Eleven Reasons Why I Am Super Bullish On Gold and Silver.The Ducks are Lining Up! - Peter Degraaf (30/08/2018)
30 August, 2018
This chart is courtesy Real Investment
Advice.com and borrowed from a recent article:
‘
Wicksell’s
Elegant Model
’. The brown areas in the chart highlight the
periods when ‘real rates’ were and are negative. Gold tends to perform best during those
periods.
Featured is the weekly gold chart courtesy
Stockcharts.com. The pattern indicates
the likelihood of a developing ‘inverted head and shoulders’ formation. Watch
for a turnaround here to carve out the right shoulder. A breakout at the blue arrow will confirm the
pattern, with a target at $1650.
This chart courtesy COT@softwarenorth.com
shows the ‘net short’ position of commercial gold dealers has evaporated for
the first time in years – perhaps for the first time ever. As a percentage of open interest the number
is very bullish at 0.4%.
This chart courtesy Zerohedge.com shows
hedge funds have NEVER been more ‘net short’ gold. Hedge funds are often
referred to as the 'dumb money'. The last time these funds were somewhat
short (compared to today), was in December 2015 - see chart). That was
when gold moved from $1050 to $1375. Is history about to repeat?
This chart is courtesy Bloomberg.com shows
a situation today that compares to a set-up in 2002. Gold back then rose from $275 to $1925.
This chart courtesy BGMBullion.com shows a
steady increase in the amount of gold that is being acquired by Central Banks,
since the end of the last financial crisis.
Since Central banks are hoarding gold, we can assume that these bankers
anticipate a future role for gold in the world’s financial system.
This
chart dated April 2018, and courtesy IMF and Deutschebank shows several dozen
countries and the expected % Change in Government Debt-to-GDP Ratios for
“Advanced” Economies. Most of the countries listed are expected to reduce
this ratio, but the USA is shown here as likely to increase its debt to GDP
ratio by 9%. This increase in the level of debt will cause the US dollar
to depreciate. Investors are likely to seek gold and silver for protection.
While this article is focused primarily
focused on gold, we recall that historically, during a gold bull market, silver
usually moves up even faster than gold.
This chart courtesy Sprott.com and sources
listed shows hedge funds have shorted silver at an all-time high number.
When too many passengers in a boat are seated on one side, there is danger of
the boat tipping over. Watch what happens to the price of silver
when these short positions are covered.
This chart courtesy Egon von Greyerz at
Goldswitzerland.com shows a bullish pattern is developing in silver. Silver is the only commodity that has not yet
reached the value that prevailed in February 1980. An upside breakout here will send silver
advancing towards that 48.50 level, and possibly beyond.
This chart courtesy goldchartsrus.com shows
the number of ounces backing SLV and other silver ETFs and trusts has increased
while the price of silver declined. This is bullish divergence; leading to
the conclusion that silver is due for a rise, to match the uptrend in this
chart.
Featured is the Palladium chart.
Palladium often leads the precious metals complex. The upside breakout at
the blue arrow is setting a positive example for gold and silver and is
confirmed by the supporting indicators. This breakout sets up an initial target
at the green arrow.
 |
Peter Degraaf was for many years a coin dealer - attending coin shows all over the USA and Canada. Upon retiring from the coin business, Peter used his investing experience to develop as a technical analyst. His specialty is the combining of fundamentals with charting. |
The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
