"Gold and Mining Stock Secular Bull Market Has Resumed"
A Legend Weighs In
Housekeeping:
Morning Rundown
Good morning. The dollar is down 17. Bonds are unchanged after a rough day yesterday. Stocks are mostly softer with Dow holding its own. Gold is up between $3 and $6 back and forth. Silver is straddling unchanged now. Oil was softer and popped in the last hour. Crypto is mixed but Alts are picking up buying again. Grains are all down. Today’s Goldfix covers the market being or not being in a range, and how shorts like to cover their positions.
GoldFix Podcast
Bitcoin Podcast
Guidance-Inflation
The busy start to the year for the Treasury market has been driven by an increasing conviction among traders that the Federal Reserve will tighten policy more aggressively than previously expected. Federal Reserve Bank of Minneapolis President Neel Kashkari, one of the most dovish policy makers, said more persistent inflation means he now backs two hikes this year. For the market the big event today is the release of the minutes of the December meeting where it was decided to double the pace of tapering asset purchases. Friday’s payrolls number will also be key for investors, where a strong reading will likely keep tightening bets in place. - Bloomberg
Zen Moment
Background
Leon Tuey is a noted yet under the radar commodity technician from back in the day who knows his trade. Two weeks ago his report noted that Gold, Oil, and Copper were on the cusp of resuming bull trends. On January 2nd he put an updated report out. Gold had triggered his buy signal.
But of course; The next day gold gave all the previous week’s gains back in classic fashion. But it did not invalidate his idea.
Please note his approach to playing his own analysis may be different than yours. And he is not infallible. What he does is handicap good risk/reward plays. For us, his methodology is solid, his critical thinking consistent over the years, and his enthusiasm always tempered. He is in short, the kind of guy we used to ask questions of on the trading floor.
To add: He is also heavily into Mining and other resource stocks.
Our Bias
It’s always about the teens near $1800 for GoldFix. We’ve explained why a million times before. It’s Option based. If Gold trades $1820, we’d be heavily leaning towards adding risk. If the market, after trading $1820 settles underneath that $1820 price or trades sub $1810, all speculative bets are off.
Also: since we believe Silver will have a much better chance of outperforming this leg up, that will be part of the mix. Why? Because allocations aren’t into Gold. They are into Precious metals this time of year. And LBMA closure could add to the impulsive moves as the contracts close out.
This is a seasonal trade based on inflow allocations to asset classes. Gold has lost favor with RIA types for Bitcoin starting last year. So even if this trade is right, it is just a trade.
The more fundamental/ stacker/ investor types out there should just enjoy the ride if it commences.
GOLD IS SHINING BRIGHT
Correction Is Over and the Secular Bull Market Has Resumed
In my December 22 report, “Copper. Gold, & Oil”, I felt that Gold was ready to take flight again. Despite its seeming lack of progress, gold has been showing signs of accumulation. Moreover, as shown in the table below, January is the best month for gold as it gained an average of 2.06% for the past 29 years. Also, as shown below, gold’s technical structure continues to improve and is poised to break its 2020 – 2021 downtrend. Technical indications strongly suggest that the correction is over and the secular bull market has resumed.
Hence, investors should continue accumulate the precious metal issues. The ones with the longest base with the highest beta will provide the biggest “bang for the buck”.
WISHING EVERYONE A HAPPY, HEALTHY, AND PROSPEROUS NEW YEAR!
[Edit- please note that Mr. Tuey is thorough and has not cherry-picked data from the last 7 years which is even more bullish in January. Why? Because he doesn’t get paid to bullshit you.
That said, we temper our own bullishness with the awareness that Bitcoin has and will continue to cannibalize Gold and Silver flows during this time of year. - VBL]