Chad Burlet provides a fundamental outlook of the grain sector....
Gold: The Ultimate Currency
09/19/2017 2:53 am EST
Breaking above the key $1300 level, gold is now on its way to test its peak last year near the $1380 level, asserts resource sector experts Mary Anne and Pamela Aden, editors of The Aden Forecast.
And it’s not just gold. Gold shares are popping up, and so is silver, platinum and the base metals. Copper has been the leader, reaching a three year high.
In other words, it’s a powerful move when the precious and base metals are in a major turnaround together from bear market to bull market.
The weak U.S. dollar and low interest rates have also given this sector a boost. You could say the same about the stock market, and this will continue to be a bullish backdrop for these metals and mining shares.
Meanwhile, investors and hedge funds have piled into gold. Hedge funds' bullish bets have climbed almost nine times since early July.
In addition, Russia and China continue to stockpile gold in a bid to cut their economic dependence on the dollar. Other countries are doing the same. And many have taken advantage of the low summer months to increase their positions.
Gold will get its crown back as the ultimate currency. There are more black swan potentials in today’s waters. And interestingly, this potential coincides with a cyclical bull market that is ready to unfold in gold.
The gold price is a measure of fear — and economic fear is the most powerful. But it also moves on political fear and tense geopolitical fears. More important, gold is the true longstanding currency of last resort.
On the downside, gold will remain very strong by staying above $1300. It has solid support above its 23-month moving average at $1235. In a worst case support, the $1200 level supplies it.
In 2008-09, once gold rose and stayed above $1000, it was off to the races. Today, this key level is $1380. This is a strong hurdle to surpass because it identifies the whole weak part of the bear market since 2013.
Once this level is broken, the final hurdle will be next. The $1536 level was the first support of the last bull market and it’s now the last resistance for this new bull market. Overcoming this level at $1536 would be a giant step to reaching a new record high.
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