The day that the Fed will raise interest rates is closing in much faster than the market thinks. That is at least the impression you get looking at the figures today. Our opinion regarding the rate hike has been different for a long time.
Precious metals are likely beneficiaries from the huge outflow of funds out of the bond market, once that one breaks. Why? Because of the monstrous size of the bond market.
Although it is a controversial idea that rising rates will benefit precious metals, it makes more sense every day.
The first big gold correction slowed down when QE was ending. Over time gold went into a sideways pattern when the zero percent interest rate policy was being questioned. Now that we are getting closer to the decision regarding a rate hike, gold signalspromising signs once again.
The price of gold broke through its 200-day moving average for the second time in 2015, which indicates that the upward pressure is increasing. It retraced slightly this week, so the coming week is important. We do not want to see a break down below the key moving averages.
There is enough room to take on the next few resistance levels. The first one is at 1,260 – 1,280 USD, where the downward channel lives. Above this level there is not a lot that stands in the way of gold moving up to 1,530 USD!
You can see on the chart above that we are getting closer to a historical breakout with gold and on the bottom you can see that the pattern of lower lows is getting weaker and wants to form a new pattern (of higher highs).
You could be tired, meantime, by "another breakout announcement." Indeed, gold has put the patience of plenty of investors to the test. Don’t be mistaken, however, because this psychological game is part of bottom formation in a secular trend.
Unfortunately, it is a long and tiring process.
What stands out even more in this turnaround, is that there is barely anything to read about gold anymore on popular financial websites. The theme of ‘gold’ has taken a backseat, which is a clear indication of the fact that the masses are no longer interested in the yellow precious metal.
Everyone is Tired of Gold!
But that is exactly what you want to see in a fundamental turnaround of a price trend. It should happen in the shadows, exactly like it is happening today. Hardly anyone, except for Secular Investor, is talking about gold, let alone gold mining stocks, the ‘worst place on the planet for investors’. Those are not our words, but taken from a mainstream analyst at CNBC :-).
As a contrarian investor, what more do you want to hear?