A Large Scale Look on Gold

07/15/2015 8:00 am EST


Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

On a big picture basis, we believe 2015, and possibly into 2016, will go down as a major accumulation time period for the metals, asserts resource experts Mary Anne and Pamela Aden, co-editors of The Aden Forecast.

We know the deflationary pressures present today have been keeping downward pressure on commodities in general. The massive global debt monster—especially since 2008—has been the main culprit.

But considering the historical monetary actions taken by the Fed and other central banks, we believe it’s a matter of time before we see the effects.

And since these actions are indeed unprecedented, it’s still to be seen how the final outcome plays out.

With all this uncertainty going forward, it’s no surprise to see more countries building their gold reserves.

Silver is also looking attractive to many. Last year, India imported over 7,000 tonnes of silver. And this year through April it has imported another 3,000 tonnes.

Plus, the demand for physical gold continues. Sales of gold and silver American eagle coins jumped up in June, doubling and tripling the amount sold in May.

Plus, consumers in important gold consuming nations like China, India, and other emerging markets have few ways to protect their savings and wealth against rising prices. That too will keep demand robust.

The point is, gold remains popular in these markets because it’s seen as an efficient and reliable store of value. In addition, there’s little competition with global interest rates so low.

Meanwhile, gold has been weak during the summer months. Gold declined well below the $1170 level.

And so far, the longer it stays below this level, the more likely we could see the November lows tested near $1143.A worst-case decline for this bottoming process would be the $1100 level.

If the bear market is a vicious one, then an upcoming decline could be very weak with another leg down. This would happen below $1100. This doesn’t seem likely, but we can’t discard it altogether.

On the upside, the 23-month moving average is our key mega trend identifier. Once gold closes and stays above this level at $1253, a mega trend change will be underway from down to up.

Then the January high near $1300 will be the next key level to surpass. This would then give gold the clear green light.

Silver is an even better value than gold right now. Its excess has
been removed and it’s now down near levels that usually coincide
with big bottoms.

Gold shares are also in this same situation. Gold shares are poised and coiled for a big bounce up.

Gold shares overall are in a bombed out situation versus gold. The time is getting close. We don’t want to sell our gold share position; the bottom is too close.

We recommend keeping the rest of your positions in gold for now. If anything, buy on weakness if you want to buy new positions or add to the ones you already have.

Among our positions, we currently own Central Fund of Canada (CEF), Market Vectors Gold Miners ETF (GDX), and iShares Silver Trust (SLV) as well as physical gold and silver.

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