Tony Lepage

Blither, Blather. I’m sick of chatter.

Cycles are a very interesting thing. Since my entrance into the market, I’ve noticed something quite obvious. Market bulls scream when the market is down and gold bears scream with a 1% drop in the gold spot price. Take a look at CNBC, their hot headed commentators make very bold statements that are quite foolish.

“Commodities are dead!” yells Jim Cramer.

I’m a firm believer that many don’t want to see gold up and will sell it when it starts looking strong. We’re on the Titanic before it’s doom is obvious to everyone and the rich are telling the others that the lifeboats are useless. Do you believe them? Perhaps they are oblivious to the major macroeconomic shifts that almost certainly spell doom for the US economy. Perhaps they feel that increasing the core interest rate won't cause a recession like it has the last 4 out of six times. The funny thing is, it’s getting harder and harder to hammer the gold bull. Last week, gold was up $2.30 to close the week at $440 per ounce. Recall the December high of $458. Commitment of traders saw the largest net increase of 55 000 contracts to the short in one week. It has been an extremely long time since a switch that large has taken place. There certainly hasn’t been a change in interest to the short of gold this large in at least 3 years.

Translation- Commercials are heavily short the gold market, increasing their short position over 70 000 contracts over the last two weeks and this may cause gold to be down for a few weeks. I must add that the commitment of traders report is not a directional tool but does tell us where the interest is. Big money can make things happen.

I began by speaking of cycles and will interpret what they mean for us here. While the hot heads yell bull and bear and throw out reasons why the gold market is overheated, it is interesting to note that for the last 29 years, gold has been seasonally lower in June and July to gain strong strength in August. If this is the case this year, watch for gold to easily surpass its February high of 445.00 and challenge the $458 mark. Passing this mark, there is little resistance.

It’s not surprising that there has been movement to control the Gold market. Between the China-US trade issues, oil’s new highs, gold nearing its highest level in 16 years, there is significant reason to take the reigns of gold.

What did gold do in response to this? Its spot price fell just under 1.5% on Monday and Tuesday. Not all that impressive. In fact! Commodity stocks, specifically Gold stocks have become market leaders these last two days! Gold spot prices are holding up well under significant pressure and gold stocks have been gaining momentum.

Gold juniors. Very Bullish. Opportunity of a lifetime.

The Markets

Today we had impressive 3.8% rise in GDP. Oil prices have dropped over $1 from their $60+ high. Bonds are down. No rally in the markets? What’s with that? What’s the problem Mr. Dow? Gold stocks rallied.