Hang on to your hats and gold shares as we maybe entering a...

Hang on to your hats and gold shares as we maybe entering a massive gold bull market.

For the last few months on HC gold stocks threads I have been banging on about when Gold ETFs becoming net buyers of gold from being net sellers (still net sellers in March but much less so). Unfortunately I have had almost no reaction to this possibility. [The World Gold Council publishes weekly ETF flows].

My view has been and is more so now, when (not if) gold ETFs become net buyers the POG will go up a lot more than it has already and take gold stocks a proportionally a lot higher than the increase in POG.

As gold producer stocks are still very undervalued, and even more so ALK, we could see gold stocks in general double or more this year from current levels (and a lot more for some stocks) as they may go from being undervalued to being over valued which tends to happen in bull markets. I have noted substantially more articles about gold in many publications over the last 2 months.

When ETFs start being net buyers of gold we are likely to see an emerging big interest in gold stocks as the POG goes up a lot more. POG is now around $US2,400 having risen by $US350 or 17% in 6 weeks or 20% in 8 weeks when ETFs are net sellers.

The following chart and comments from the following article (which is an excellent description of the gold market - all should read it) suggests the upside in POG once ETFs become net buyers could be potentially $US3,000 which I suggest will happen in 2024 and I won't be surprised if it goes higher than that level this year (its already increase by $US350 in about 8 weeks).

"For the most part, gold’s 14.12% year-to-date price increase (period measuring 1/01-4/09/2024) has generated only a perfunctory media stir. However, the indifference of investors in Western capital markets suggests to us that there is significant potential for further upside. We believe that if buying by mainstream investors approached flows from 2008-2011 (1,645 tonnes added to gold-backed ETFs), the gold price could potentially rise another 25%, well beyond the recent upwardly revised and always behind-the-curve price targets of banking and brokerage analysts. Figure 2 shows the historical flows into gold-backed ETFs for the past 20 years."


Note that the last 2 big spikes in ETFs being net buyers did not have central banks buying gold anywhere near today's level nor did they have the Chinese going nuts buying gold (and silver) - the rise in POG was due mainly to ETF being significant net buyers of gold in previous periods.

The other chart I thought worth focusing on was the following.


There is a big move by many countries from the US dollar which looks like it is accelerating but the US dollar index is still high. If the US dollar index starts to fall significantly this will give way to big buying of gold and silver and another big increase in POG. It's interesting that the increase in POG since early October 2023 when it was about $US1,850) which is about $US550 has occurred while the US dollar index has not moved lower and bond yields have not moved much lower as normally gold would not move much in this environment but it has increased by close to 30%! Will the POG go nuts if the US dollar index falls significantly?

https://sprott.com/insights/sprott-gold-report-what-does-the-gold-price-breakout-mean/?utm_source=insights&utm_medium=email&utm_campaign=what-does-the-gold-price-breakout-mean&_cldee=4J_bgD1v8DQqvm5o3FQT8Rmy99KPbp198VlipNg9gi4g0TTLqGL2DQIK_ovT-Cqh&recipientid=lead-32adb0f99349ee11be6f000d3ae99267-8e4a64213fd84d189fb3e18fa06bf7b4&esid=5978c405-78f7-ee11-a1fe-0022483bc96c