Money Morning https://moneymorning.com Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come. Money moves markets. But Money Morning lets you move first. en Mon, 09 Dec 2019 02:52:29 +0000 Mon, 09 Dec 2019 02:52:29 +0000 5 How to Prepare for the Coming of NIRP to America https://moneymorning.com/2019/11/04/how-to-prepare-for-the-coming-of-nirp-to-america/ It's a phenomenon that simply shouldn't exist - one that manifests itself in weird, almost comical ways...

Borrowers are being paid to take out loans and mortgages... Imagine your account balance dropping in value as the bank "taxes" you each month for the "privilege" of keeping your money there.

And yet it's real. Very real: Negative interest rates are already in effect in at least eleven countries. As of the end of August 2019, an unfathomable $17 trillion in global debt was under a negative yield regime.

This isn't confined to fourth-tier economies, either. Several of those are among the world's largest, most advanced economies - like Germany, Japan, and France - where 10-year bonds trade with negative yields.

Incredibly, the total value of negative-yielding bonds is expected to keep rising as central banks keep pushing rates lower.

It's an experiment that will end badly.

Large banks are struggling, unable or unwilling to pass on those negative rates to their clients.

Meanwhile, odds are growing rapidly that America will be the next major economy to institute a negative interest rate policy (NIRP)... and all the negative effects and capital destruction that come with them.

Ultimately, hundreds of millions of investors will be victimized by this dubious practice.

But there's no need for you to be among them...

The Many Dangers of a Currency War

The odds are growing every day: NIRP is coming to America.

The U.S. Federal Reserve is looking ahead to the next recession or financial crisis and taking stock of the "ammo" at hand to fight it.

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It's been floating trial balloons and researching the idea. And the markets are pricing this in.

The European Central Bank introduced negative rates in 2014 in order to stimulate the economy. That was followed by the Bank of Japan, which did the same in 2016 to weaken the yen, as it was spiking and hurting exports.

On some level, pushing rates into negative territory can weaken a currency as investors flee for higher-yielding ones. But when no one wants a strong currency that hurts exports, it's not long before others use the same tactic and the benefits dissipate.

That's a currency war - a "beggar thy neighbor" policy - that becomes a downward spiral engulfing many.

The other goal of negative rates is to try and get savers to save less and spend more as they face the prospects of negative returns on deposits. You'd think if low rates stimulate economic growth, negative rates should do the same - but on steroids.

And yet like many harebrained policies, negative rates have unintended consequences. In some cases, as customer deposits shrink or accounts are closed altogether, banks actually make fewer loans, and the economy contracts. Bank profits take a hit, and share prices drop.

Banks need to attract deposits, which in turn allows them to fund new loans.

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A recent paper titled "Negative Nominal Interest Rates and the Bank Lending Channel" by researchers at Harvard University, Brown University, and Norges Bank of Norway determined that negative rates have these very effects. They examined the policies of Sweden's central bank, the Riksbank.

The paper states, "Using daily bank level data, we document that once the deposit rate becomes bounded by zero, interest rate cuts into negative territory lead to an increase rather than a decrease in lending rates... A calibration which matches Swedish bank level data suggests that a policy rate of -0.50% increases borrowing rates by 15 basis points and reduces output by seven basis points."

Another unintended consequence is currency hoarding. Rather than spend their money before negative rates take their bite, people begin to save even more and spend less capital. As they focus on their goals of retirement, a home purchase, or tuition, savers double down by saving even more. The real effect is deflation, which is the exact opposite of the inflation central bankers want.

Five years of negative rates have hurt European banks. In fact, they have been desperate to avoid passing those on to most retail clients, which is something corporate clients haven't been so lucky to escape. At the same time, these institutions are clamoring for ways to replace lost revenue.

Euro-area banks already pay over 7 billion euros annually just to leave funds on deposit with their central bank. In many cases, that's pushed their share prices to record lows thanks to falling revenue and profits.

Your Golden Opportunity amid All This Negative Yield

The Eurodollar futures market is used by larger market participants to hedge U.S. interest rates. It's a highly liquid market companies use to protect against interest rate risk if they have exposure to dollar-based financing agreements.

This market currently has large bets we'll see zero or negative U.S. interest rates within the next two years.

As JPMorgan Chase & Co.'s (NYSE: JPM) head of U.S. interest rate derivatives strategy recently told The Wall Street Journal, "People are trading things that imply negative rates are not just possible but reasonably probable... The market's willingness to price in negative rates has gone up significantly."

The San Francisco Fed recently published a paper titled, "Yield Curve Responses to Introducing Negative Rates." Its main conclusion was that with rates already so low in so many developed nations, negative rates could be seen as a vital tool for the Fed in the next recession. Never mind that the actual experience has shown the opposite results.

That could mean negative-yielding Treasuries in addition to the $17 trillion in negative-yielding sovereign bonds already held worldwide.

Consider that those bondholders already worry that rates could drop further. As a result, they're ready to plow their cash into bonds that promise to pay them back less than their original capital 10 years later.

After cutting for the third time this year, the Fed rate is already down at 1.5%, and that's in a supposedly healthy economy with employment at record lows.

"We would need to see a significant move up in inflation before we could consider raising rates," Fed chairman Jerome Powell said during the press conference that followed Fed's October interest rate announcement. That suggests once inflation arrives, it could run hot for some time.

Gold reacted well to those comments, rising back above $1,500 to regain its 50-day moving average. With falling U.S. rates and negative rates across much of the world, gold's lack of yield is becoming less of an opportunity cost with each passing day.

In fact, the World Gold Council recently suggested that flat to inverted yield curves, high stock valuations, and a clear shift by central banks to an easy money policy favors gold. They proposed that gold could become attractive and a better diversifier than bonds, allowing for higher portfolio allocations.

Given the inherent risks of extremely low bond yields in the United States and negative yields in so many other parts of the world, gold's looking especially attractive. Central banks would know: they're buying gold at the highest rate in 50 years.

A simple way for retail investors to buy gold exposure is through the Sprott Physical Gold Trust (NYSE: PHYS). It holds gold bullion that is fully allocated and stored at a secure third-party location in Canada, subject to periodic inspections and audits.

What's more, U.S. investors holding for at least 12 months can benefit from a 15% capital gains tax versus the 28% rate with most precious metals ETFs.

If you're just looking to maximize the yield on your cash, consider the BMO Harris Platinum Money Market. If you meet the $5,000 minimum deposit, you'll earn just over 2%, for now.

