Saturday , 15 December 2018

New All Time Record Highs For Gold & Silver Coming In 2019

Gold is gaining momentum after a 5-year consolidation and is set to challenge the 2011 highs some time next year. Once gold clears $2,000, a powerful bull market should drive the gold price meaningfully higher.

The original article has been edited here for length (…) and clarity ([ ])

Physical Gold

Gold has been an unloved asset class for years but that is about to change. I am expecting a bear market in equities and rising yields as a consequence of years of central bank QE.

 A traditional portfolio of stocks and bonds will not protect investors during the next downturn. I expect gold will replace bonds as the go-to hedge.

Ultimately, I think gold will reach $5,000/ozt-$10,000/ozt, as a multi-year bear market in equities and the USD unfolds (along with a USD currency crisis), but let’s get to $2,000/ozt first.

Gold Miners

Should gold continue on its bullish trajectory, the gold (and silver) miners will explode higher.

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$XAU is an index of gold and silver mining companies, and they are on sale today, following a catastrophic collapse from 2011 to 2016. Miners are cheaper today than they were all the way back in 2000 when the gold bull market began (and gold was trading at $250/ozt). Many gold and silver mining companies are now breaking out from multi-year base formations. Fortunes will be made in this sector over the next 5-10 years…

The U.S. Dollar

The US stock market has rallied +167% from 2012 to 2018. US Treasuries added almost +40% from 2013 to 2016 before falling -20% over the last two years. The USD added +32% from 2013 to 2017 before declining -15% over the last 15 months.

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Investors with a bullish bias should be rooting for both US Treasuries and USD to stabilize. If the USD and Treasuries continue to fall, the stock market will surely follow and the decline could accelerate at a moment’s notice.
Physical Silver
Silver has been in a trading range for over four years and is now preparing to launch higher. More volatile than gold, silver is also considered a precious metal and the upside potential from here is significant. Silver cleared $17 a troy ounce yesterday. I think $18 and $20 will fall shortly as the next leg of the precious metals bull market gets underway. Just as I expect gold to break out to new all time highs next year above $2,000/ozt, silver has a good chance of doing the same.
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Commitment of Traders
The latest Commitment of Traders report is also favouring a sharp move higher in silver prices. The Commercial Traders (smart money, purple bars) who are always short the metal to hedge silver producer production, are holding their smallest short position in years.
Screen Shot 2018-04-19 at 09.35.27.png

Meanwhile, the Large Speculator position (blue bars) is now short silver for the first time in years. The scene is set for a rocket launch in silver prices.

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