Gold-Bull Breakout Potential

By Adam Hamilton – Re-Blogged From Gold Eagle

Gold has faded from interest in the past couple months, overshadowed by the monster stock-market rally.  But gold has been consolidating high, quietly basing before its next challenge to major $1350 bull-market resistance.  A decisive breakout above will really catch investors’ attention, greatly improving sentiment and driving major capital inflows.  With gold-futures speculators not very long yet, plenty of buying power exists.

Last August gold was pummeled to a 19.3-month low near $1174 by extreme all-time-record short selling in gold futures.  The speculators trading these derivatives command a wildly-disproportional influence on short-term gold price action, especially when investors aren’t buying.  Gold-futures trading bullies gold’s price around considerably to majorly, which can really distort psychology surrounding the gold market.

The main reason is the incredible leverage inherent in gold futures.  This week the maintenance margin required to trade a single 100-troy-ounce gold-futures contract is just $3400.  That’s the minimum cash traders have to keep in their accounts.  Yet at the recent $1300 gold price, each contract controls gold worth $130,000.  So gold-futures speculators are legally allowed to run extreme leverage up to 38.2x!

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Silver Price Outperforming Gold Price

By Adam Hamilton – Re-Blogged From Silver Phoenix

Silver recently started outperforming gold again, a watershed event.  For long years this white metal has mostly lagged the yellow one, relentlessly battering silver sentiment.  But gold surging into year-end 2018 finally sparked some life into moribund silver.  This is a bullish sign, as silver has soared in the past once rising prices reach critical mass in attracting new investment capital.  Silver looks to be nearing that point again.

Despite a good finish, 2018 was a rough year for silver.  Its price slumped 8.6%, way worse than gold’s -1.6% performance.  And that still masks miserable intra-year action.  At worst in mid-November, silver had plunged 17.3% year-to-date.  That was 2.2x gold’s comparable loss, and at $13.99 silver languished at a major 2.8-year low.  A soul-crushing 96% of its early-2016 bull market had been reversed and lost!

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Waiting For The Next Big Thing

By Mark J Lundeen – Re-Blogged From http://www.Gold-Eagle.com

The Dow Jones Index was up for the week with its BEV plot below closing above its -10% line. Nothing wrong with that as it enters its third month correcting from its last all-time high of 26,616 of January 26th. As double digit corrections go, this one has been a fairly wimpy one – so far. The Dow Jones’ last correction occurred from May 2015 to July 2016 (fourteen months); twice the Dow Jones dipped below its -12.5% line in the BEV chart below, or 16,000 points on a point chart in August 2015 and again in February 2016. Since then the Dow Jones has put two years and 10,000 points behind it.

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Silver Stocks’ New Upleg

By Adam Hamilton – Re-Blogged From http://www.Silver-Phoenix500.com

The silver miners’ stocks have surged higher in this young new year, putting the Trumphoria general-stock rally to shame.  Following its fourth-quarter drubbing, this tiny contrarian sector is embarking on a major new upleg as traders return.  Silver-stock uplegs tend to grow to massive proportions, and silver-mining fundamentals remain strong today.  So odds are the silver stocks are going to power far higher in 2017.

Because silver stocks aren’t widely followed, most investors and speculators are unaware of this sector’s stellar upside potential.  Silver mining is a challenging business both geologically and economically, so there aren’t many primary silver miners out there.  And their stocks’ collective market capitalization is small, a rounding error compared to the broader stock markets.  That doesn’t leave much room for funds to buy.

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Gold Stocks Screaming Buy

By Adam Hamilton – Re-Blogged From http://www.Zealllc.com

The gold miners’ stocks are suffering from universal and overwhelming bearishness today, with nearly everyone expecting further selling.  That’s the natural reaction following this sector’s recent massive correction, which climaxed in one of its biggest daily plummets ever witnessed.  But within bull markets, there’s no better time to buy aggressively than deep in a major selloff that’s riddled with great doubt and fear.

The core mission of speculation and investment is so simple even children can easily grasp it, buy low sell high.  The great challenges arise not from understanding, but execution.  Actually buying low then selling high in real markets is exceedingly unnatural and uncomfortable.  It requires traders to overcome their own greed and fear to do the exact opposite of everything their own instincts are screaming to do.

The only times speculators and investors want to buy aggressively is when it feels great to do so.  That only happens late in powerful rallies, when everyone can clearly see how strong a sector’s performance has been.  Traders then commit one of trading’s cardinal sins, extrapolating recent performance out into the indefinite future.  They assume a red-hot sector will keep on rising, and eagerly rush to buy high after a rally.

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Beware The Stock Bear!

The US stock markets’ latest record highs have left traders exceedingly euphoric and complacent.  They are utterly convinced this stock bull will power higher for years to come.  But their enthusiasm is very misplaced.  In real inflation-adjusted terms, the US stock markets only just regained breakeven levels 15 years after the last secular bull peaked.  Now the secular stock bear ever since is overdue for a new cyclical bear.

The flagship benchmark index for tracking the US stock markets is the mighty S&P 500, often shortened to SPX.  The whole financial world literally revolves around this dominant index, with most global equity markets and even some major commodities markets like oil usually mirroring it.  American stock traders can directly trade the SPX through a handful of gargantuan ETFs including the leading SPY S&P 500 ETF.

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