Bullion regains its glitter
Is gold bullion coming back to life? Should one read anything into the rise of 6.2% (+$56) since the yellow metal’s low of early July?
When it comes to gold bullion and gold stocks, I need to confess I started my investment career in 1984 as none other than a mining analyst. Ever since those days of calculating net present values on my trusted HP 12C I have been intrigued by the shenanigans of the yellow metal and related stocks. And I have also learnt over the years that one should never underestimate the ability of the gold price to surprise when least expected.
Admittedly, part of the improvement in the gold price can be ascribed to the fading US greenback, which declined by 3.9% over the same period. I always have more faith in gold’s rallies when they are not only a reflection of US dollar weakness, but gold is also appreciating in most currencies. This serves as an indication of increased investment demand and is a phenomenon one should keep an eye on as gold might just have started moving independently of the dollar over the past few days.
Considering the fundamental outlook for gold, a very comprehensive report was recently published by Austria’s Erste Group. The analysts list the positive and negative influences below, leading them to conclude that gold is only half-way through a secular bull market and offers an outstanding risk/return profile.
Gold’s technical picture is certainly looking up. This is explained by Adam Hewison of INO.com who prepared a short analysis of gold’s most likely direction. (The analysis was done on Tuesday, but is still as relevant today as it was then.)
Click here or on the image below to access the video presentation.
Seasonally, September also seems to be a good month for gold, with an average gain of 2.6% for the month since 1970.
Source: Plexus Asset Management
I am bullish on gold in the medium term, especially as I believe the vast money printing by central banks could set off strong inflation pressures down the road. I will not be surprised to see bullion passing the infamous $1,000 resistance level over the next few weeks – a question of fifth time lucky – and I will be inclined to add bullion to my portfolio on pullbacks.
More on this topic (What's this?)
Has Gold & Silver Finally Bottomed? (the Underground Investor, 8/20/15)
8 Charts that Illustrate the Necessity of Owning Gold & Silver (the Underground Investor, 8/24/15)
Gold Price Gravitating Lower Towards $1000 (Gold Stocks Today, 7/6/15)
5 comments to Bullion regains its glitter
Performance Optimization WordPress Plugins by W3 EDGE