I suggest you take full advantage of those kinds of yields while they're available, because even the Fed's telegraphing that negative rates are on the horizon.

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About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Mon, 04 Nov 2019 22:13:20 +0000 https://moneymorning.com/2019/11/04/how-to-prepare-for-the-coming-of-nirp-to-america/ Here’s Why the Price of Gold Is Rallying from the U.S.-China Trade War https://moneymorning.com/2019/05/07/heres-why-the-price-of-gold-is-rallying-from-the-u-s-china-trade-war/ On Monday morning (May 6), U.S. President Donald Trump said over a series of tweets that the United States will increase its tariffs on Chinese goods again this week. This rise in trade tensions prompted investors to sell off riskier investments. That's kicked off a new rally in the price of gold.

The president said the United States will raise the tariffs on $200 billion worth of Chinese goods from 10% to 25% over the course of this week. Beyond that, the president says he intends to go after another $325 billion in Chinese goods with 25% tariffs in the future.

Of course, China wasn't happy about the president's latest tweets. Chinese stocks fell 5%, and Chinese officials threatened to skip a trade meeting scheduled for this week.


This was a shock to investors and trade watchers because the White House had been saying trade negotiations with China were going very well.

That news sent markets tumbling. The Dow initially fell by more than 400 points before rallying to close down 66 points. The S&P 500 shed 1% and closed 13 points down. The tech-focused Nasdaq dropped 1.1% and closed roughly 41 points down.

But when investor fears rise, safe-haven assets like gold get a boost. That's why the price of gold rallied after a four-month low last Friday.

In fact, spot gold's prices increased by 0.2% to $1,281.91 per ounce, while U.S. gold futures jumped 0.2% at $1,283.20 per ounce this morning.

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And while the broader market fell, gold stocks are riding gold's rally.

But this is just the start for rising gold prices.

Here's how the trade war could kick of a gold boom, sending prices nearly 10% higher...

What the Trade War Means for the Price of Gold

The price of gold has been stuck in a rut over the last month. But data suggests the lows were just small hiccups in gold's growing value.

Money Morning Resource Specialist Peter Krauth says there are two major reasons for gold prices to climb out of their funk. And the trade war uncertainty might be the catalyst we need to start the rally.

First, yield curve inversions are solid predictors of recessions. Because of this, investors tend to flee stocks when the yield curve inverts. The curve briefly inverted in March, which means investors may start to look for safer assets over the next year.

The dollar's rally last month certainly dented gold's value as well. But the newfound strength was mostly short-lived. With ever-growing economic uncertainty looming over the potential trade war, safe-haven assets like gold are rallying.

Second, the Fed is keeping rates flat and might even cut rates this year.

The current market is even beginning to price in future rate cuts. And this is exciting for gold investors.

The CME Group's FedWatch puts the probability of a cut by October 2019 at roughly 34%. By December 2019, it'll be 40%.

That's setting the stage for a renewed gold bull market, and the trade war is only pouring gas on the fire.

In fact, Peter Krauth says the year-to-date high of $1,340 that was set in February will be overtaken in the next few months.

After that, gold prices will challenge the high of $1,365. By year-end 2019, gold stands to grow another 9%...

If you're interested in Krauth's full analysis and price target for gold in 2019, you can check it out here...

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About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Tue, 07 May 2019 17:10:11 +0000 https://moneymorning.com/2019/05/07/heres-why-the-price-of-gold-is-rallying-from-the-u-s-china-trade-war/ Why the Price of Gold Today Is a Sure Bargain https://moneymorning.com/2019/04/16/why-the-price-of-gold-today-is-a-sure-bargain/ The price of gold has managed to churn a few stomachs in the past month, but the data makes these lows look more like growing pains.

Gold surged through early March, from $1,285 all the way to $1,320. But toward the end of the month, it sold off pretty strongly as the U.S. dollar started a new rally.

That dragged gold prices all the way down to $1,287 in early April, before it recovered this past week to $1,307. Then, over the last couple of days, gold fell once more - this time to $1,290.


The yield curve inversion was a key factor here. On March 22, the yield on the 10-year Treasury note fell below the yield on the three-month T-bill.

Yield curve inversions have been a rather accurate predictor of recessions (which typically begin about a year later). So investors freaked out, with a bond rally pulling the 10-year yield down to 2.4% as weak global growth became a bigger concern on disappointing data.

Further boosting the dollar, the Fed FOMC meeting minutes from March released last Wednesday showed a slightly less dovish stance than expected.

And that's how we've landed at $1,290.

But while the dollar's safe-haven rally may have dented gold, its strength already appears to have been short-lived. The price of gold today hovers near its mid-March levels. And with economic uncertainties growing, it looks like it will surprise many to the upside this year.

Here's why the price of gold could rise by as much as $110 - and how you can trade it for the highest potential gain.

How Fed Decisions Affect the Price of Gold

Something very interesting has happened the last two times we had a renewed upward trend in the yield curve.

Looking at the differential between the 10-year and the two-year treasury: It dropped and then flattened out in 2000 before trending higher. In 2007, it did the same thing again.

Once the Fed began cutting rates in response, causing the yield curve to steepen once again, gold and gold stocks began trending higher months in advance.

The reason this is exciting for gold investors is that it means the market is starting to price in future rate cuts. The CME Group's FedWatch pegs the probability of a cut by October at 34%, and by December at 40%.

The recent decline in the two-year yield from 3% in October to 2.35% today, shown in the chart below, is a dramatic 22% fall.

This kind of drop has preceded rate cuts, and as the yield approaches 2%, a cut becomes more likely.


This scenario bodes especially well for gold stocks and gold. Given these recent yield curve developments and higher probabilities assigned to lower rates by the market, savvy investors will want to watch this sector very closely.

I believe we are in the kind of plateauing phase that typically precedes a new bull market.

Signs of a Gold Bull Market

And I think we're going to see it weigh on the dollar before long.

As you can see in the chart below, despite the U.S. Dollar Index (DXY) sideways range-bound movement between 95 and 97.5 since October, the moving average convergence divergence (MACD) momentum indicator has been trending downward for almost a year.

 


To me, concerns about a slowing global economy are going to weigh on the greenback, which for now enjoys safe-haven buying.

Meanwhile, inflation is creeping in. If investors don't believe it, they should consider this: The Bloomberg commodity index has just recently closed above its 200-day moving average (chart below).

It's worth noting, too, that the 50-day moving average is catching up to the 200-day, making a "golden cross" increasingly likely over the next couple of months (shown below).


