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Monday
May202019

European Politics And Its Indirect Effect On Gold Prices

Preamble

The European elections take place this Thursday in the UK and the polling suggests a win by a large majority by the Brexit Party which was formed just 5 weeks ago. Some bookmakers have the Brexit Party at 1:20 with the second place going to the Labour Party at 20:1, in their eyes the Brexit Party will win the most seats by a large majority. As I have said before the last thing that the EU wants is the return of Nigel Farage as his stance for independence and democracy causes restlessness within other nation states.

If the EU can throw the British PM a bone and she in turn can persuade a few of the opposition MPs to vote for the three times rejected EU treaty, then it might pass. Theresa May intends to ask her cabinet to sign off a package of Brexit concessions this week, as she ramps up for one last bid to win over MPs and salvage her version of Brexit.

If that happens then the UK will be out of the EU in terms of having representation but tied in via the new treaty and as a result that would be unpalatable for many in the UK. The fight for democracy in the UK will not stop regardless of parliamentary decisions so I expect that this issue is not going to be put to bed for some time.

The lack of clarity surrounding this issue is having a negative affect on both the Pound and the Euro and thus the US Dollar glistens by comparison and remains strong.

To summarize the US Dollar Index is made up of a basket of currencies including the Pound sterling at 11.9% and the Euro at 57.6%. When these two currencies are under pressure and head south the US Dollar becomes the beneficiary and remains buoyant.

The US Dollar has an inverse relationship with gold so as the US Dollar strengthens gold prices weaken. We have been through a phase of rate hikes in the US which now appears to be over. The next move could be a rate cut and if that was then followed with the reintroduction of QE the US Dollar would lose its gloss and commence a decline. It is this sort of ignition that will set the gold market on fire. Until then or until we experience a ‘Black Swan’ event gold prices will continue to trade sideways at best.

A Quick Look At The Charts

The chart below shows the steady advance of the US Dollar and its penetration of the resistance level at ‘97’ which now becomes a support level.

 

 

The chart below shows.........

Click to read more ...

Saturday
May112019

The Precious Metals Stocks Suppressed Due The Recovery Of The S&P500

Preamble

In today’s modern world of investment opportunities there are a myriad of attractions for an investors hard earned funds. There are pros and cons for each one of them and sooner or later they all have their day in the sun. Investments on offer include but are not limited to; currencies, real estate, land, art, antiques, bonds, stocks, coins, various funds, crypto currencies, etc.

Our particular interest is the precious metals mining sector which unfortunately has been battered over the last five or six years and remains very much in the unwanted category. However, we could argue that "the time to buy is when there's blood in the streets." A saying that is attributed to Baron Rothschild, a member of the Rothschild banking family. He made a fortune by investing in the uncertainty that followed the Battle of Waterloo against France, when his peers where disposing of their holdings. Is the precious metals sector bleeding at the moment? we don’t think so, but this sector is most certainly close to it and worthy of further consideration.

The Gold Bugs Index (HUI) Chart

The chart below shows that there is strong resistance at the 180 level and despite a number of attempts to breakout the precious metals mining stocks have failed to do so. The technical indicators such as the MACD and the STO are in the oversold zone with the RSI sitting just above the 30 level which is regarded by some technicians as a buy signal should the stocks drop below this level.

 

The recent sell-off from 180 to 150 wiped 16% of the value of this index......... READ MORE

 

The sudden drop in the S&P 500 had an immediate impact on gold as it jumped $12.00 or so. The trade war between China and the US has made the markets nervous..

If you would like to know which stocks we are buying and selling please join us atStock Trader our premium investment service.

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Wednesday
May082019

Top 10 lowest cost gold mines on the globe



In 2018, global gold mining companies' average all-in sustaining costs (AISC) fell 6% across the board as miners reacted to a gold price in steady decline for most of the year.

Click to read more ...

Wednesday
May012019

World's Monetary Reserves and the End of an Era

 

Hugo Salinas Price

We had been observing the evolution of the total of Central Bank Monetary Reserves for several years, and noted a peak on August 2, 2014, when these Reserves reached a maximum of the equivalent of $12.032 Trillion dollars, according to Bloomberg.

As of April, 2019, a review of Central Bank Monetary Reserves, according to Bloomberg, yields some interesting information.

