Growing Optimism for Gold and Gold Shares

GoldThe rise in the price of gold so far this year has been impressive and very helpful to our portfolio. Credit goes to my regular technical analyst guest on my radio show, namely, Michael Oliver, who has been the most bullish of technical analysts that I follow. The advantage that Michael has is that the momentum data he uses very often gives a buy or sell signal ahead of analysts that rely more strictly on price data.

Back on February 18, when gold closed in London at $1,210, this is what Michael said about gold.

“What I would focus on most intently now is gold. Its action was picture perfect. After breaking through the key long-term momentum breakout numbers (quarterly and annual momentum) from $1142 to $1169, it surged to just over $1260 in a week. Then it backed up over $60 into the $1190s. Today, gold traded back up to $1240. If it touches $1260 I think it’s about to launch a move, possibly with speed, to the $1450 level (the next projected shelf of resistance). I would also assume that if gold reaches and exceeds that $1260 peak, that the S&P 500 might then be ready for a renewed downside—regardless of whether it has managed to nip out the early February rally high.

“So if you covered some or all of a stock market short position based on last weekend’s cautionary report, and if gold tags $1260 again, you might consider reinstituting your short stock market position, at least in part. And if the S&P 500 manages to exceed the February high trade (1947), you might consider reinstituting any covered shorts on a scale-up between 1950 and 1980.”

As gold was breaking through the $1260 level on Thursday, I sent Michael an email and this was his response: “It even hung tough with a stock market rally. Did not matter.” As this was written, Michael’s bearish views for stocks are yet to unfold, though he has no doubts that it will. But thus far, he certainly has been spot on with regard to gold.

So as the political process and the world become increasingly unglued, we do not rejoice. But it has always made sense to trade what is obviously fraudulent currencies, including the dollar, for real money—namely, gold and/or silver. Beyond applying such basic logic, we leave the rest in the hands of our Creator, who set it all in motion 14+ billion years ago with the Big Bang creation. What more can we do but trust and obey the One who created us? And if we had done so, we would not need to trade dollars for gold. The dollar would still be as good as gold because it would be backed by gold!

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.