 

Also consider that the Cleveland Fed has an alternative Consumer Price Index, the Median CPI. They feel it's a better forecaster of inflation. And it rose a stunning 2.8% in March, versus the regular CPI, which rose 1.9%.

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Even more noteworthy is that its six-month rolling average has been rising at a 3.2% annualized pace, the most since 2011. That's more than 50% above the Fed's targeted 2%.

Perhaps that's what commodities are sensing. And it's the perfect setup for precious metals.

As for gold, its recent lull could be temporary.

Although gold has pulled back considerably from its February high, it has managed to establish a series of higher lows so far. At the same time, the action in both the relative strength index and MACD momentum indicators confirms a rising trend.


Over the last three months, gold stocks have performed well, on their own and in relation to gold prices.

As you can see below, VanEck Vectors Gold Miners ETF (NYSEArca: GDX) is up 5.6%, while gold is nearly flat over that time frame.


Since late January, GDX has essentially moved sideways but remains within a bullish upward trend channel.


But looking at the GDX-to-gold ratio below, we see an ongoing steady climb.


In fact, it's been grinding higher for seven months since bottoming in early September.

Yet another great leading indicator of gold's direction is platinum:


Platinum appears to be breaking out and has just established a six-month high. Currently, it's just 5.5% from a 52-week high.

With a spike in platinum, an inverted yield curve, and further global economic uncertainty down the road, well-performing gold stocks signal just the beginnings of a much stronger gold market.

In fact, this could all result in gold prices rising to $1,400 by the end of the year.

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The Top Gold Investment Picks

Now that you know the price of gold will almost certainly soar this year, here are a couple funds set to pop with it.

Naturally, these have struggled lately, but that just makes them better bargains right now.

The DB Gold Double Long Exchange-Traded Notes (NYSE: DGP) are down about 19%, but as gold's bull comes roaring back, this ETF will soar. Stay long DGP and/or buy on weakness.

The VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) has retreated with gold's consolidation/correction and is now up just 1.5% since mid-January. Continue to buy on weakness.

Central banks continue to buy copious amount of gold. If you consider what's been going in bond markets, it's no surprise.

The yield curve inverted, likely foreshadowing a recession between 12 and 18 months from now. Meanwhile, the Bloomberg Barclays Global Aggregate Negative Yielding Debt Index has surpassed $10 trillion worldwide, as investors fear slowing economic growth.

China's central bank bought 11.2 metric tons in March, pulling its reserves up to 1,885 metric tons. That makes for nearly 43 metric tons purchased by China in the last four months.

Given ongoing robust buying from other nations so far, 2019 looks like it will be similar to 2018, which saw the highest levels in over 50 years.

On that note, gold should return to bull action soon.

Its obvious first target will be the $1,340 high year-to-date, set in mid-February. I think we'll see that breached over the next couple of months. From there, I think gold will challenge the crucial $1,365 high, then go on to approach $1,400 by year's end.

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About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Tue, 16 Apr 2019 19:20:44 +0000 https://moneymorning.com/2019/04/16/why-the-price-of-gold-today-is-a-sure-bargain/ Here's Where the Price of Gold Is Headed in April 2019 https://moneymorning.com/2019/04/08/heres-where-the-price-of-gold-is-headed-in-april-2019/ The price of gold is going up, according to Money Morning Resource Specialist Peter Krauth. He says the recent pullback in gold prices was actually a healthy indication they would rise again this year.

Between August and mid-February, the precious metal rebounded 14%. Had this been a larger gain, the correction might have been worse.

Gold prices have fallen by about $60 off the recent peak, but Krauth says gains in the price of gold shouldn't necessarily be linear. Ideally, it's a series of several steps forward with an occasional step back.


Thanks to the Fed renewing its dovish outlook, reduced real rates will also serve as a catalyst for higher gold prices this year.

There is a seasonal factor to the rise of gold prices as well: Gold generally hits a bottom around the middle of March and then begins to climb through May.

In the past week alone, gold has already bounced back to around $1,286, which is a strong indication we've passed through the correction.

Knowing these things, here's what you can expect to gain from gold in April 2019.

Why the Price of Gold Is Rebounding

Gold produced significant gains between August and February, so the slight correction didn't come as a shock. But the rebound has been swift, with gold prices hitting a peak of $1,346 on Feb. 20.

There was a gain of 14.6%, or $171, from the low in August of $1,175. The correction gave back about 4.5% of that gain, or $60 to a price of $1,286.

There was a nearly perfect negative correlation between the gold price correction and a five-day delay in the U.S. Dollar Index (DXY).

The DXY shows the dollar hitting bottom a few days after the February peak in gold prices. Then it peaked just after gold hit its recent low.

This action indicates the dip in gold price has run its course - one bullish indicator for gold prices is also when they post consistently higher lows.

According to the CFTC Commitments of Traders report for March 5, there was a net drop of roughly 62% in gold futures. The precious metal continues to hold up well in the face of strong sales pressure.

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If you review the bull years for gold since 2001, the metal generally hits a bottom in the middle of March and then rallies through May. Expect a repeat of this for 2019.

This rally could push gold prices higher than their February highs, which is also projected in the Money Morning gold price predictions.

So, according to Krauth, it appears the gold correction has bottomed out. This and the gold price's typical seasonal trends throughout the year make for a great buying opportunity.

To get you started on profitable gold investing this year, here's the road map for gold in 2019.

Where Gold Prices Are Headed in April 2019

2019 has several indicators serving as strong gold price forecasts.

While the direction of the dollar remains uncertain, Krauth stresses that gold can continue to rally in the face of a strong dollar. The DXY remains above its 50-day moving average and continues to trend higher.

Now that gold prices are above their 50-day moving average as well, it looks like $1,300 could be the new support level.

Many other precious metal stocks were attempting to push higher even as gold prices were sitting at $1,285 in early March.

The VanEck Vectors Gold Miners ETF (NYSEArca: GDX) was trying to break higher between March 4 and March 7, which suggests we've seen the bottom of gold and a rise is imminent.

There is also the gold-stocks-to-gold ratio, which indicates that gold stocks persevered better than gold during the correction and had a quicker bounce back. Since the new rally began, gold stocks jumped three times as much as gold itself.

This kind of performance by gold equities could signal more strength on the way for both gold stocks and gold in the coming months.

Even though gold took a slight break from its nonstop rally between August and February, there is encouraging price action indicating positive things ahead.

