Category Archives: Gold

6th December 2013 – MIDAS support for gold at $1,206/oz

So, this been quite a week for the precious metal.

To say the trade has been choppy would be quite an understatement. Four of the five trading days have seen 30-40 intraday moves. We’ve tested some of the lows set earlier in the summer and there is a feeling something significant is going on in this market at present. Earlier today, our proprietor, Richard Jennings, wrote another bullish call on gold, pointing to further evidence that a bottoming process is playing out. A cursory glance over the chart below, strongly suggests he could be right:

 

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4th December 2013 – Another day another massacre

Following on from my last piece about the current collapse in gold and gold mining stocks, this is starting to look more and more like a capitulation event. And as we all know, for a market truly to bottom it first needs to capitulate.

To recap what I wrote yesterday, I believe that the market for gold is going through a fundamental change. Gold itself is fast transforming from a crisis trade, in anticipation of the financial system collapsing or blowing up in a hyperinflationary boom, to a fundamental play supported by the true cost of production. An investment company, called Hebba Investments, has been publishing a series of research reports on Seeking Alpha for the last few years. They have developed a model to calculate the all-in production costs of the world’s largest listed miners. In their latest note they estimated that the average all-in production costs for these companies (accounting for more than 25% of the world’s supply) were $1,221.75/oz during Q3 2013.

At this very moment gold trades at $1,215/oz.

 

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3rd December – Is this it for gold?

Gold bulls are getting massacred.

The market euphoria that has gripped the main boards and taken hold of the “all is well, bravo the Fed!” crowd has a nasty sting for any pragmatist who knows that a debt crisis cannot be solved by yet more debt. That the latter group will almost certainly be proven right in the long run will do little to cheer them if they are wiped out in the meantime. This could well prove to be the bitter irony of what is happening now. What was it Keynes said about the market remaining irrational longer than he could stay solvent?

Anyway, back to today and gold mining stocks and associated ETFs have been crushed under heavy volume selling, and the price of the yellow metal looks almost certain to retest its 52 week lows (note I said “almost”). If this happens and the decline continues then serious technical support looks well over $100 away.

 

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23rd September 2013 — The MIDAS Touch

King Midas’ legendary ‘curse’ was that all he touched turned to gold. If only my trading fortunes were blessed with such ill (good) luck! Today, rather than a Midas touch, I find myself faced with a MIDAS test.

OK, I am sorry, enough of the terrible puns!

Immediately before the FOMC bottled making a decision (which in hindsight wasn’t much of a shock I suppose), I released this piece, which analysed the gold price in the context of the MIDAS method. So far this summer, MIDAS has made some fantastic calls in various commodity markets (copper, natural gas, silver and gold). During this time, experienced users of MIDAS will have been able to get in and out of these markets, as crucial levels of support and resistance were confirmed and failed.

 

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18th September 2013 — Gold; a test of faith

We’ve been quite categorical about our position on gold over the summer. We are bullish and believe the current pullback represents a buying opportunity.

It is true that many die-hard gold bugs loudly proclaimed their allegiance to the precious metal from the top, all the way to the bottom, losing fortunes in the process. While we hope we haven’t been afflicted by the same investment fanaticism, we are betting that the latest weakness is a precursor to the next move higher. It is possible that the recent drops have been exacerbated by taper-related speculation, but we are now at or are approaching several key areas of technical interest. As always, we let ourselves be guided by what the charts have to tell us.

 

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