Technical Analysis vs Fundamentals for Gold

ByDavid Schectman conflict, gold, king, miles, miles-franklin, physical, price, similar-posts, world Comments Off

Bill Holter wrote this morning, if you believe in what we are saying and are worried about your friends and family, forward at least five of them an issue of the Miles Franklin newsletter. It would be better yet if you call them and tell them you are sending it and suggest that they sign up. It could well be the biggest favor you do for them this year. What they do with our information is another matter, but you can at least tell yourself that you tried to open their eyes. If even one person is impacted by your phone call and email, you will have done a very good thing.

Jim Sinclair of jsmineset.com featured Bill Holter’s article 2+2=”Quadruple.” We give you Andy Hoffman and Bill Holter every day. We are proud of the writers who are a part of the Miles Franklin team.

I do a lot of reading every day. There are two points of view on gold. There is technical analysis, which is decidedly bearish. Even the usual bulls, like Dow Theory Letters and the Aden Sisters are backing away from gold and silver, based on the charts.

The other point of view is based on fundamentals. The fundamentals – Chinese demand, QE to infinity money creation, cost of mining higher than the current price – all of these suggest higher prices.

Then there is Larry Edelson who follows the charts, but at least is acutely aware of fundamentals. He is of the mind that gold and silver should take off by next month. Most analysts think that gold and silver have to bottom before the bull market can return. But no one knows exactly where the bottom is, or what the price will be.

We at Miles Franklin are decidedly in the “fundamentals” camp. We don’t know if the metals will go a bit lower or exactly when they will start to rise again, but we do know that they will and that the move will be so stunning that it matters not what you pay to get in the game. That is true only for physicals. Those who want to buy contracts or stocks are more concerned with the next 24 hours. We are concerned with the next 12 months. We don’t trade metals; we don’t speculate with them. We know the winning trade is long gold and silver and short dollars, but one must look ahead. It can’t end any other way.

Gold Price. Value vs. Momentum

Submitted by Tyler Durden on 12/16/2013 21:50 -0500

Submitted by Alasdair Macleod

For many commentators there are two distinct camps in the gold market: investors in bullion and speculators in the paper market. With the two markets pulling in different directions some dealers think it is only a matter of time before derivatives fail completely and the price of gold will rocket on physical demand.

That two ends of one market are in conflict and one will win over the other is a tempting conclusion, but this is unhelpful. The conflict is more about two different types of investor: there are those who buy or sell on grounds of value and momentum investors who deal on the trend. It is the market structure that tends to corral them into different camps. Value investors generally go for physical metal, while momentum investors go for derivatives.

Their motivations are different. Value investors include buyers of physical gold from all over the world, commonly seeking value or security compared with holding fiat currency. Speculators in the futures markets rarely evaluate the price of gold, assuming the current price is the only valid reference point that matters. This bifurcation between value and momentum is a common feature from time to time in nearly all capital markets. We saw it in equities during the dot-com boom, when value investors were embarrassed before momentum investors were eventually crushed. However, both classes of investor always fish in the same pool.

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Tomorrow I will present a few pages from Jim Willie. I always look forward to his comments. They are NOT for the faint of heart.

Just a reminder. This week’s FOMC meeting starts today. One never knows how the precious metals will “react” – or be allowed to react – but we’ll find out as the next two days progress.

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David Schectman