• 4 minutes Tariffs to derail $83.7 Billion Chinese Investment in West Virginia
  • 9 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 17 minutes Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 4 hours Saudi Arabia turns to solar
  • 16 hours Kaplan Says Rising Oil Prices Won't Hurt US Economy
  • 10 hours Could oil demand collapse rapidly? Yup, sure could.
  • 4 hours Corruption On The Top: Netanyahu's Wife Charged With Misuse of Public Funds for Meals
  • 5 mins Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 1 day Tariffs to derail $83.7 Billion Chinese Investment in West Virginia
  • 1 min Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
  • 10 hours Gazprom Exports to EU Hit Record
  • 6 hours U.S. Withdraws From U.N. Human Rights Council
  • 11 hours OPEC Meeting Could End Without Decision - Irony Note Added from OPEC Children's Book
  • 15 hours China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 9 hours "The Gasoline Car Is a Car With a Future"
  • 8 hours What If Canada Had Wind and Not Oilsands?
  • 3 hours EU Confirms Trade Retaliation Measures vs. U.S. To Take Effect on June 22
  • 21 hours EVs Could Help Coal Demand
  • 9 hours Sell out now or hold on?

Breaking News:

Saudi Aramco Clears Another IPO Hurdle

Alt Text

Expect Mine Closures In This Key Gold Mining Nation

Major gold mining nation South…

Alt Text

This Key Gold Producer Sees Its Production Slump

Africa’s second gold producer Ghana…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Trending Discussions

Gold is Breaking out to the Upside

Look at the $25 move in gold today, and it's clear that an upside breakout is imminent. It made this move on a whisper of a rumour about a speculation that China may take out an eyedropper and tickle their economy with a few more drops of stimulus.

This is proof positive of how sensitive the barbarous relic is to global QE/stimulus. Given that we can expect a steady dose of this medication from central bankers for years to come, the outlook for gold today is probably better than for any other single asset class. Gold charts are breaking out all over and have already broken out to new all-time highs against the Swiss franc, the Australian dollar, and the Euro. It is just a matter of time before the party spreads to the dollar.

Why is monetary easing so crucial for gold's outlook? Take a look at the chart below showing the Federal Reserve Bank of St. Louis adjusted monetary base. When QE2 was launched, the base grew exponentially, and so did the price of gold, from $1,100 an ounce to $1,922. When QE2 ended in June, 2011 the monetary base flat-lined, and so did the barbarous relic, falling back to $1,500.

So what will QE3 do for the price of gold? The really easy answer here is that it doubles again to $3,000, possibly within the anticipated 24-month life of the current round of monetary easing. Since I am a cautious cheapskate, I am pegging my target at the old inflation adjusted high of $2,300. One thing is certain. To mix a few metaphors, gold bugs are going to be watching the monthly updates of this chart like hawks. This is why I tell guests at my global strategy luncheons that this is the only chart they need to look at for the foreseeable future.

How long will this love-fest last? Look at the next chart of global growth prospects, which are headed in a generally southern direction. Consider the inverse of this chart to be the likelihood of further, more aggressive monetary easings -- gold bulls absolutely love it.

Use every dip in gold to load the boat. Buy calls, call spreads, or outright shares in the gold ETF (GLD). Look at the biggest gold miners, like Barrack Gold (ABX) and Newmont Mining (NEM), the big miner's ETF (GDX), and skip the juniors. The more aggressive can buy gold futures to take advantage of the 18:1 leverage. You might buy some silver too.

Zero Monetary Growth

Cyclical Headwinds

SPDR Gold Trust Shares 8

SPDR Gold Trust Shares/Euro

SPDR GOld Trust Shares/Australian Dollar




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News