They Will Never Be Royals, but Large Speculators Add Gold

October 20, 2014 - 2:54pm

 by Gary Wagner

The way the Kansas City Royal slipped into the World Series with little prior heralding, large speculators have entered the gold market, adding the yellow precious metal to their positions. Strikingly, this includes a wide variety of managed funds across the board.

Last week, holdings in global exchange-traded products backed by the metal alone rose 4.9 metric tons, the most since July of this year.

Gold has also picked up renewed interest in China, which seems besides itself and its sudden, inexplicable stagnation. Everything from state-run funds to private banks to individuals are adding gold into their holdings. fear of economic malaise has also spread in Europe and that region, too, is fueling the renewed buying of gold and its associated funds.

Finally - and you know you've been reading it here for months - there is more and more acceptance of the idea that the Fed will put off at least a rise in interest rates and possibly the finally blow to QE3 paper purchasing. However, we should keep in mind, too, that that sort of action, or rather inaction, has a salutary effect on the stock markets, which could sponge off some investment money from gold.

Regardless, the key word for today, and the key word that would help gold bulls really find their feet, is "doubt." Obviously doubt leads to fear, and that in turn leads to desires for safe havens.

The dollar also helped gold today, making up about half of the gain we are witnessing in late afternoon trading.

The decline in the dollar, which reciprocally pushes gold up, can be seen as another function of the idea that rates aren't going anywhere in any of the main economic blocs in the world.

Likewise, the yield on the bond declined and the face value climbed. When people want to hide, shiver and quiver, there are only a few safe places. Gold, bonds, and strong currencies.

As always, wishing you good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

Yesterday we sent out a special “Trade Alert” recommending that you enter the market from the long side with a Buy at market order.

Maintain current long gold @ 1244
Maintain STOP below 1230

Gold Market Forecast

There might be something in the air, but the big boys are buying gold again.  It is absolutely certain that we did hit a triple bottom two weeks ago when gold traded and bounced off of the lows at 1180. What is not clear as of yet is how high this most recent rally will take gold prices, and that is exactly what we attempt to answer on today’ show.

We will look at 1241 and why it is so important to close above that price point. We will also look at the Fibonacci retracement levels that were created when gold fell from 1341 to 1180 to plot out our strategy on this current trade. Lastly we will use this information to plot price targets or potential points to exit our current trade if we are correct and the market moves in our favor