Fundamentally, gold should continue its climb in 2019. Now, here's the best way that you can invest in gold in April 2019.

The Best Way to Buy Gold Now

In 2018, central banks loaded up on gold, buying more of it in volume than in any year since 1967.

Largely due to a rise in geopolitical and economic concerns, central banks are using gold as a means of safety and to diversify reserves.

The performance of gold in 2018 was better than most other major asset classes, due to this activity by central banks and the fact that gold ended a consolidation period lasting several years.

If you want to buy gold, expect these stocks to pop as the price of gold continues to increase throughout the year:

The VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) is up roughly 7.5% since mid-January, still with significant headroom.

The DB Gold Double Long Exchange Traded Notes (NYSEArca: DGP) is down due to the correction but will jump as the gold bulls recover. This is one to buy on weakness and hold long.

Gold prices are again on the upswing, but not yet near their all-time highs.

Krauth believes the price of gold could reach $1,350 over the next several months. It's on a firm trajectory toward $1,400 later in 2019.

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Follow Money Morning on Facebook and Twitter.

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Mon, 08 Apr 2019 17:02:33 +0000 https://moneymorning.com/2019/04/08/heres-where-the-price-of-gold-is-headed-in-april-2019/ Here's Why the Price of Gold Will Keep Going Up in 2019 https://moneymorning.com/2019/03/15/heres-why-the-price-of-gold-will-keep-going-up-in-2019/ Bulls can stop worrying about the price of gold falling anytime soon.

I've been telling you for a while that a pullback was not only normal, but healthy. Now that the data is in, I'm going to show you why.

Gold prices just notched a huge gain over a short six-month period, blasting 14% higher between August and mid-February.

That's big. And if the gold price had continued to power any higher, its correction could have been worse.


So chalk it up to normal bull action of three steps forward and one step back as gold continues to climb its golden staircase.

Although the price of gold has dropped by about $60 from its recent peak, we may have already seen the worst.

The Fed's renewed dovish stance has lower real rates back as a driving factor for higher 2019 gold prices.

And consider too that, seasonally, gold tends to bottom around mid-March then climb through until end of May.

Gold has already printed a solid bounce back to $1,310 in just the last few days, strongly suggesting its correction has run its course.

With all this in mind, there are big things ahead for the price of gold in 2019...

Why the Gold Price Is Bouncing Back

Over the past three weeks, gold has come to terms with its strong gains between August and February, with the metal's price peaking on Feb. 20 at $1,346.

From the August low of $1,175, that produced a striking gain of $171, or 14.6%.

Since that February peak, gold has dropped back by about $60 to $1,286, giving up a total of 4.5%.

This correction in the gold price has been an almost perfect negative correlation with the U.S. Dollar Index (DXY), with about a five-day delay.

Looking at the action in the dollar, we can see that the DXY bottomed a few days after gold's February peak, and may have peaked just after gold's recent low.


But even as gold has corrected, its recent price action suggests that correction may have already hit a low.

The most recent CFTC Commitments of Traders report for the week ending March 5 shows that the net long position in gold futures dropped some 62%.

And despite such sudden, strong selling pressure, gold has held up well.

So far, gold's March 7 low has held above its Jan. 24 low, providing for a bullish higher low pattern.

It's still a bit early, but I believe we've seen the bottom of this gold correction.

What's more, if you consider the seasonal patterns of gold's behavior, we could be in a sweet spot right now.

Looking at gold's bull years since 2001, it typically bottoms in mid-March, then starts on a spring rally through until the end of May. In the chart below, you see the "high lows" circled immediately before a rally begins. This pattern should continue into 2019.


I think this potential rally has the ability to push gold above its February high near $1,340 by then. If gold can close above that level, then its previous high of $1,350 (last April) will lie within close reach.

Stronger Indicators for the Price of Gold in April

As I've said in previous updates, the dollar's direction is anything but clear at this point.

The DXY remains above its 50-day moving average, and both the relative strength index and moving average convergence divergence have been trending higher since early January.


As I've noted before, this doesn't seem to have gotten in gold's way, as gold prices have continued to rally in the face of a stronger dollar. That has been a bullish omen for gold in the past.

With the gold price back above its 50-day moving average, it's possible that $1,300 will now become a new support level.


If indeed the gold correction is over, it will have been relatively short, barely lasting three weeks.

Looking at gold stocks, we can see that even as gold was languishing around $1,285 between March 4 and March 7, they were attempting to push higher.

The VanEck Vectors Gold Miners ETF (NYSEArca: GDX) was trying to break higher each of those days, except for March 6, suggesting at the time that we could be witnessing a near-term bottom in gold, and that its next move would be higher.

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As it turns out, when we look at the gold stocks to gold ratio, it tells us that gold stocks held up better than gold through the correction and bounced back faster. In fact, gold stocks rose three times as much as gold since the metal started rallying late last week.


This kind of outperformance by gold equities may be foreshadowing more strength both in gold and gold stocks over the next few months.

So gold's taken a well-deserved break after rallying almost nonstop between August and February, and its technical price action is encouraging.

But on a fundamental basis, there are positive signs that gold is set to continue climbing higher this year. Here's how high the gold price is set to rise in 2019 - and a selection of the best investments for you to capitalize on it...

The Best Gold Funds for Your Money

2018 was exceptional for institutional gold buying. Central banks bought more gold by volume last year than in any year since 1967.

That makes it the most in over 50 years. Thanks to increased economic and geopolitical concerns, central banks turned to gold in a big way to diversify their reserves and seek safety and liquidity.

This, along with the fact that gold may have ended a long-term consolidation it started in mid-2016, may help explain why the safe haven dramatically outperformed most other major asset classes last year. The central bank has also been buying up significantly more gold each year since the 2008 financial crisis, as depicted in the chart below.


Below is one of my favorite gold charts for 2018 from the World Gold Council. You can see gold did better than not only most major stocks and global treasuries - it rose substantially in the face of a stronger U.S. dollar.


Of course, my January gold recommendations have pulled back with the sector.

The DB Gold Double Long Exchange Traded Notes (NYSEArca: DGP) are down about 16%, but as gold's bull comes roaring back, this ETF will soar. Stay long DGP and/or buy on weakness.

The VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has dialed back along with gold's consolidation/correction, and yet it's still up a respectable 7.5% since mid-January. Continue to buy on weakness.

Despite the correction gold endured starting in mid-February, it remains solidly above its 200-day moving average.

And gold priced in over 70 different national currencies, including most major ones, is either at or near all-time highs.

