Gold seems to be signalling a buy and the reasons I believe so are as follows:
1. Gold made a low of 1769 which significantly is slightly higher then the Nov low of 1765. This shows that bears are not in total control as generally believed.
2. The strange behaviour of Silver: inspite of Gold retesting its lows silver refused to break accordingly. This divergence is due to the following factors:
* Silver contracts expire next week and there are concerns about delivery as physical silver is not easily available and continues to sell at a premium.
* The change in prospectus of IShares Slv trust (largest silver ETF) where it no longer links itself to actual silver and talks about possibly stopping the issuance of new shares which could point to the difficulty of sourcing physical silver.
3. The above mentioned silver behaviour is signalling a move from paper to physical and could point to things to come for gold as the current contract approaches expiry.
4. The looming stimulus which is expected in March.
5. The increasing T yields which are pushing up borrowing costs for the Govt and could force the Fed to intervene in order to manage the yield curve (money printing).
6. Higher food inflation which could be a portend of things to come.
This analysis holds as long as Gold does not break 1765 and my targets are 1812-1835.
1. Gold made a low of 1769 which significantly is slightly higher then the Nov low of 1765. This shows that bears are not in total control as generally believed.
2. The strange behaviour of Silver: inspite of Gold retesting its lows silver refused to break accordingly. This divergence is due to the following factors:
* Silver contracts expire next week and there are concerns about delivery as physical silver is not easily available and continues to sell at a premium.
* The change in prospectus of IShares Slv trust (largest silver ETF) where it no longer links itself to actual silver and talks about possibly stopping the issuance of new shares which could point to the difficulty of sourcing physical silver.
3. The above mentioned silver behaviour is signalling a move from paper to physical and could point to things to come for gold as the current contract approaches expiry.
4. The looming stimulus which is expected in March.
5. The increasing T yields which are pushing up borrowing costs for the Govt and could force the Fed to intervene in order to manage the yield curve (money printing).
6. Higher food inflation which could be a portend of things to come.
This analysis holds as long as Gold does not break 1765 and my targets are 1812-1835.