Gold

Gold is in a tough situation right now. It is an enigma and it is suffering from an identity crisis. It does not know whether it wants to be a commodity or a currency...sometimes its price reflects its position as a commodity and other times as a currency. These days gold is struggling with both these roles...and when it decides what it wants to be there will be a price adjustment. I believe that adjustment is coming soon and that it will take the price lower. Here's why.

When it comes to market sentiment, gold is at the bottom of the barrel as almost everyone is predicting a complete collapse in the gold price and is falling all over each other to predict the new and lowest price for gold. Why is that so? What does it all mean? Read on!

The gold-silver ratio is the relative valuation of the two precious metals, and in consideration of the described trading pattern it can provide an indication of the maturity of a bull or bear cycle. Market tops for gold and silver are typically accompanied by low gold-silver ratios (silver outpacing to the upside), and market bottoms are typically accompanied by tops in the gold-silver ratio (silver outpacing to the downside). So what is the gold-silver ratio saying these days?

If gold were to start moving appreciably higher it would damn all paper currencies...and given the current fragile state of the global economic landscape...governments around the world simply cannot, and will not, allow that to happen. They sit on big stocks of gold and, if necessary, they will use those reserves as a tool to crush rallies. I believe, therefore, that gold will soon revert to bear mode trading. My price target remains at the $880 level.

Stan Druckenmiller has made a career out of making big calls and he has just made a huge bet on gold that indicates that he thinks the bottom is finally in. Why should you care? Because he is one of the world’s most successful and respected traders. Perhaps you should do the same. Here's why.

Our analysis reveals a bearish outlook for gold over the next 3 months based on the following fundamental and technical factors:

Despite its history of gains, and 5,000 years of tradition behind it, gold is rapidly becoming one of the most widely despised assets. Before we pronounce it dead and write the final gold eulogy, however, let’s consider the following:

This chart from Morgan Stanley using World Gold Council data shows which countries, central banks and funds are hoarding the greatest amount of gold:

What Mr. Armstrong writes in his articles is done so poorly it is almost always confusing and often virtually incomprehensible but it has a way of providing cover for what he says. A case in point is the inference in an article last week that gold had bottomed, would begin to rise substantially sometime after Oct. 1st and eventually reach $5,000+ sometime during 2016. His latest article disclaims those inferences. Here's what he now says by way of clarification:

Much has been written over the past few months as to just where gold (and silver) is headed. In light of the recent significant drop in price below is substantiation for such a decline and several projections as to where the price correction will bottom out and the timeframe for such price action.