So, by all accounts, gold continues in a long-term uptrend, and its recent correction could well be history.

I think the precious metal is headed toward $1,350 over the next few months and remains on a solid path toward $1,400 later this year.

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Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Fri, 15 Mar 2019 17:44:11 +0000 https://moneymorning.com/2019/03/15/heres-why-the-price-of-gold-will-keep-going-up-in-2019/ How the Price of Gold Could Be Getting an Even More Bullish Catalyst https://moneymorning.com/2019/02/25/how-the-price-of-gold-could-be-getting-an-even-more-bullish-catalyst/ The price of gold consolidated again last week, but that stage of the climb might already be over. If the "golden staircase" pattern continues, gold prices could jump higher again soon.

Gold spent January like a lion, then entered February like a lamb. But momentum and interest have been building for the asset.


Early last week, gold rallied to a 10-month high, hitting my most recent target before dropping back. But even that retreat was short-lived as bargain hunters stepped in.

What's more, after two mega-mergers in the gold space in the last four months, Barrick Gold Corp. (NYSE: GOLD) says it's considered a possible merger with Newmont Mining Corp. (NYSE: NEM).

And that has the sector abuzz.

With U.S. growth likely slowing, the newly dovish Fed is going to be very hesitant to hit the brakes via rate hikes. In fact, its next move may even be back to the gas pedal via rate cuts.

As it turns out, consumers looking out five to 10 years have lowered inflation expectations to 2.3%, equalling the lowest level on record. Even some Fed insiders have argued inflation should be allowed to overshoot 2%.

Once real interest rates head back toward zero and below and inflation outpaces yields, gold prices will soar.

Here's what happened with gold prices last week - and why I'm still bullish in my latest gold price prediction...

The Price of Gold Built Even More Momentum

Gold started roaring back this past week, hitting a 10-month high and my latest target at $1,340.

That means it easily surpassed January's high of $1,320, my previous target.

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Tuesday's (Feb. 19) action was explosive, certainly helped by a big retreat in the U.S. Dollar Index (DXY). The dollar sold off, and the DXY dropped from above 97 to below 96.5 in a matter of hours, powering gold to $1,340 by noon. The dollar stabilized and the DXY remained near 96.5 while gold did the same and closed at $1,341.

Gold opened slightly higher on Wednesday (Feb. 20) at $1,343, peaked at $1,346 at noon, and then saw profit-taking set in as it dipped back to close at $1,338.

Here's the dollar's action in the form of the DXY for the past week:


On Thursday (Feb. 21), unsurprising profit-taking emerged in gold, aided by a bit of renewed dollar strength. The DXY regained 96.6 while gold fell back to close at $1,323.

But that didn't last long, as bargain hunters bought the dip on Friday (Feb. 22). The DXY dropped back below 96.5, while gold rallied to $1,330, a level it held at mid-afternoon.

That's actually great news for the price of gold.

In fact, it puts gold on the trajectory to hit my latest gold price target...

Why My Gold Price Prediction Remains Bullish

The dollar remains a bit of a wild card.

Although it has rallied of late, it did make a lower high, yet it's still trading above both its 50-day and 200-day moving averages. Until it crosses below the 200-day moving average, we need to consider that the dollar is in a position of strength.


Both the relative strength index and moving average convergence divergence are near mid-range, so they're not really giving any clues on direction.

The interesting thing is how strongly gold has performed since the DXY's rally off the 93.5 lows of mid-September.

We can see that gold bottomed only shortly after the DXY and has put in a massive rally since.


Like I detailed last week, gold can move higher for extended periods, even as the dollar does the same. And gold tends to rally significantly higher once those simultaneous dollar advances finally end.

In that context, gold's bull could just be getting started.

Interestingly, spot gold prices reached then retreated at the level I had targeted, $1,340. This is still my next target, which gold will need to cross above and hold. At that point, $1,340 could become a new floor as gold then works its way to $1,360 in the "golden staircase."

A quick look at how gold stocks have been performing is also pretty revealing.

Notice that the VanEck Vectors Gold Miners ETF (NYSEArca: GDX) has powered higher, surpassing its April high of $23. I think this could lead to some short-term profit taking, but $23 could become a new floor.


Also notice that we have a "golden cross", with the 50-day moving average crossing up over the 200-day moving average, and volume has been rising gradually since June.

Now the GDX-to-gold ratio is also advancing, meaning gold stocks are rising more quickly than gold.


We see a similar pattern to GDX alone. Sentiment is certainly favorable toward gold, but the shift toward gold stocks has been stronger.

Here's a look at my recent recommendations.

The DB Gold Double Long Exchange Traded Notes (NYSEArca: DGP) are down about 9.2%, but it's only been a little over one month. Gold's bull is looking strong, so stay long DGP and/or buy on dips.

The VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has participated nicely in the rise of gold stocks and is now up about 10.4% since mid-January. Continue to buy on dips.

Gold continues to look strong, but it could still be overbought. As we near the end of February, the seasonal pattern favors a pullback or at least more consolidation. But given how gold's been behaving, it may still surprise to the upside.

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Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Mon, 25 Feb 2019 18:41:42 +0000 https://moneymorning.com/2019/02/25/how-the-price-of-gold-could-be-getting-an-even-more-bullish-catalyst/ Gold Prices Rallied 32% the Last Time This Pattern Appeared https://moneymorning.com/2019/02/19/gold-prices-rallied-32-the-last-time-this-pattern-appeared/ Gold prices traditionally move inversely to the dollar. But when they move higher together, it could mean a breakout to the upside is coming. And that's exactly what we're seeing right now...

We are already halfway through February, and gold prices are still in the midst of a consolidation phase.

gold prices
The most interesting thing about it is how mild it has been, at least so far.

Since crossing above $1,320 in late January, gold prices have traded in a pretty narrow range, closing between $1,307 and $1,324.

Even more impressive is how the price of gold has held up in that range, clearly above $1,300, in the face of a stronger U.S. dollar.

The U.S. Dollar Index (DXY) has actually rallied since the end of January, gaining as much as 150 basis points.

Normally a stronger dollar is bad for gold. But that's not always the case. There have been periods when both rose simultaneously.

And what happened to gold afterwards will impress you.

I'll show you exactly what that means for gold prices after we recap last week's gold price action...

The Price of Gold Moved Laterally Last Week

It was a relatively uneventful start to the week in gold as the price began last Monday (Feb. 11) at a low of $1,305. This was just as the DXY was beginning a new climb, having reached 96.8 at 8 a.m.

