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Gold’s Rally: A Study In Perfection – Stewart Thomson
Gold has staged a majestic upside breakout. My $1320 target is coming closer.
It’s important to understand the difference between the gold market now, and during the 2009 – 2011 rally:
1. The gold price action continues to look spectacular, as the rally gains both technical and fundamental momentum.
2. Gold has staged a majestic upside breakout, as I predicted it would, from an important symmetrical triangle pattern. The upside fun continues this morning, with the world’s ultimate asset rising overnight again, in solid Asian trading.
3. My $1320 target is coming closer.
4. From a fundamental perspective, it’s important to understand the difference between the gold market now, and during the 2009 – 2011 rally.
5. Institutional buyers then tended to be leveraged hedge funds. They believed Ben Bernanke’s QE program would be inflationary, even though Ben himself stated it could be quite deflationary, which it was. For several years, I’ve suggested that the exit from QE and interest rate hikes will create all the inflation those hedge fund managers wanted to see.
6. That’s coming into play now, and value-oriented funds are eagerly buying gold. These are very strong hands. While I don’t engage in gold market price chasing, those who do so now don’t face anywhere near the risk they did before these powerful institutional buyers joined the “gold buying party”.
7. If a Western gold investor has lots of precious metal sector investments now, they should not be greedy and buy more as the price rises. If they have none at all, they should definitely be a buyer right now, because they are in the company of deep-pocketed institutions.
8. These institutions appear to be committed to the precious metal asset class for the long term as a value play, and won’t be easily shaken from their positions for many years to come! Also, whether gold rises or falls now, those money managers will likely keep buying regularly.
The full read is at http://www.silverdoctors.com/gold/gold-news/golds-rally-a-study-in-perfection-stewart-thomson/
