn't seen this level since mid 2010). In both cases the Bears pushed Gold down below US$1,200 and on both occasions Gold rallied strongly. In June we saw Gold rally 21% to reach US$1,430 within 2 months.
Our view is that there is every indication we will see the same rally, but given the Christmas period it may take a little longer.
The following is a view of the end of month prices for the last 6 months.
|
Closing Prices ($USD) |
Gold |
Silver |
|
Current at 6th December |
$1,233 |
$19.49 |
|
End October |
$1,324 |
$22.20 |
|
End September |
$1,326 |
$21.68 |
|
End August |
$1,395 |
$23.64 |
|
End July |
$1,314 |
$19.94 |
|
End June |
$1,192 |
$18.86 |
Typically, as in June 2013, The Trend Followers (or Managed Funds) have significantly increased their short positions reflecting the mainstream negatives views on Gold. Curiously, as happened in June 2013, the Big Bullion Banks (The Big 4 in USA) are once again at their near record long positions as they position themselves for a rally.
Technically this has become a time to look to buy in the dips as most Commentators are looking for a trading range of between US$1,200 and US$1,280.
Global Factors continue to weigh heavily:
The SPDR Gold Trust has continued to sell and now holds approximately 843 tons Gold, its lowest level since 2009. Will they keep selling or when will they turn to net buyers?
Chinese buying continues to be strong while Indian demand is struggling (which is now surprising given the tax premium they must pay).
Economic data has continued to look promising and the expected 'tapering' by the US Fed is weighing heavily on a strong rally. The question is 'Has this already been factored into the price of Gold?' We think it probably has..
In the meantime reports are that the Gold Miners are reviewing their forward production levels as the selling price is close to their cost to produce. This factor is something we will continue to watch very closely as any significant slow down in production would have an impact on supply in the short to medium term.
In 2014 demand may well out-weigh supply for physical Gold.
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DISCLAIMER: Australia Mint Bullion & Coin does not provide financial advice and does not employ financial advisors. Any opinions expressed within news articles or market updates are not intended as recommendations. If you are looking for investment advice, please seek independent, specific advice regarding your personal financial situation from a qualified professional.
