VRIC Keeping Gold Investors Warm This Winter
(Kitco News) - Sorry folks, PunxsutawneyPhil, the famous weather pontificating groundhog, saw his shadow, which meansthere is still six more weeks of winter left.
And on the topic of loomingshadows, gold prices are looking to end the week in negative territory withanalysts saying that gold could be entering a consolidation phase, faced withan uncertain outlook.
The price action is a suddenturn of events from last week. I was covering the Vancouver Resource Investment Conference (VRIC), where everyone sounded so bullish, with calls of $1,500 goldby year-end. The conference was well attended, with close to 10,000 people--frankly, I am now a bit afraid of what PDAC will look like.
Some key takeaways from thevideo interviews include Amir Adnani, chairman of Gold Mining who, previouslysaid it was “crazy” not be in gold, is now upping the ante by saying it’s“absurd” not to be exposed to the yellow metal. “Gold has been in a stealthbull market, quietly moving up...last year I said it would be crazy, now I wouldsay it is just absurd, not to have that protection,” Adnani said. He alsopointed to the depleting global supply of gold as a bullish case for the metal.
Coming in with a moreconservative tone was Sprott’s Rick Rule, who when I asked if this was going tobe gold’s breakout year, did not mince words. “No,” he bluntly responded. Goldwill do well this year but it is not on the verge of a breakout, the CEO ofSprott U.S. Holdings told me. “Confidence in too many things is too high...golddoes well when people are afraid of other stuff,” he said.
But you, the people, are notbuying into gold’s looming shadow. For the first time this year, there is asharp divergence between Wall Street and Main Street in the weekly Kitco Newsgold survey. The majority of traders and analysts who make up the Wall Streetpoll look for the yellow metal to remain on the defensive next week, whileKitco readers who took part in an online survey look for gold to bounce.Previously, both camps were bullish in each poll so far in 2018. Sixty-fivepercent of Wall Street called for gold to fall, while in an online Main Streetpoll, 64% looked for gold to climb next week.
If you are on the fence andare looking to gauge opinions from giants of the industry, be sure tocatch the much anticipated debate between three titans of the gold space;bestselling author Jim Rickards, Sprott’s Rick Rule, and Kitco Metals globaltrading director, Peter Hug give their matter-of-fact, point of views on themetal. It was the definite highlight of the VRIC - and yes, I have to admit Iam biased since I had the honor of moderating it.
Back to the price and marketaction, in the Kitco News weekly, outlook, reporter Neils Christensen writesthat the seven-week uptrend in gold appears to be losing momentum as the marketis closing the book on its worst week since early December. April gold futuressettled the day at $1,337.30 an ounce, down more than 1% since last Friday.
And mining expert David Erflecomments, “With some profit taking on tap when gold’s 6-week rally paused for abit last week, the GDX has been sold down to strong support at the $23 level.The major miner ETF move up from its mid-December low was stopped cold justbefore it could reach long-term resistance at the $25 region, when it had astrong volume intra-day reversal from this critical level on January 25th.
Since then, the miner priceaction leading into Federal Reserve Chairwoman Janet Yellen’s farewell FOMCspeech and this morning’s release of the US Non-Farms Payroll (NFP) reportshould not be surprising to veteran miner sector investors.
Virtually every FOMC meetingand NFP report during this US interest rate hike cycle beginning in late 2015,has been sold into by precious metal investors and computer-based trades. Thegold sector continues to be sold into these reports despite the fact that goldhad risen during each Fed Funds Rate-hike cycle since Bretton Woods collapsedin 1971 when President Richard Nixon severed the link between the dollar andgold.”
Between the State of theUnion, Yellen’s exit and Friday jobs it was a week full key news events, takethe weekend and catch up on what you missed and of course... Enjoy the Super Bowl....
We’ll see you next week!
By Daniela CamboneFor Kitco News
Follow @DanielaCambone
dcambone@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.