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Dave Kranzler: Is The Pullback In Gold Over (Part 2)

Tuesday, March 29, 2016 16:35

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(Before It's News)

TND Guest Contributor: Dave Kranzler

Click here for part 1.

The bullion banks/Central Banks seem to be having a problem pushing gold lower here. Nearly every evening (U.S. time zone) they take a sledge hammer to the price by dumping payloads of paper gold electronic contracts in the Globex trading system. But gold snaps-back typically after the London a.m. fix. They also try to hammer it about 25 minutes before the Comex floor trading opens, to no avail:

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This graph on the left shows the spike up in gold that occurred at 9:05 EST today (the x-axis is MST). The banks tried to hit gold about 15 mins after the stock market open but failed.

The next graph shows the daily gold price since September 29, 2015. As you can see, gold appears to be consolidating after a pullback from the 20% move that occurred from early January to early March.

CLICK TO ENLARGE

I find it amusing when the gold investment community starts whining about a price pullback after a big move in a short period of time. When is the last time the S&P 500 moved up 20% in 2 months? It looks like the momentum indicators are curling back up as well. The action in the HUI and the metals reminds of late 2005 and late early November 2008. I leave it to the reader to review that particular history to see if they draw a similar conclusion.

Note: I just got off the phone with the CEO of a junior gold mining company that is one of the best ideas from a risk/return standpoint that I’ve seen in 15 years of researching, investing in and trading this sector. There’s been a handful of time when I’ve smelled “grand slam” ideas – Aquiline Resources, Silvercrest Mines, Wheaton Minerals (which became SLW and Gold Wheaton), Osisko, to name some of the most memorable. I smell a grand slam in the making with this company. I’ll be featuring it this week in the latest issue of the Mining Stock Journal.
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About Dave Kranzler:

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.