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The dollar rallied, pulling its index up to 97.10 by 2 p.m., and surprisingly, gold bounced back to $1,309 by mid-afternoon.

The dollar backed off on Tuesday (Feb. 12), retreating from an early-morning peak at 97.17, then dropping back to 96.7 by early afternoon. That was enough to give gold reprieve, allowing it to rally back to a close at $1,311.

But the dollar index soared back on Wednesday (Feb. 13), well above 97, peaking at 97.25 just after 5:30 p.m. Gold took it on the chin, bottoming at $1,306 at 3 p.m.

Here's the DXY in the rearview mirror for the past week:

gold price

Just before markets opened on Thursday (Feb. 14), it seemed gold wouldn't get any loving on Valentine's Day. Gold bottomed at 7 a.m. at $1,304. But lots of bargain hunters stepped in, bidding the metal back up to $1,311 at 8 a.m., finally closing at $1,313. Meanwhile, the DXY bounced between 97 and 97.25, finally ending the day at 97.

Then on Friday (Feb. 15), even as the DXY remained strong above 97, gold roared back, opening at $1,318. The dollar index sold down to 96.9 by the close, helping gold climb further to reach back above $1,320, closing at $1,321.

And on Monday (Feb. 18), with stock markets closed for Presidents Day, gold performed well. The DXY hovered around 96.8, but gold had begun climbing the previous evening, and it ended the shorter trading day at $1,326.

While I expect to see a bit more of this consolidation, gold prices moving alongside the DXY has historically been very good for the metal.

Here's why that could help gold reach my latest target price...

We're On Track for My Latest 2019 Gold Price Target

The DXY has certainly managed a decent comeback from its recent lows near 95. It has "tested" 97, but so far, that seems to remain as overhead resistance.

gold

Looking at the relative strength index and moving average convergence divergence, momentum seems to be on the dollar's side. And with the DXY back above 96 (the 50-day moving average), it does appear to have strength.

The recent closes at or below 97 do, however, highlight a lower high than what the DXY was able to manage in November and December. For now, it appears to me that the jury is out and we need to give the DXY more time to tell us where it's headed next.

The encouraging aspect of this is how well gold has held up.

So far, at least, gold's correction has been negligible. In fact, it would seem more appropriate to call it a consolidation, especially against the backdrop of a stronger dollar.

price of gold

After gold's January rally that took it from $1,280 to $1,324, gold has stayed in a range between $1,304 and $1,324. Impressively, until now, $1,300 has remained as the new support level.

Barring any black swans, I'd expect to see gold continue to move in this range a little longer, perhaps another week or two, until it starts to move higher once more.

I think the "golden staircase" pattern I noted last week will continue to play out, potentially pulling gold to $1,340 next, followed by $1,360.

Like I said above, gold doesn't have to hurt just because the dollar is strong. Yes, that's often how things play out. But when gold rises at the same time as the dollar, to me it's a sign of even more strength.

In the chart below, I've highlighted extended periods when the dollar rose. As you can see, they certainly didn't seem to be impediments to gold's advance. Between April 2005 and April 2006, gold surged by 58%.

gold price action

And between spring 2008 and midyear 2010, the dollar rallied 25%. In that time, gold ran up by 32%.

But note that the period following those yellow bars, when the dollar declined significantly, gold continued to power much higher.

For all we know, we could be at the start of one of those times when both the dollar and gold move higher together. If so, that's great. But remember, once the dollar goes back into bear mode, gold could see a huge move up for months or years.

Consider too the rising tide of central banks buying gold that I pointed out last week. Now we've got news that China has bought nearly 10 metric tons of gold in December, plus an additional almost 12 metric tons in January. And according to Commerzbank, "In the past, the PBOC has tended to buy gold for several months in succession."

Here's a look at my recent recommendations:

The DB Gold Double Long Exchange Traded Notes (NYSEArca: DGP) are down about 7.8%, but it's only been a little over one month. Gold's bull is looking strong, so stay long DGP and/or buy on dips.

The VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has participated nicely in the rise of gold stocks and is now up about 7.4% since mid-January. Continue to buy on dips.

To sum up, gold's been consolidating for two weeks. But the downside has been very limited so far. Gold seems to be signalling good strength in the face of a strong-ish dollar.

Conditions look very favorable for the new bull to continue. Let's wait and see what gold does once this consolidation phase runs its course.

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About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Tue, 19 Feb 2019 20:37:06 +0000 https://moneymorning.com/2019/02/19/gold-prices-rallied-32-the-last-time-this-pattern-appeared/ What the "Golden Staircase" Pattern Means for Gold Prices This Week https://moneymorning.com/2019/02/11/what-the-golden-staircase-pattern-means-for-gold-prices-this-week/ Even though gold prices broke out in a big way to start the year, they've reached a lull in February. But this is actually a good thing.

Gold was up 3.1% in January alone and was up 10.3% between mid-November and the end of January.

Consolidation is not only to be expected; it's healthy. What we need to watch for now is how long it lasts and how much gold prices correct.

gold prices
In the past week, the price of gold tested the $1,300 level, with buyers stepping in at $1,303 to provide support.

U.S. Federal Reserve Chair Jerome Powell's White House dinner with U.S. President Donald Trump on Monday (Feb. 5), the day before his State of the Union address, made economists uneasy about Fed independence.

And President Trump's speech on Tuesday (Feb. 6) provided little in the way of catalysts, other than possibly helping to buffer the dollar as traders grew weary of trade wars.

Looking at the movement of gold prices over the last six months, we can see it's following a unique pattern - what I coined the "golden staircase" years ago. That's when gold moves up, then sideways, and repeats the process in a discernable pattern over months and even years.

So despite a week that brought a relief rally in the dollar, gold still managed to hold its own as it contemplated a period of consolidation.

And given the robust buying from central banks in 2018 and institutional investors over the last several months, gold is looking solid indeed. I expect gold to continue to climb the golden staircase, and I'll lay out exactly where it's headed in my latest gold price prediction below...

Why Gold Prices Plateaued Last Week

After closing around $1,317 the previous week, the price of gold started out Monday on a weaker tone as the U.S. Dollar Index (DXY) gained some steam. It climbed to 95.85 that morning and then moved sideways. Gold prices weakened initially but closed at $1,312.

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Gold prices managed to hold around $1,314 through most of Tuesday, even as the DXY climbed above 96. But as the DXY sailed higher on Wednesday (Feb. 7) in the wake of the State of the Union address, gold succumbed and closed the day at $1,306.

