Barry Dawes of Martin Place Securities takes a look at the current state of gold and where he believes it is headed.
Best explorers/developers
AUCAUTBC8ICLSXGSNGLGMTRMFG1BGDOBMTOK Tolu Minerals IPOClosing Friday, October 30Link to prospectus Prospectus | Tolu MineralsA strong performance by gold on Friday as it passed easily through US$1900 and now looks to be on its way to new all-time highs in the very near future.
As you know from these commentaries, the gold market has been through a lot over the last few years.
The price has been volatile and sluggish despite the positive fundamentals of supply and demand where central banks have been buying at record rates, China and India continued to buy Western gold, the man in the street continues to buy up coins and bars, and the supply of newly mined gold is still sluggish.
Also, against the background of fiat currencies continuously undermined by politicians hell-bent on printing money and creating even more debt and making the rationale case for gold even stronger.
That 180,000 tonnes of gold sitting in vaults or tied up in jewelry dwarfs what happens to that annual 3 - 4000 tonne of newly mined or recycled gold as it is absorbed into the marketplace.
Gold is now no longer driven by the US$ or interest rates. Everyone needs to understand that this is the beginning of something very big.So, it is that vast stock of gold that influences the price.
But of course, it's so much more complicated than that because there are things called futures contracts and non-exchange structured and derivative products, and these can affect the price of gold at the margin.
It is fascinating to see that gold has exceeded US$2000 and tested ~US$2090 on three occasions over the past three or so years.
And gold prices in most currencies have continued in their parabolic rises.
All are very positive at every level. Yet, market sentiment has been in the cellar. Looking at the gold markets closely forces you to the conclusion that the gold market has really been suppressed.
Who and for what reason? We can only speculate, but it has been very obvious.
However, these past 12 months have been very different, as has been pointed out here, and the difference between gold prices today and gold prices over the last six years relative to the real U.S. interest rate is quite revealing.
It was flagging the change from gold being under the control of holders playing with the stock of gold to a market showing a better reflection of supply and demand.
Everyone knows the analogy of the beach ball held underwater and allowed to bounce right out of the water. That now applies to gold. The activities in Israel, with the attacks by Hamas from the south and now by Hezbollah in the north, are very ugly and have the potential to create something really nasty.
Let's hope sanity prevails, but some of the commentary is very inflammatory. These actions have caused a run to gold, but the bigger picture is that the change has been quietly underway for the past year, and this is the trigger to send gold much higher.
The trigger is not to encourage everyone to go out and buy gold because the sky is falling but rather to force the covering of massive short positions that have been built up during this period of price suppression.
Gold is now no longer driven by the US$ or interest rates. Everyone needs to understand that this is the beginning of something very big.
The buying that is likely to come in at US$2100 is very large.
The ending of the 60-year Gann cycle in gold in December 2023 will be seen to be a major event as gold heads higher for much of the next 60 years.
Heading higher for much of the next 60 years!
The sentiment levels in North America, as has been shown here so often, are equally abysmal, and so all this draws you to one simple conclusion. The marketplace is considerably underweight in gold and gold stocks.Gold is the punisher. It will punish free-spending politicians and bureaucrats. There will be a return to some sort of gold standard that will mean the end of deficit spending and the spiraling out-of-control debt.
It is amazing that the world is finally waking up to the fact that so many of the leaders in the world today are basically incompetent rogues, and many are true criminals.
So many of their policies are for themselves and against their own people, so these elected/selected are seeing their days are now numbered.
This is obvious in the U.S. and especially in Canada, but the currencies are showing that Europe, UK, and Japan are heading into major problems as the politicians have destroyed sound money.
Here too.
The Voice Referendum in Australia has been fascinating.
It really did show the incompetent leadership on so many levels.
Half-baked ideas, poorly explained, no proper consultation, atrocious planning, and hoped to be supported by celebrities who told you the vibe was the key issue. And the true intention is hidden.
The impression that the government worker electorates in Canberra, Sydney, and Melbourne voted with >70% YES turnouts and those regional areas with large Aboriginal populations with