“Major Battle Underway In The Gold Market”

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by Dave Kranzler, Investment Research Dynamics:

The chart (and blog title) above is from James Turk via King World News. Turk was making the point that the western Central Banks, via the bullion banks, are short $4 billion worth of paper gold on the Comex. With all of the Central Bank money printing, and the Fed is by far printing the most, it would be a disaster for the fiat currency system if the price of gold were to break free and rediscover price discovery. It’s only a matter of time until this occurs. But for now the Central Banks are making a concerted effort to do what they do best: defer reality for as long as possible.

For now the goal is to prevent gold from breaking above $1800, which means the invisible “battle line” is at $1790. I remember when gold was trying to get over $400. It seemed like it took forever. But once $400 fell (shortly after Elliot Wave aficionado, Robert Prechter, proclaimed gold was going back to $50), it didn’t take long for gold to double (about 18 months). I think once gold gets through $1800 and holds, it will challenge the all-time high at $1900 relatively quickly. For as bullish as I am on gold, I’m 3x more bullish on silver.

A subscriber was concerned about the possibility of the miners getting hit hard in the next general stock market crash. I suspect the miners will get hit initially but then stage a rally. But that’s why I advise always leaving yourself plenty of cash to take advantage of big sell-offs that will likely recover quickly and take the market higher.

We’re in an ideal period of time for gold/silver to move higher with all of the money printing and concomitant currency devaluation. As gold/silver move higher the mining stocks will eventually catch a big bid from the mainstream investing public and soar. Look at how quickly the mining stocks recovered from the March massacre. (And from the Thursday/Friday morning price slam as the Comex was opening).

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