The Big Picture

Some very interesting activity is appearing on monthly charts (btw I like monthly charts as they filter out the day to day noise and provide a much clearer long term picture). So let's take a look at a few of them and how they may have an influence on the future direction of BDR in SP terms.

1. The US market (DJIA). Read a comment by an analyst the other week citing that the 'jaws of death' (or megaphone) pattern has now become the jaws of life by virtue of a breakout above on the DJIA multi year monthly chart. But is this assessment premature and could the breakout instead be a trap for the bulls?


2. The US  Dollar. As you can see the USD has broken out from it's wedge pattern and has had a great run over the last seven months or so. It is now entering a 30+ year resistance zone on some wildly overbought technicals. Does this mean it's due for a corrective pullback?


3. Gold Bear market in Russian Rubles. This is of course an extreme but very real example of what can happen to the value of Gold when priced against a major fiat currency that is under enormous pressure. IMO this why the Russians and Chinese central banks (amongst others) have opted to stock up on gold in recent times?  The USD is very strong compared with almost every other currency on the planet today, but only because it is the 'safe haven' choice for now and the best of a bad bunch. The fact is that all fiat currencies throughout history have had a finite life as they have been devalued by their governments and become worthless over time, and the USD will be no exception. By contrast Gold and silver is the only 'finite' money that has withstood the ages and acted as a protector of  wealth and that is becoming more apparent as we see major economies falter.


4. Gold in Brazilian Real (BRL). Heading in the same direction as the Ruble though it has a bit more work to do. Is the next stop the all-time high of 3600 on a monthly closing basis?


5. Gold in Aussie Dollars (AUD). After a major breakout, Gold in AUD is just $70 shy of it's all-time high on a monthly closing basis. Will it form a triple top or perhaps explode above (like Gold in RUB) and will the next pullback coincide with a correction of the USD?


6. Gold in US Dollars (USD). Gold in USD appears to have broken from a 2+ year declining resistance line on the monthly chart and is doing something out of character, that is rising in the face of a strong USD. Could that mean that safe haven investors are not only switching to the USD, but now switching to Gold in USD as well?


7. Oil in USD. Representatives from OPEC nations are on record as saying that we are unlikely to see $100pb of oil again and that they're prepared for lower prices to $20pb if need be. The Saudis for example have 10 years of cash reserves to withstand any losses in the event of a more permanent lower oil price. Iraq is producing record output and OPEC say they have no intention of restricting supply for the time being. Perhaps opening the floodgates (so to speak) has something to do with protecting their market share?

The US recently became the No.1 exporter for oil, however that won't last IMO due to the shale industry now running enormous losses because their average cost of production is much higher than OPEC and othe oil producing nations. Therefore it appears that the major fallout in oil prices is set to take months (at least) to recover and the winners will be non-producing oil countries such as China and India and the many consumers including gold mining companies.


8. GDX Gold Miners ETF. Preparing for take-off?


9. XGD (Aussie Gold stock index). Preparing for take-off following Gold's impressive rise in AUD terms? With Gold in AUD approaching new highs something's got to give and soon IMO.


10. Northern Star Resources (NST) and Beadell Resources (BDR).
A tale of opposite fortunes over the last 12-13 months. Having said that BDR's solid Dec qtr, January production est. and positive outlook for 2015 should IMO conservatively result in a SP not too different from it's average SP in 2013.



GLTA and note that my opinion and analysis should not be relied upon on nor considered as advice of any kind. Please DYOR.