A quick note after a long drive…
US stocks were more or less steady on Monday. Gold was up $11… apparently on its way back to $1,300 an ounce. (See more below from Chris on where gold is going and when to buy…)
We spent yesterday driving from Baltimore down to Aiken. So we didn’t have much time to think about what was going on in the markets.
Aiken is supposed to be warmer than Baltimore. Today, it’s about 10 degrees warmer. But it’s hardly balmy. And the cleaning lady at the hotel warned us:
“I know you came down here to get away from the snow. But I’ve got bad news for you. It’s going to snow here on Wednesday. Not much. But it will be exciting. We’re not really very used to snow. Should be pretty, though.”
The cold has been a subject of conversation all up and down the East Coast of the USA. On Sunday, we gave our advice to a young couple who had just bought an old house in rural Maryland.
“You need to build a big fireplace. Maryland has plenty of trees. Firewood is no problem. So, you put a big fireplace in your kitchen. Then you don’t really care how cold the rest of the house is. You just make a roaring fire in the kitchen. Everybody congregates in front of the fire. And then spring comes.”
Gold Shines in 2014
From the desk of Chris Hunter, Editor-in-Chief, Bonner & Partners
Gold has been behaving well in 2014, after a roughly 27% drop in 2013.
As Wall Street veteran and former Merrill Lynch technical analyst Bob Farrell put it in his “10 Market Rules to Remember”:
When all the experts and forecasts agree – something else is going to happen.
This is certainly the case with gold, which had up until recently been left for dead by the mainstream.
As you can see from the chart below, gold has managed to climb above resistance at its 50-day moving average (blue line). And its 200-day moving average (red line), at $1,313 an ounce, is now in sight.
As we’ve been telling members of Bill’s family wealth advisory, Bonner & Partners Family Office, during the recent correction gold has been moving from “weak hands” to “strong hands.”
In other words, often-leveraged speculators and hedge funds in the West – “weak hands” – have been selling out of their mainly paper gold bets. And individual buyers in the East – “strong hands” – have been gobbling up mainly physical gold at nice discounts to recent peaks.
Recent reports, for example, reveal that gold bullion buying by individual Chinese investors rose 40% in 2013… probably pushing China ahead of India as the largest consumer of gold.
If you’re looking to build a position in gold, there looks like significant price support at about $1,200 an ounce.
And if gold breaks above it’s 200-day moving average… and that break is sustained… it would be a good time to buy.
The consensus is that the secular bull market in gold is over.
Something else is likely to happen…