first majestic silver

Gold $1310: Buy Zone Of Champions

President of Graceland Investment Management
March 6, 2018

Gold is showing solid rallies from my $1310 area buy zone (basis April futures). From both a love trade and fear trade perspective, the fundamental picture is becoming more positive.

I’ve repeatedly highlighted the fact that while America has the world’s richest economy, China’s economy is vastly bigger.

Courtesy of the Visual Capitalist, this snapshot of Chinese commodity demand should provide a significant confidence booster shot for investors.

The huge demand puts a floor of support under commodities like gold… even on minor price declines.

This is the daily gold chart.

Gold is rallying for a second time from my $1310 buy zone, and there is a positive non-confirmation in play with the Stochastics oscillator.

Since hitting the $1370 resistance zone in late January, gold has consolidated in a drifting rectangular pattern. The odds of an upside breakout from this pattern are about 67%.

Importantly, that breakout implies that the price would move above the huge resistance zone at $1370!

While the gold trading volume on the Dubai Gold & Commodities Exchange (DGCX) is nowhere near the size of COMEX volume, it’s growing relentlessly while COMEX volume appears to have peaked.

The SGE (Shanghai Gold Exchange) is helping the DGCX. The Sharia-compliant spot gold contract launch is quite important because it should bring more stability to the overall gold price discovery process.

A rise above $1370 against the background of rising institutional money manager concern about inflation in the West would be another huge confidence boost for investors, both in America and in China.

The current price action of the dollar against the safe haven yen is truly horrific.

It’s another stronger indicator that gold is poised to move above $1370.

The oil market price action is becoming concerning.

Some of the decline can be attributed to rising US supply, but the price action is eerily similar to the US stock market. That synergy suggests that oil traders are concerned that the US economic numbers may be peaking, leading to a drop of demand for oil.

The US dollar is moving strongly higher in USD-CAD trading.

I refer to the Canadian dollar as the “Cbone”, because it is the backbone of the Canadian banking system and government. Oil exports play a big role in the Canadian economy.

The Cbone appears to be getting pummelled by inflationary tariff concerns and a potential collapse in US oil demand.

Gold often rises when commodity currencies like the Cbone rise, but in the current situation, the big FOREX traders appear to be mainly focused on what inflation and collapsing economic demand in America would mean for the US government’s ability to finance itself.

The bottom line is that twenty years of declining money velocity are coming to an end. A new inflationary era is being born in the West, albeit at a snail’s pace. That is a source of frustration for some gold stock enthusiasts.

The good news is that current time frame is probably best compared to 1968 – 1970, when interest rates and inflation began to rise.

Gold stocks perform like champions in this type of environment once the concept of growing stagflation gains widespread institutional acceptance. That time is approaching quickly now.

This is the GDX daily chart. Range traders should take note of the buy zone at $21 and the sell zone at $25. This trading range has been in play for about a year.

If gold bursts above $1370 with rising inflation in the West and the new Dubai spot gold contract serving as wind at its back, GDX should explode upwards above $25. This would in turn see many more institutional investors come to embrace gold stocks as offering generational value with the best potential for price appreciation!


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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.

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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

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Stewart Thomson is president of Graceland Investment Management (Cayman) Ltd. Stewart was a very good English literature student, which helped him develop a unique way of communicating his investment ideas.  He developed the “PGEN”, which is a unique capital allocation program. It is designed to allow investors of any size to mimic the action of the banks.  Stewart owns GU Trader, which is a unique gold futures/ETF trading service, which closes out all trades by 5pm each day. High net worth individuals around the world follow Stewart on a daily basis.  Website:

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