Saturday, 31 January 2015

Gold And January Barometer Flashing Red: Stock Market Warning Signal



  Nobody knows the future, but some indicators can put us into the right direction. Strong Dollar is already hurting US Economy and Oil Crash will bring more pain to the economy. Gold Bugs Index HUI has painted the Bottom and is challenging the important resistance on the upside. Once the realisation that US Dollar cannot rise forever without pushing all the air from the stock market bubble hits headlines - the FED stance on the rate hike will change dramatically. China buying record amount of Gold and advising its citizens against buying US Dollars is another part of this big picture.
  For our Gold mining sector and resources in general we do not need any End of The World scenario - just some reallocation of the capital from the overinflated assets into the beaten into the ground ones. All Central banks will be driving the war on Deflation to save Economic Growth, it is impossible without Resources coming out of this Recession. Gold will show us when Central Banks will succeed in this battle, mind the manipulation masquerade. When and what to buy will be your choice as usual.



  
  NOVAGOLD is back on the radar screens these days with its very positive news from Alaska. Please notice the Buy Volume signal last December.


China Buys 202 t of Gold in 3 weeks - Koss Jansen: SGE Withdrawals Week 3, 2015: 71 tonnes!



  We have a nice short squeeze today in the gold market and Gold is marching back towards $1,300 threshold after being smashed this week. U.S. GDP for Q4 came below expectations at 2.6% and there are more and more talks about the strong dollar killing export and corporate earnings. The upbeat on economy FED can face a very different reality after the Oil crash will make its way throughout the system with massive layoffs, cuts on CAPEX and even ... stop of shares buybacks.
  Meanwhile Koos Jansen reports that in China people are buying Gold in record amounts, every dip in price is being bought literally and first 3 weeks in 2015 have seen 202 t of Gold withdrawn from SGE.
  Miners start to move up again and NOVAGOLD is quite on fire after its positive news from Alaska, hopefully our Shotgun Project will get the proper attention with gold breaking above $1,300.



Alaska - NOVAGOLD Marks 2014 by Reaching Important 

Milestones in Advancing Permitting of Donlin Gold.



  We have another positive release from NOVAGOLD for Gold mining in Alaska. Now the Gold price above $1,300 should bring interest back to this safe mining jurisdiction and TNR Gold Shotgun Gold project.


TNR Gold: Shotgun Gold Project Fact Sheet January 2015.




Kitco:

The "January Barometer" is a popular stock market indicator devised by Yale Hirsch in 1972, editor-at-large of the Stock Trader's Almanac.
The premise is simple. As the S&P 500 goes in January, so goes the year.
If the S&P 500 is up at the end up January that foretells of a bullish year for stocks, and on the flip side if the S&P 500 is down at the end of January that warns of bearish year in stocks.
Let's look at the numbers as January comes to an end:
  • The S&P closed out January down 3%,
  • nearby Comex gold futures gained 8% year-to-date.
Does this January Barometer indicator actually work? Market analysts say yes.
"Based on S&P 500 data going back to 1928, January is a good predictor of the year. When January is up, the year is up 80% of the time with an average return of 13.0%. When January is down, the year is up only 44% of the time and the S&P 500 has an average decline of 1.9%," according to a BofA Merrill Lynch Global Research report.
Another factor that warns of potential disruption in the stock market in 2015 is the sheer age of the current bull market phase. The latest bull market cycle in stocks began in March 2009. "There is a good chance we will celebrate year six in March," said Sam Stovall, U.S. equity strategist at S&P Capital IQ.
"But, only two of the prior 11 bull markets since WWII made it to year seven," Stovall added. "We are skating on thin ice. The trend is your friend until it ends."
Historically, the start of a Fed tightening cycle has also proven to be negative factor for stocks and analysts are still widely expecting a US rate hike this year.
Stovall studied the impact of interest rate tightening cycles since World War II, even if that only meant one rate increase.
He found that stocks reacted negatively in the six months prior to the first rate increase:
  • In six instances since World War II, the stock market saw a pullback of 5-10%,
  • in four instances since World War II the stock market underwent a correction of 10-20% and
  • in three instances a bear market in stocks, which includes a retreat of 20% or more ensued.
What could this all mean for gold?
Gold and stocks generally tend to have an inverse correlation. As investors shift out of paper assets, such as stocks, cyclical tendencies support a move into hard assets like gold. A pullback, correction or bear market in stocks could send more investors into the safety of gold. Stay tuned. The year is just getting started. Kitco."