In August 2014, the dollar amount of CB Monetary Reserves was, as we just said, $12.032 Trillion dollars, and as of April 19, 2019, CB Monetary Reserves had fallen by $479 Billion dollars, to $11.553 Trillion dollars.

Click to read more ...

Sunday
Apr212019

Gold Mining Stocks Remain Under Pressure From The Markets And The US Dollar

Preamble

It is 8 months since we penned part 3 of this post when The Gold Bugs Index (HUI) stood at 135. Since then things have improved for the precious metal sector and the HUI had risen to a peak of 180. Alas since then some of the euphoria has dissipated as profits were too good to resist for some investors and so they so they capitalized on their gains and disposed of their holdings.

The HUI Chart


This chart shows the rally from September 2018 to February 2019 where it peaked at 180, however, it struggled to hold its ground and fell back to 160. The technical indicators show the stochastics on the floor, but,

Click to read more ...

Sunday
Apr142019

Wheaton Precious Metals Corporation: On The Up

Preamble

In 2010 we became big fans of the ‘streaming model’ and as it was known then Silver Wheaton Corporation (SLW) which has been very kind to us over the years. On the 8th September 2010 we penned a short piece entitled;

Silver Prices: Dare To Dream

A short snippet follows:

Now, remember if you don't have dreams, they can’t come true, so line up a few things that are unique in terms of dreams to you and then prepare the road map of how to achieve them. We won’t bore you with our dreams as they vary from the simplistic to the ridiculous. However, our road map consists of holding a core position in the physical metals along with a small list of mining stocks and some cash for trading purposes. At the moment we utilize the recommendations as stated in our premium options trading service to boost our returns along with the occasional more cavalier trade being posted on our sites.

In this instance our road map involves taking a spread of Call Options on our favourite stock, SLW, with the following purchases.

December 2010 $26.00 Calls @ $1.55

December 2010 $30.00 Calls @ $0.58

December 2010 $35.00 Calls @ $0.18

January 2011 $26.00 Calls @ $2.00

January 2011 $27.00 Calls @ $1.64

This trade was thought by some to be a bit of a stretch, however,

Click to read more ...

Monday
Apr082019

In The Event Of A Fiat Currency Collapse Would Gold Rocket? 

Preamble

One of the reasons given for allocating a portion of one’s investment assets to the precious metals sector such as physical gold is that gold can be considered as an insurance policy against the devaluation of paper money. On my office wall I have framed various bank notes from an 'inflationary' period of time which include the following:

2,000,000 marks, Germany 1923

100,000,000 Pengos, Hungry 1946

5,000,000 Kwanza, Angola 1995

100,000,000,000,000 dollars, Zimbabwe 2008




These bank notes serve as a reminder that currencies can be devalued in dramatic fashion and eventually become worthless.

Click to read more ...

Wednesday
Apr032019

Gold is still a Dollar Play

 

It is been a very frustrating time for Gold Bugs as gold has been unable to break out above the $1350 level for the last 5 years.

The chart above shows the number of times gold has attempted this break out above this resistance level and has failed once again.

Click to read more ...

Saturday
Mar092019

The US Dollar Recovers To Spook Gold

Preamble

Since the last all-time high of $1900/Oz made in 2011 Gold Bugs have taken it on the chin as gold fell from grace resulting in many investors leaving this space in search of greener pastures. In recent years gold has levelled out and is indeed shaping up for a comeback as it once again eyes the near-term resistance level of $1350/Oz.

For many investors breaching this level

Click to read more ...

Monday
Feb252019

Gold To Obliterate The Resistance Level Of $1350/Oz 

Background

It feels like a distance memory since gold traded at the heady heights of $1900/Oz, since then the bears have been in control and gold has been savaged along with the associated mining stocks.

However, since 2016 gold has been making somewhat of a comeback and is now trading close to $1350/Oz. This is a level that it has tried to pierce on 6 or more occasions and failed as each rally ran out of steam, they were head fakes disguised as a rally. This resistance level needs to be obliterated with some gusto and gold needs to find the traction to take out the next resistance level which is $1400/Oz before there is more or less a clear run to $1800/Oz and then new all-time highs of $2000/Oz and beyond for gold.

A quick look at the gold chart


The above chart shows the resistance

Click to read more ...