The Case for Gold
Topics
PLEASE NOTE THAT THIS INFORMATION EXPRESSES THE VIEWS AND OPINIONS OF SEABRIDGE GOLD MANAGEMENT AND IS NOT INTENDED AS INVESTMENT ADVICE. SEABRIDGE GOLD IS NOT LICENSED AS AN INVESTMENT ADVISOR.
Is the Gold Correction Over?
On balance, we think so. There are still some small flies in the ointment; the gold stocks are underperforming gold...a negative divergence that is often a sign of weakness...and the speculative positioning on COMEX is neutral rather than bullish. Silver is underperforming when it usually leads to the upside.
What's Not Up for Gold
There is a push/pull in the gold market that is testing the patience of investors. It's time to stay calm, in our opinion.
The Debt Ceiling Shortly Becomes Issue #1
The US federal government's debt ceiling was reinstated on March 16th at around $20 trillion, the amount of debt outstanding that day. We are now rapidly approaching the time when the debt ceiling is the most important issue, financially and politically.
The Debt Ceiling Returns
One of the best kept secrets, it seems, is the return of the U.S. debt ceiling on March 15. There should be no surprise. The suspension of the debt ceiling, part of the October, 2015 deal between Speaker Boehner and President Obama, was always going to expire tomorrow. So, whatever the amount of Federal Government debt is outstanding on March 15 (almost $20 trillion) is the limit that can be issued until Congress agrees to raise it.
Inflation, the Dollar and Gold
In the last few days, Fed heads have made it very clear that they want to hike the Fed Funds Rate at the March FOMC meeting which concludes on the 15th despite recent downgrades to the Fed's own first quarter GDP estimates. We continue to believe that the Fed is not economic data dependent but rather market dependent. Thanks to Trumpomania, the stock market is strong enough that the Fed can feel confident a rate hike will be accepted without significant damage. If not now, when will the Fed ever raise rates again?
The Fantasy Continues
Well, that was fun. Trump made his first address to Congress last night and said nothing of substance. But because he didn't go off script and say something crazy, the stock market is happy and green, proving once again that the extraordinary performance of financial markets since November 8 is due to Trumpomanian policy expectations, not economic performance.
.png)
Long Liquidation Looks Bullish for Gold
We noted last week that thought we had seen the bottom in the gold correction. More evidence of that came today with the release of Friday trading data from COMEX. Last week, as the gold price began to fall towards its 50 day moving average where corrections usually end or breakdowns can begin, COMEX Speculators blew an enormous number of contracts out the window.
Signs of a Turn in Gold?
There are growing signs of a turn in the gold market. The correction may be over.
Troubling Contradictions in Trumponomics
Markets are expecting a Trump economic miracle with real GDP growth estimates of 4% per year and more. The cheer leaders cite tax cuts, infrastructure spending and de-regulation unleashing a wave of new economic activity. But that's not where growth comes from.
Review of the Gold Market
An overview of recent developments in the gold market and why gold investors should not fear the Fed.