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Peter Schiff - Gold Just Broke Out &
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Thursday, July 26, 2012 7:58:28 PM
Peter Schiff - Gold Just Broke Out & Is Now Off To The Races
July 26, 2012
Today Peter Schiff told King World News that “Gold has now broken out of a channel. There was a very nice trendline and we just broke out of that today.” He also said, “Now that we have broken out of that channel, there is a lot of room to the upside.”
Schiff discussed the Fed, mining shares, and key levels in the gold market, but first, here is what he had to say about today’s comments out of Europe by Draghi: “Draghi is just saying he’s going to print as many euros as he has to. That’s what people are interpreting here is him saying, ‘We are not going to let countries default. We’re going to keep countries on board, which means we are going to acquiesce to the pressure to print money.’”
This is music to the ears of the people who control the markets, the people that control the lion’s share of all of the money and that make all of the decisions. That’s what drives the market in the short-run. You’ve got a lot of leveraged players that key off of everything central planners say.
But the Dow is already off its highs. The euro, the main currency in focus, is back over 1.22....
The Australian dollar and New Zealand are also gaining strength today because they are outside of these crisis areas.”
Schiff also added: “The Fed has already begun QE3 in a stealth way, but they are going to have to publicly come to the rescue of the economy with QE3. The Fed has come out and said, ‘We’re only going to do more QE if the economy needs it.’ That’s like a heroin addict saying, ‘I’m only going to take more heroin if I need it.’
We know the economy is going to need more QE because that’s its life blood. This phony economy lives and breathes cheap money, and that’s what it needs to sustain it. And if the Fed wants to sustain this consumer-led borrow and spending binge, it can only do it if it continues to dole out the cheap money.
So if you understand the dynamics, then you know that more QE is inevitable.”
Schiff said gold is breaking out even though mining shares have been struggling: “
Gold stocks are struggling on the back of weak earnings from Barrick. These stocks are trading at low PE’s, and there’s a lot of pessimism in the gold sector and that’s also weighing on the market.
AEM (Agnico Eagle) had its earnings warning a few months ago, and that stock was really beaten up. Now it’s rallying back from very depressed levels. AEM was almost as high as $90 back in 2010, and even as late as September of 2011 the stock was trading in the low 70s.
Goldcorp had also gapped down a while ago on an earnings disappointment. Even more recently the stock gapped down from $38 to $32 in two days. It now seems to be recovering from those recent lows.
I’m surprised that gold is not rallying even more considering what’s happening. Gold has now broken out of a channel. There was a very nice trendline and we just broke out of that today. Now that we have broken out of that channel, there is a lot of room to the upside. The next channel for resistance appears to be another $100 higher than current levels for gold.
If gold breaks above the $1,650 level with conviction, then I think we are looking at retest of the all-time highs from late summer of 2011. And nobody is really anticipating that because these gold stocks are priced for a collapse in the price of gold, not a return to the highs.
I think, ultimately, we take out the highs and we go a lot higher. At some point, if I’m right, these gold stocks are going to take off because they have a lot of catching up to do.”
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