Gold Breakout Was the Signal to Buy Again

Florian Grummes says gold's break above 4,200 was the signal he had been waiting for, and he has moved from 50% invested to 80% invested on the back of it.

The founder of Midas Touch Consulting tells Kitco News anchor Jeremy Szafron that the trigger was not the metal itself but the Federal Reserve's new facility accepting Japanese collateral, which he calls "back to money printing" and compares in direction to the swap lines used during the Credit Suisse rescue.

He is buying juniors rather than producers, and he names two he owns. His screen is counterintuitive. He wants a stock that has already outperformed the metal, because that is the proof it will move when gold moves. He expects a wave of mining M&A over the next one to three years as producers redeploy the cash they are generating at these prices.

On price he sees 4,500 gold this summer and 70 dollar silver, and he says plainly that he does not expect a new all-time high this year. For anyone sitting on a 30 to 60 percent drawdown in juniors, his advice is to average down.

He also explains why he is watching Hong Kong and Shanghai more closely than Singapore, and what 25 years of watching the tape tells him about why the metals so often fade in the Western session and rally in Asia.

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