Gold Stocks Rally
Stewart Thomson | Jan 13, 2015 12:04PM ET
I expect global jewellery demand to support consistently higher Gold prices, well into the month of February. That’s partly because Chinese stock markets had a tremendous performance in 2014.
Investors in China appear keen to celebrate the New Year by purchasing enormous amounts of gold jewellery.
That’s the daily gold chart. A key breakout has occurred, and gold should make its way to $1350 over the next month or two.
I’ve predicted that trading volume in China’s gold markets will surpass the volume on the COMEX over the next two to three years.
As that happens, I expect gold to trade with less volatility, but horrific geopolitical events involving Al Qaeda and ISIS could bring brief periods of time where gold trades “wildly” higher, and then sharply lower.
As powerful as Chinese demand is, I think most gold investors are underestimating what could become an even bigger source of demand and gold price discovery, which is Dubai.
Dubai is launching a new gold jewellery expansion program, targeting international businesses(B2B).
I expect that program will drive gold demand much higher than the bearish bullion bank economists are expecting. Dubai is known as the “City of Gold”, and I’m predicting it ultimately dwarfs London, New York, Shanghai, and Singapore in gold trading volume.
In the big picture, it’s only fitting that the world’s primary centre of gold price discovery should be in Dubai, the city of gold.
Most bank economists have only a mildly negative outlook for gold in 2015. ANZ and TD bank are bullish, and focused on jewellery demand!
Get The News You Want
Also, Bloomberg News quotes Barclays economists this morning with this statement, “The lows of this year and next are likely to offer attractive entry-level prices for the longer-term investor.” – Suki Cooper and Kevin Norrish, Barclays economists, January 12, 2015.
As 2014 began, the gold bears at the banks sounded more like financial terrorists than economists, and many investors in the Western gold community became extremely frightened. Some even became bitter,regretting their involvement with gold stocks.
The good news is that the tone of the gold bears has changed dramatically, in recent months. Also, their predictions of drastically lower prices based on the tapering of QE failed to materialize. I think their predictions this year of lower gold prices based on rate hikes will meet a similar fate.
The Indian wedding season officially begins in just two days, on January 15, and that should add more support to the gold price.
Please click here now. The Indian government is under tremendous pressure from hundreds of thousands of jewellers, to cut the import duties.
It’s time to bring the world’s largest gold jewellery industry out of the control of the Indian mafia, and into Narendra Modi’s “Make in India” hands. I’m predicting that India will build Dubai-certified refineries over the next three years. They will sign huge supply contracts with many of the Western gold community’s favourite mining companies!
There’s more good news for all gold stock enthusiasts. Lower oil prices that help lower the cost of mining should now bring serious attention to gold stocks, from many institutional investors.
Regardless of whether gold ends the year a bit higher or a bit lower, I think gold stocks could have a stellar year.
That’s the Market Vectors Gold Miners (ARCA:GDX) daily chart. The volume is bullish.
Note the position of the 14,7,7 series Stochastics oscillator, at the bottom of the chart. It’s overbought, with the lead line at about 90.
The most reliable price breakouts tend to occur with the daily chart oscillator in this type of overbought condition. I was looking for a two day consecutive close over $20.50 to bring significant hedge fund investment into GDX, and as of yesterday’s close, that’s now in play.
That’s the GDX monthly chart. Even a bearish technician should be open to a rally towards the upper channel line in the $25 - $26 area.
That’s the weekly Market Vectors Junior Gold Miners (ARCA:GDXJ) chart. Watch the $30 price zone carefully.
A two day consecutive close about $30 should bring hedge funds into junior gold stocks, igniting a strong GDXJ rally to $45!
Cheers
Written between 4am-7am. 5-6 issues per week. Emailed at aprox 9am daily.
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