Despite the large commercial short positions, today James Turk told King World News that the gold and silver markets are about to shock market participants.
James Turk: “The week has started out very quietly, Eric. But it would be unusual for the calm to last long…
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James Turk continues: “This coming weekend is Easter, and much of the world celebrates with a 3-day or even a 4-day weekend like here in London. Typically there is short covering by the specs in gold and silver before a long weekend.
The spec shorts will often cover their entire position so that they don’t have to worry about an event or some government pronouncement over the holiday weekend that sends the gold price higher. It therefore seems reasonable to expect the slow climb in the gold price to continue as we work toward the end of the week.
We can see the uptrend in gold in the following chart. It is more or less the same chart that we discussed last week, but updated to current prices.
Last Monday when we spoke, Eric, gold was trading in the low $1230s. You will recall me mentioning how I have been hearing that gold is overbought, and my point was to ignore it. Gold is now $12 higher then it was when we last spoke. And silver is about 25-cents higher.
Gold & Silver Bull Markets To Shock Market Participants
As the saying goes, gold and silver are climbing the proverbial “wall of worry.” This so-called wall is built on emotion and sentiment, not logic.
The emotional reaction arises as a natural outcome of a protracted bear market like the one that we have been enduring in gold and silver. Silver reached its peak nearly five years ago, and gold’s peak came shortly after that. Five years is plenty of time to play with one’s emotions.
I keep hearing about the big rise in the XAU and HUI indices and how some gold mining stocks are up 50% or more since the December low and how “that’s not sustainable.” Of course that’s true, but that doesn’t mean that the mining stocks or gold or silver are going anywhere close to the December lows. That would be backward thinking.
It is the misleading thinking that has resulted from what we gold bulls have endured the past four years, but it says nothing about the future. We can’t predict the future, so we have to make our portfolio decisions on buying useful assets that are good value.
There is another sound strategy, namely, to follow the trend. When I first went to Wall Street back in the late 1960s, I had a family adviser tell me that one of the hardest things to do is believe what your eyes are telling you. Looking at the chart above, my eyes are telling me that gold is in an uptrend. Coupling that fact with the knowledge that gold is undervalued and that it is a safe haven from the monetary folly being pursued by central bankers around the world is really the essence of what one needs to know.”
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