26 Dec 2016
by Dave Kranzler, Investment Research Dynamics:
Although it seems like the precious metals sector has experienced another down year, the
HUI index is still up 48.6% from its 12/31/15 close and it’s up 65% from its low on January
19th this year.
The technicals in the gold market never been set up better than they are now for a contrarian move higher. On the assumption that gold closes on Friday lower for the week than last week, it will mark seven straight weeks in which gold has closed lower on a weekly basis. This has never happened before.
The premiums for physically delivered gold in China have never been higher. Egon Von Greyers, in Switzerland, reported in his latest King World News interview that there are reports that Swiss refiners have been paying a premium to buy gold. My suspicion is that the Chinese are willing to pay $30+ premiums to world gold in order to keep the supply from Swiss refiners flowing, which is why Swiss refiners are willing to pay premiums to acquire dore bars and scrap.
This illustrates the growing disconnect between the price of gold being paid by the markets in which physical delivery is a requirement vs. the price being paid by the paper gold markets (NYC, London) in which physical delivery (i.e. removed from the exchange and received into private hands) is highly limited, if not outright discouraged or considered a peculiarity.
The above analysis is an excerpt from the latest issue of the Mining Stock Journal. In thi s issue, I present several technical indicators which suggest gold is poised for a big move higher. The mining stocks have been telegraphing this since late November – I detail this point in the MSJ
The MSJ is a bi-weekly subscription-based newsletter delivered to your inbox every other Thursday. The focus is primarily junior exploration mining companies, which have provided the best upside returns since January. Bloomberg featured an article – LINK – which explained that in-ground reserves at the large gold producers are dwindling. This will make small exploration companies with demonstrated gold/silver resource in the ground a lot more valuable going forward. You can access the MSJ here: Mining Stock Journal Subscription Info.
New subscribers receive all of the back-issues (via email) plus a glossary of terms which help explain mining technicals. The latest issue, released yesterday, has a junior explorer that has a proved resource on the largest copper-gold deposit discovered in recent years. This stock is worth at least twice it’s current market price based on the fundamental value of the deposit.
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