Gold stock sentiment indicator.
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What I am suggesting below does not change my opinion on how the market is currently manipulated or how to trade it.
Trying to take an arms' length and emotionless view of what could be occurring.
You can call me a loony if you feel the urge. I won't be offended.
Have a pretty thick hide given commentary about my charts.
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I believe a few would have watched this video. If not, it is worth a look and only 10 minutes.
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A challenge to Miles on his first statement - that gold is the enemy of fiat currencies.
The enemy of fiat is a) the bond market (debt, IOU's) and b) inflation.
I am going to propose a different theory.
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A more neutral position is that gold is a canary re fiat and therefore the go-to when store of wealth is under threat and other assets appear on the verge of collapse.
This is why gold trades independently of other influences and correlates most strongly with the inverse of REAL interest rates.
If gold was treated as a friend, rather than enemy, it would need to be bought into the system without major disruption or generate systemic collapse.
EVERY fiat that diminishes the relevance of gold (and/or silver) eventually died.
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Currently, gold is a tier 1 and sovereign asset. The status has changed since 2019. CB's, including the BIS are increasing holdings. Strange behaviour for an unloved, out of date relic.
The point Miles makes about the mortgage market and changes in 2010 are very valid and what happened to gold after these changes - it rocketed.
The asset base collapsed.
A major point - the enemy of gold is the LBMA and by extension the COMEX that allow bad actors to play on this stage with no repercussions. They strenuously oppose these changes. WHY?
The cost of doing business will fall onto the players, not the LBMA. Paper turnover will be reduced (undoing rehypothecation), eating into profit margins but the LBMA will still be a viable business. Much of the business is in managing the physical, which will not change.
We have a tier 1 asset that cannot be marked-to-market because of volatility and price manipulation.
We have a tier 1 asset that far too many lay claim to, including sovereign holders.
I suspect sovereign nations are pissed off that gold cannot be repatriated to the owners (remember Germany?)
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Consider the changes and implications.
A lot of speculation could disappear as costs increase.
This reduction will allow better evaluation, transparency and regulation of the system - if desired.
Remains to be seen if price discovery will occur. Not actually expected any time soon.
I suspect further 'rules' will be introduced to improve visibility, particularly around ownership.
The BIS could become a major player with limited competition. Could be looking at eventually controlling the gold sector.
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For gold to be useful, price has to rise many multiples.
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If we assume that gold is to be brought in from the cold then a few more assumptions can be made.
The BIS CANNOT announce their intentions - there will be front-running and the vaults will be cleaned out. That certainly appears to be going on right now.
Gold price increases will have to be 'regulated' until a balance evolves.
This will not be a gold standard but a gold standard by stealth and the back door - as collateral to back money printing and asset prices.
Gold price cannot be pegged to anything - free floating. Local currency price will be according to local economic/fiat management.
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Another question - what would happen if gold was allowed to get to $50k over 10 years. Or any other value of significance.
BTW, a lot of predictions about US$2,400 gold in the next leg. A 50% rise. If gold only falls 10% in the down leg then rises another 50%, we get to $50k in 10 years with such a cycle. No need to target a price as it finds it's own floor over time with a transparent system. A simple calculation.
Gold at these prices would create a massive number of consumers, primarily from China, India and Thailand (Asia). Economic growth.
Any significant crisis and the gold is converted to local fiat. No need for confiscation laws.
The BIS has to have a global view.
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If I was to devise a plan to bring gold into the system to provide economic stability, it would be along the lines the BIS appear to be going.
1 - elevate status - tier 1.
2 - clean up the system. Unwind paper, hypothecation. Limit speculation.
3 - demystify and improve visibility.
4 - allow regulated price rises (but maintain appearance of a cycle, preferably 12 months)
5 - device a method of mark to market (i.e. rolling 12 month average)
6 - retain as much gold in the system as possible (remember Thais selling during lockdown?). People will sell during economic turmoil if price is right or want a new car. Reluctant to buy if they think price is too high.
7 - allow gold to float against all currencies, a de facto gold standard.
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Why are these changes happening to gold that appear to benefit golds' profile and stability?
Won't be long before we have a better idea of what is planned for gold.
We may have to overcome our deserving prejudices and biases to get our heads around what may be unfolding.
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There are parallels to systems in Australia where price suppression and government control have nearly destroyed a system - our electricity sector.
The system finally cracked because there has been minimal investment and research. Foreign owned monopolies have sprung up (poles and wires are a natural monopoly) and everyone blaming everyone and everything else for issues. Prices have exploded and the system is unstable. Now the taxpayer is expected to fund fixing it.
Not going to discuss domestic v exported natural gas. This is happening to our Australia's gold RIGHT now.
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Back to the main game.
As some of you are aware, I posted around 50 charts on various threads over the Easter break.
Of those, 6 are down, one of them predicted. All are still holding trend except for BBX which crashed through the rising trend.
Even BBX pulled up and is now sitting on long term support. I rarely use this chart except for potential bottom fishing and to identify the strongest levels of resistance/support.
20 of those stocks are up at least 10% and of those, 9 are up around 20% or more.
It is all about timing.
At least some of these stocks have a decent buffer to absorb a pull-back.
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Pretty well all of these stocks have resistance coming up but we are nowhere near that point yet. Hopefully it will be apparent.
It will almost certainly coincide with sentiment heading back towards trend. Possibly quite violently towards the end of April.
Good to see juniors with resources beginning to improve. These are the takeover target group.
There was an attempt by bears to beat up POG but there was a decent and encouraging rebound.
This may have taken a little steam out of the bulls so price could stall for a few days before resuming upward.
I have noticed some resistance on short term charts so this allows for a small pull back prior to breaking through these trends.
Of course, anything can happen and probably will.
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In the meantime...
Keep an eye on Perth Mint.
If naked shorts are increasing we could be in for a mother of a short squeeze if they are on the wrong side of the trade.
Sentiment is still climbing with leading indicators in the mid-60's. For 4 days now above 55% and only happened a few times over the last 6 years.
The market character has changed dramatically so be interesting to see how this pans out.
Momentum seems to be building.
I am still expecting sentiment to top out above 55% in the current little run.
Keep in mind this is about the gold stocks, not gold, which have been beaten and badly bruised over the last few months.
Gold about to climb through A$2,300, up almost 5% from the lows.
Here is the indicator.
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