Here's how the DXY looked last week...

gold

By Thursday (Feb. 8) the DXY had reclaimed the 96 level, but gold rebounded along with it, both favored as safe havens as markets sold off. Gold closed at $1,309.

And on Friday (Feb. 9), with flat stock markets and a sideways dollar, gold gained again, climbing steadily to close the week at $1,314.

But as I said before, this is a good sign. Gold prices consolidate before moving higher, and that's been the consistently bullish pattern for gold prices.

Here's how high gold prices can go...

How High the Golden Staircase Will Carry Gold Prices

The dollar has managed to rally in the past week, regaining its 50-day moving average.

With this data point, we can see that since the start of this year, both the relative strength index and moving average convergence divergence have turned higher. If this continues, then it could be a shift from the dollar's recent downward trend.

gold price

While this could be a headwind for gold (and it normally is) it's interesting to note just how well the yellow metal has held up.

In fact, I've highlighted gold's move while the dollar has trended higher on balance since early January.

Obviously, the dollar's relative strength in that period doesn't seem to have done much to slow gold's advance from $1,290 to $1,320.

price of gold

And in the following chart, I've marked out the "golden staircase" pattern that gold seems to be following since August. Notice how the price consolidates in a sideways range for a time, then climbs, then repeats the sideways move, and climbs again.

That's a bullish pattern that I've noticed forms in gold. Interestingly, it tends to happen both on a short-term basis (months) as well as on a longer-term basis (years).

Here it is...

gold price prediction

On the fundamental side, there's been some bullish news as well. And it may in fact explain just why gold's been so strong for the past four months.

Central bank gold purchases in Q4 2018 were the highest on record, and 2018 was the highest in any year since 1967.

golden staircase

In December, institutional investors bought gold ETFs hand over fist, acquiring 76 metric tons and pushing levels last seen in 2013. Then in January, gold ETFs saw an inflow of another 72 metric tons worth $3.1 billion, marking four consecutive months of inflows.

Only time will tell, but given how many times gold tested $1,300 as overhead resistance before closing above it, I think it could well be strong support in the current consolidation phase.

Right now, gold appears to have entered a new "step stage." Once it breaks above the $1,325 level, odds are it will climb higher and then form a new step.

But first, look for gold to consolidate and digest its recent gains. It's a well-deserved break.

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About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Mon, 11 Feb 2019 18:29:51 +0000 https://moneymorning.com/2019/02/11/what-the-golden-staircase-pattern-means-for-gold-prices-this-week/ The Price of Gold Is Surging Thanks to an Unlikely Catalyst https://moneymorning.com/2019/02/04/the-price-of-gold-is-surging-thanks-to-an-unlikely-catalyst/ The price of gold is now trading at an eight-month high.

Only one week ago, gold prices finally closed above $1,300 after multiple attempts to break through.

Today, gold has not only overtaken my first target of $1,310; it's testing my next gold price target of $1,320.

price of gold
That has my gold recommendations rallying nicely too.

And we have an unlikely suspect to thank: the Fed.

A complete reversal by the U.S. Federal Reserve last week cemented the new bull in gold and gold stocks.

Not only did the Fed omit any indication about its next rate moves, a statement concerning the Fed's balance sheet says it will now need to maintain a larger portfolio than originally planned.

Of course, stock market investors cheered this news. But gold traders absolutely loved it, sending the metal to $1,322.

With my Q1 target already met, my next gold prediction is looking even more likely.

Let's break down what happened with gold prices last week and take a in-depth look at my next gold price target...

The Price of Gold Is in Bull Market Territory

Gold prices were already climbing early last week in anticipation of the Fed meeting outcome.

The precious metal rose steadily on Monday (Jan. 28) and Tuesday (Jan. 29), closing at $1,302 and then $1,311 respectively.

But of course, the really big move happened Wednesday (Jan. 30), as the Fed's post-meeting statement was released.

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Gold had been trending downward all morning from near $1,315 to bottom just below $1,310 by 2 p.m. Then it exploded higher within 45 minutes to $1,323 before settling the day at $1,319.

The DXY did nearly the exact opposite during that same time. Here's what the last five days have looked like:

gold

On Thursday (Jan. 31) and Friday (Feb. 1) gold spent both days in retreat mode, digesting its recent gains as traders took profits.

That pulled gold back to close at $1,318 on Thursday as the DXY bounced from a low of 95.19 to 95.55.

On Friday, the DXY remained near that same level, and gold backed off on news from the U.S. Labor Department that a robust 304,000 jobs were created in January. Gold ended the week at $1,317.

That's perfectly positioning gold to hit my next target level...

Where Gold Prices Are Heading Now

By all accounts, the dollar has continued its bout of weakness.

Needless to say, the Fed's silence on future rate hikes helps keep the outlook dovish.

I can see how the DXY might find temporary support near 95, which lines up well with the current 200-day moving average.

gold prices

But the Fed's about-face from where it was in December suggests the dollar's going to face more weakness.

The DXY's 50-day moving average continues trending downwards, so I continue to expect dollar weakness. However, we could see the index move temporarily sideways near its current level first.

Gold, on the other hand, has been on a spectacular tear.

It may even have been "too strong". That's not to say that this rally is not overdue.

It's just that the jump from $1,280 to $1,325 was very quick. Notice that the relative strength index is now into overbought territory at 74.7.

gold price

I see one of two scenarios likely to play out from here.

Either gold consolidates around the $1,320 level, which was my latest target, or it drops back further but finds support at $1,300. I just want to caution readers not to be surprised either way.

Remember too that back in early January I said, "Overall, gold seems well positioned to reach for $1,300 in Q1."

Well, we've met that target - and just in the first month of 2019. This bodes well for gold and for my $1,400 target by year's end. I may even have to revise that higher.

Meanwhile, looking at the gold-stocks-to-gold ratio shows us a dramatic surge by the equities versus the metal, and that's despite gold's dramatic jump.

gold price target

Here's a look at my recent recommendations.

The DB Gold Double Long Exchange Traded Notes (NYSEArca: DGP) are down about 9.4%, but it's only been three weeks. Gold's bull is looking strong, so stay long DGP and/or buy on dips.

The VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has participated nicely in the rise of gold stocks and is now up about 7% since mid-January. Continue to buy on dips.

To sum up, gold's been on fire, and conditions look very favorable for the new bull to continue. But after such a strong January, February could bring consolidation.

