“Real” Gold Bull Market Has Begun – Gartman

Release Date: 
Thursday, December 24, 2015

Gold and Silver Prices
Gold prices moved higher during this shortened holiday week on a weakened dollar and higher oil prices.

“Gold rose on Thursday, snapping two days of losses, as the dollar softened ahead of the Christmas holiday break, and a recovery in oil prices helped sentiment…

“In other markets, crude prices steadied above $37 a barrel, a fourth day of gains after hitting a lowest since early 2009 on Monday. Gold is positively correlated to oil as the metal is seen as a hedge against oil-led inflation. ‘If oil continues to rally we think this would eventually feed into real gains for gold prices,’ HSBC said in a note.” (“Gold edges up after two-day drop on weaker dollar, steadier oil,” Reuters, 12/24/15.)

Gold ended the week up $9.50, closing at $1,076.60. Silver prices closed at $14.42, up $0.24.

“Real” Gold Bull Market  Has Begun – Gartman
Economist and financial analyst Dennis Gartman told CNBC that, after a 4.5 year bear market, an “enormously rare” event has caused him to become bullish on gold.

“’What really had my interest was the CFTC reports that came out last week indicating that the commercials, as they're called, who are normally enormously net short, are almost net long,’ the editor of the Gartman Letter said. ‘The fact that commercials are effectively net long and the public is abundantly out — that is a reason to be abundantly in.’

“According to Gartman, in the ‘enormously rare’ instances that commercial interests shift their participation to the long side, it’s an indication that ‘real’ bull markets have begun.

“Gold commercial interests can be described as miners, refiners or jewelers with gold inventory on hand. ‘Commercials are always ahead of the public…  The last time we saw this happen in the other direction was when the commercials got egregiously net short back in November of 2011. They're the ones that call the top, they're the ones that call the bottom, so that alone has me interested.’” (“Something 'enormously rare' is happening in gold: Gartman,” CNBC, 12/22/15.)

World in Recession; Time To Buy Gold – Faber
Marc Faber, editor and publisher of “The Gloom, Boom and Doom,” believes investors need to acquire gold to protect themselves from the global recession which has already started.

“Marc Faber … advises investors to scoop up gold and U.S. Treasurys before the nation plunges into yet another recession. ‘The global economy is probably already in recession now. It will be more obvious in the U.S. in March or June of next year…’

“’At that time, the Fed will say, ‘Well, we didn't want to increase interest rates, but there was pressure on us to do so. So we increased them, and now we have a recession, and now we have to cut them again and flood the market with QE4…’

So how are investors to best prepare for the recession? … ‘Everything is distorted, and it's a relative game. Looking at the fundamentals of the world, including the quantity of money, the magnitude of debt as a percent of GDP, the low economic potential and the mad frame of mind of central bankers and their intellectual dishonesty, I would own gold….’” (“Marc Faber: Buy Gold and Treasurys Before Recession Hits,” NewsMax Finance, 12/22/15.)

2016 Will Be A “Golden Year” – Thomson
Kitco commentator and technical analyst Stewart Thomson explained why a number of factors are highly bullish for gold in 2016.

“The year of 2016 looks very good for gold and related assets for a veritable myriad of reasons. First, while gold bullion recently traded below its summer low, about 75% of GDX component stocks are trading higher.  That’s a classic technical bullish non-confirmation, it is significant…

“From a technical perspective, there’s a commodity-style double bottom pattern in play, and that may be part of something much bigger, and much more bullish… 

“Geopolitics is a bullish 2016 wild card, and the PBOC gold buy program looks set to continue relentlessly.  The SGE gold fix is scheduled for a spring launch, and that coincidentally comes at the same time as cycle master Marty Armstrong predicts a horrific sovereign debt crisis will appear.  Marty is widely followed by many money managers, and their liquidity flows can be sizable.

“It can be persuasively argued that Indian demand is the most important big picture driver of the gold price.  When India “sneezed” with a gold duties virus in 2013, the Western gold price immediately looked like it caught financial Ebola.  For the past two years, India has suffered from drought, and that’s reduced the rate of demand growth significantly. 

“The bottom line for 2016 is, “Out with El Nino, and in with La Nina!”  Bumper crops across India would create a huge surge in both official and unofficial gold market demand!

“…  The 2008 crash involved institutional and local government OTC derivative investors.  Each crisis is intensifying, and each crisis is affect the price of gold to a greater degree.  I’ve argued that the Fed must raise rates, to reign in the US government’s insane obsession with debt.  If that creates a government debt crisis, so be it.  Gold price parabola fans should know there is nothing more bullish for gold than a global sovereign debt crisis.  Santa has been pretty good to the Western gold community during the 2015 tax season, and 2016 looks like it may be a truly golden year! (“2016…The Golden Year,” Gold-Eagle, 12/22/15.)

Oil and Gold Up in 2016 – Turk
James Turk, the former head of commodities for the Abu Dhabi Investment Authority and precious metals analyst, told King World News readers that investors should see higher oil, gold and silver prices in 2016.

“’As we head toward the end of the year, Eric, there are two important points that I would like to make… my first important point is that I would like to re-emphasize my comments from a couple of weeks ago. We have to be alert that the low in gold and silver may have already been made and their price trend is reversing.

“This brings me to my second point – crude oil prices… Right now it takes only about 1 gram of gold to purchase a barrel of West Texas Intermediate crude oil, which is even less than the 1.2 goldgram price at the end of November shown on the above chart. So crude oil – when its price is measured in terms of gold – is at the historic low reached in the early 1970s, and we all know how crude oil and gold thereafter soared higher for the rest of the 1970s.

“’My expectation is that the odds are high that history will repeat for one simple reason — government intervention in markets never ends well… There are a lot of things spinning out of control because the damage done by central banks from their market interventions and destructive monetary policies is now coming undone. We need to consider the consequences…

“’We have to again consider the real possibility that the low in crude oil is at hand, or very close. Given that gold is inching up from its multi-year low made in early December, I suspect that crude oil will soon be turning higher here too from its multi-year lows, which of course is bullish for gold.’” (“What’s In Store For Gold And Oil In 2016 May Surprise Investors,” 12/21/15.)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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