Not since launching Portfolio Wealth Global in June of 2016 have I been sincerely bullish on precious metals.
Gold is an important commodity. No other metal is suited to be money quite as flawlessly as gold. Many societies have tried and failed to use other systems, but gold has never wavered or disappointed.
It does however, go through cycles based on how much yield cash savings are generating and how stable the monetary banking structure seems to be.
Trump's elections, surprisingly, boosted confidence for businesses, and the Federal Reserve's constant teasing regarding rate hikes had calmed investors into believing that things are normal, but the Fed's reluctance to carry out their multiple rate hike policy has now revealed their real outlook for the economy to us all.
This has caused the start to a short squeeze!
In case you're unaware of what this means, it simply suggests that all the institutions naive enough to bet against gold are going to sell their bets while the gold price rises at the same time.
If you've ever wondered what getting hit by a train head-on feels like, call one of these investors today and ask them how their week was...
But I don't want us to just see our gold bullion position worth more, since I don't intend on selling my insurance. Instead, I want us to get maximum leverage from this moment because you never know how long it will last.
That's why I've been in Vancouver, British Columbia, for the past few days meeting with the top echelon of the mining scene—especially the gold rock stars.
Since the start of the year, the five-year Treasury yield has risen about 150%. This would put tremendous pressure on the price of gold, under normal circumstances—higher yields raise the opportunity cost of buying gold—but over this same period, the USD has weakened and is now officially in a bear market.
Because gold is priced in dollars, this has been supportive for prices. Year-to-date, gold is up more than 8%.
But, what is truly playing out like in the textbook is that no one is bullish.
This is precisely when you want to be bullish because of this strategy.
If there are any more rate hikes in 2017, the next one won’t be until December. It should be smooth sailing for gold over the next three to four months!
Gold currently has a net long position of only 37,776 contracts. For gold to be trading over $1,250 per ounce with such a small net long position is extremely bullish. At the very beginning of 2017, gold had a slightly larger net long position of 38,923 contracts, but gold was trading for only $1,137 per ounce.
The bottom line is this: The trend is powerful, and you should be ALL IN!
Tom Beck, 24 July 2017
Gold-Eagle