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About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Mon, 04 Feb 2019 17:59:51 +0000 https://moneymorning.com/2019/02/04/the-price-of-gold-is-surging-thanks-to-an-unlikely-catalyst/ Venezuela Shows Us Just How Important It Is to Own Gold During a Crisis https://moneymorning.com/2019/02/01/venezuela-shows-us-just-how-important-it-is-to-own-gold-during-a-crisis/ Gold has been a store of value and wealth for more than 5,000 years, dating back to ancient Egypt. And here in America, the value of the U.S. dollar was fixed to gold in 1792, when Congress passed the Mint and Coinage Act. That would last until we went off the gold standard in the 1970s.

Yet through it all, the yellow metal maintained its aura. Even though no major currency is tied directly to gold anymore, central banks around the world still maintain a cache in order to defend their currencies. Its utility as a hedge against economic trouble is unparalleled.

The benefits of owning gold are made crystal clear by the crisis in Venezuela.

If you lived in Venezuela and owned gold, you would be one of the few citizens there who made the right financial move. Annualized inflation is estimated to be between 80,000% and 100,000%. Even the International Monetary Fund (IMF) suggested it would be closer to 1,000,000%. Compare that with the annual U.S. inflation rate at 1.9%.

Prospering During a Financial Crisis: Incredible wealth-building opportunity for those who are prepared - quickly amass a potential $1.5 million retirement nest egg. Learn more...

In other words, hyperinflation destroyed their currency. With inflation levels that high, fiat money became worthless. And when the economy collapsed, what scarce resources were left were too expensive for the average person to buy.

But if you owned gold, it held its value, and it could've been your lifeline out of the crisis...

How Owning Gold Could Save You

Gold has been a quiet portion of a well-balanced portfolio for decades. It aids your portfolio's performance when times are good and helps keep it stable when conditions are not so good. It makes sense for anyone to have a reasonable portion of your money - something around 2% - in gold.


"Even a small amount helps dampen overall portfolio volatility yet still offsets the principle risk to your bond holdings associated with inflation, geopolitical uncertainty, and economic volatility," says Money Morning Chief Investment Strategist Keith Fitz-Gerald.

Contrary to popular opinion, gold isn't a pure hedge against inflation. Instead, there's a direct link between gold and interest rates, which are, in turn, driven by inflationary pressures and global risk, especially lately.

That also means you can avoid the worst of the fallout as the Fed continues to threaten stock gains with its headstrong move toward higher interest rates.

Plus, gold offers investors growth upside. The metal bottomed on August 16, 2018 at $1167.10 per ounce, and as of the close Thursday, it traded at $1,325.20. That's a gain of 13.5%. Not bad when the Nasdaq was about to plunge into a bear market, losing 24% from August through December.

And while stocks have made a nice recovery since their lows, gold also rallied to nine-month highs. Win-win.

However, just owning gold is not enough when crisis hits. You have to be able to access your gold.

The Maduro government was smart enough to stockpile gold before they destroyed their economy, but now they can't get to it. Their gold is held at the Bank of England, and the British government isn't about to let them have it. It does the regime no good at all if it just sits in a vault.

While that might be poetic justice for the tyrannical regime, you don't want to find yourself in a similar position when you need gold. Investors need to be able to access their gold for it be useful in times of uncertainty - and especially if a crisis unfolds.

Here are the three best ways to do it...

The 3 Best Ways to Own Gold

Gold is a scarce asset, and it cannot be created out of thin air the way a paper currency can. It is priced in dollars, so any event that pushes the value of those dollars lower must, by definition, push the price of gold higher. That's why it maintains worth, unlike a bank account or a paper asset.

It is important for investors to own gold in some form, but actual, real, physical gold is the best way. Even gold certificates and futures contracts are mere promises that someone will give you the value of the gold. While in normal times, that would be good enough, should a crisis hit and the financial system locks up, those paper promises would only be worth the paper itself.

We've all seen the ads on television with a highly paid celebrity extolling gold's virtue. While they're probably charging you an arm and a leg to buy it from their company, it's easy to buy and sell real gold. It doesn't matter whether you open an account with a gold dealer, the U.S. Mint, or simply head down to the local gold and jewelry shop at the strip mall.

You can buy one-ounce gold coins, such as the American Eagle, Canadian Maple Leaf, South African Krugerrand and many others. You can even buy small coins in one-tenth ounce, one-quarter ounce, and one-half ounce sizes if you don't want to buy in $1,322 increments - the current price of an ounce of gold.

If you feel more comfortable with buying and selling on the stock exchange, exchange-traded funds are a good alternative, too. SPDR Gold Shares ETF (NYSEArca: GLD) is an ETF that tracks the price of gold.

It's highly liquid, but while the fund owns real gold, you cannot take delivery of that gold. However, you can still cash it in any time you want to get the benefit of the increase in its price. This is for people who want the benefits of owning gold without wanting to worry about keeping it secure in their homes.

If you want a hybrid between real gold and a traded gold fund, Fitz-Gerald likes the Merk Gold Trust ETF (NYSEArca: OUNZ). It is one of a small handful of gold ETFs that allows investors the opportunity to turn in their shares for the delivery of actual physical gold bullion, like bars and coins.

Any way you want to do it, dedicating a small portion of your portfolio to gold in some form will protect you from, as the gold broker pitchman put it, the "financial craziness" of today's world.

The takeaway is that gold is an important hedge against crises, and that while we aren't predicting that the United States will turn into Venezuela, another financial crisis like we saw in 2008 could threaten your personal wealth.

Millions of Americans Now Entitled to Collect "Federal Rent Checks"

Forty-six years ago, Congress passed an obscure piece of legislation known as Public Law 92-313. And today, it's why the Treasury is sitting on top of an $11.1 billion pile of money.

Fortunately, Americans from coast to coast have discovered a loophole that entitles them to a sizable portion of this cash.

And they're racing to add their names to a special distribution list.

Some are now receiving monthly checks worth $1,795 each. Others are collecting $3,000, $5,000, or more every month. If you want to join them in this powerful investment income stream, you better hurry up.

Because this cash is getting scooped up left and right! Read more...

Follow Money Morning onFacebook, Twitter, and LinkedIn.

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.To get full access to all Money Morning content, click here.

Disclaimer: © 2019 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.]]> Fri, 01 Feb 2019 19:15:51 +0000 https://moneymorning.com/2019/02/01/venezuela-shows-us-just-how-important-it-is-to-own-gold-during-a-crisis/