Breakout Alert!, page-18

Afternoon Guys,

A good day indeed and an endorsement for serious chartists such as FBX258 who called this ahead of time.

I have been adding materially over recent weeks due to Company specific FA and forecast models provided by Sprott and similar. In addition, the sector setup is becoming increasingly bullish with both early/ lead TA and FA supporting a bullish setup for gold.

Using momentum analysis, MSA, have provided a line in the sand of $1,315 weekly and $1,320 monthly close for gold as being the "gateway" for another run at $1,350 which, in their opinion, will break this time. Whilst chartists who look solely at the price charts will be watching the $1,350 area closely and going long only after a breach (or covering shorts), momentum, which MSA state leads price has already broken out strongly.

Hedgeye is showing that half of the World's economies are in a "Quad 4" status (growth slowing and inflation slowing) with the U.S. moving towards "Quad 3" for the remainder of 2019 (growth slowing and inflation increasing). Both Quad 4 and Quad 3 are supportive for gold and lead to falling real yields - which we are seeing.

As shown in this TIPs graph, real yields are now falling fast:




We now have >US$10 Trillion of negative yield bonds (and growing) and an increasing demand for physical gold once again emerging:

(1) Central Bank demand for physical gold is rising as per WGC's 2018 demand data

(2) The prospect of the rise of the left in Western politics and the potential for wealth taxes et al (e.g. as proposed by Elizabeth Warren and AOC and supported by 87% of U.S. Democrats) may lead to an increase in private/ investment demand as per Jeff Gundlach in a recent RV interview.

Thirdly, production is potentially about to fall off a cliff in the mid 2020's based on data compiled by CIBC and included in a recent Sprott piece:



As per point (2) above, this is leading to non-traditional private investors to look at gold as an investable asset class, for example property billionaire Sam Zell:



We also have a favourable set up in the COT positioning with the setup far from overbought or extended, meaning that there is lots of room for the financial sector to participate in gold's run later (probably once $1,350 is decisively taken out):





It looks like projects such as WAF's which have been chronically undervalued for years may now be seeing the pendulum swing back towards (and eventually probably past) fair value.


Cheers
John