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The Gold Market Review

Gold Market Analyst & Author
June 8, 2016

Market Update

We finally got the first dip in gold. Last week was an excellent chance to buy according to my mantra "buy the dip between $1,215 and $1,180". Unfortunately, our limit for silver was missed by just $0.02. As well our limit for UGLD was not reached. But we were very lucky with Endeavour Silver. I hope you followed my recommendation to buy with a limit of $2.90. We got in right at the bottom -- and are up already 20%.

Gold´s underlying strength is obvious. We are very likely in a new bull market. Last week´s low could have already been the summer low. I am not sure about that. We simply continue to buy low and sell high. 

But looking ahead towards the next couple of weeks we might be in for some serious liquidity crisis and turmoil with crazy volatility and falling prices in all asset classes. Why, because we´re facing various potential shock events. The FED might raise interest rates, the British might vote for the Brexit, Spain might face a massive political shift in the coming election and the european football championship in France could see some nasty terror attacks. The outcome of all these events is very uncertain and each one could bring short-term havoc into the markets. Therefore, I recommend to keep as much liquidity as possible. Stay out of bonds and stocks. If we´re lucky our limits will get filled in a final panic sell off in the precious metals sector. Otherwise we´re already well positioned for the next leg up -- and will buy more once the dust has settled.

The Midas Touch Gold Model bullish since June 3rd

Last Friday gold finally did bounce as expected two weeks ago. Within seven minutes gold jumped from $1,212 to $1,237. The massive move shifted my Gold Model from bearish to bullish.

Compared to my last public report two weeks ago we have one new bearish signal:
Gold in $, €, £, ¥

Seven elements shifted to bullish:
Gold in USD - Weekly Chart
Gold Volatility - CBOE Index
Gold in Indian Rupee
Gold in Chinese Yuan
GDX Goldminers - Daily Chart
US-Dollar - Daily Chart
US Real Interest Rate

It will likely need a move back below $1,200 to switch the model to a bearish summary. Otherwise, the bulls now have lots of signals in their favor, which might be able to push gold at least towards $1,262.

Gold - Final Sell-off, Prolonged Consolidation or New Up-cycle?

Gold has been falling from $1,303 to $1,200 recently. For many weeks I´ve recommended to buy the dip into $1,215 - $1,180. So last week you had your chance. I am personally still not convinced that gold is ready for the next leg up, but it is acting very strong and continues to hold above $1,200. My model has turned bullish -- and usually the model is right and I am wrong...(J).  So here are the potential scenarios:

  1. More sideways consolidation above/around $1,200 over the next couple of weeks until 200MA ($1,266) is hitting $1,200. That might take some more time.
  2. Final sell-off down towards the rising 200MA ($1,166), which would get everybody panicking and would create an outstanding entry chance.
  3. The lows are already in. And once gold takes out $1,262, the next target around $1,345 will be approached rather quickly.

Let´s see how the market behaves. As you know we have to buy low. Therefore, I am not chasing gold here...but remaining patient.

Action to take: Wait until you can buy the VelocityShares 3xLong ETN (UGLD) below $10.00

Stop Loss: $8.50

Profit Target: $18.25

Timeframe: 8-10 months

Risk ($1.50) / Reward ($8.25) = 1 : 5,5 (very good ratio)

Position Sizing: Don´t risk more than 1% of your equity

Investors should buy physical gold with both hands if prices move below $1,190 again. As well buy silver below $15,80. Buy both metals until you have at least 10% of your net-worth in physical gold and silver. But do not over expose yourself. 25% of your net worth should be the absolute maximum. If you want to be more aggressive, put 2/3 into silver and 1/3 into gold.

Portfolio And Watchlist

Long-term personal bias

Officially, Gold is still in a bear market. However, the big picture has massively improved and the lows are very likely in. If Gold can take out $1,307, we finally have a new series of higher highs. If this bear market is over, a new bull-market should push gold towards $1,500 within 1-3 years.

My long-term price target for the DowJones/Gold-Ratio remains around 1:1. --and 10:1 for the Gold/Silver-Ratio. A possible long-term price target for gold remains around US$5,000 to US$8,900 per ounce within the next 5-8 years (depending on how much money will be printed).
 


Fundamentally, as soon as the current bear market is over, Gold should start the final 3rd phase of this long-term secular bull market. The 1st stage saw the miners closing their hedge books, the 2nd stage continuously presented us news about institutions and central banks buying or repatriating gold. The coming 3rd and finally parabolic stage will end in the distribution to small inexperienced new traders and investors, who will be subject to blind greed and frenzied panic.

If you like to get regular updates on our gold model and gold, you may subscribe to my free newsletter here: http://bit.ly/1EUdt2K

© Florian Grummes 2016 all rights reserved

Hohenzollerstrasse 36, 80802 Munich, Germany

Disclaimer & Limitation of Liability

The above represents the opinion and analysis of Mr Florian Grummes, based on data available to him, at the time of writing. Mr. Grummes's opinions are his own and are not a recommendation or an offer to buy or sell securities. Mr. Grummes is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in the Midas Touch. As trading and investing in any financial markets may involve serious risk of loss, Mr. Grummes recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Florian Grummes is not a Registered Securities Advisor. Therefore Mr. Grummes's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. The passing on and reproduction of this report is only legal with a written permission of the author. This report is free of charge. You can sign up here: http://eepurl.com/pOKDb

Hinweis gemäß § 34 WpHG (Deutschland):

Mitarbeiter und Redakteure des Midas Touch Gold Newsletter halten folgende in dieser Ausgabe besprochenen Wertpapiere: physisches Gold und Silber, Bitcoins sowie Gold-Terminkontrakte.

Imprint & Legal Disclosure

Anbieterkennzeichnung gemäß § 6 Teledienstgesetz (TDG)/Impressum bzw. Informationen gem § 5 ECG, §14UGB, §24Mediengesetz 

Herausgeber und verantwortlich im Sinne des Presserechts / inhaltlich Verantwortlicher gemäß §6 MDStV 

Florian Grummes 

Hohenzollernstrasse 36 

80801 München

Germany

E-Mail: [email protected] 

Website: www.goldnewsletter.de

Florian Grummes (born 1975 in Munich) has been  studying and trading the Gold market since 2003. In 2008 he started publishing a bi-weekly extensive gold analysis containing technical chart analysis as well as fundamental and sentiment analysis. Parallel to his trading business he is also a very creative & successful composer, songwriter and music producer. You can reach Florian at: [email protected].


In 1792 the U.S. Congress adopted a bimetallic standard (gold and silver) for the new nation's currency - with gold valued at $19.30 per troy ounce
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