Replies to post #2985 on Gold Lakes Corp. (fka GLLK)

[RobbinGood]

GOLD! SEEKING ALPHA! Mar. 16, 2017 9:52 AM ET We've Been Patient With Gold: Now It Delivers

http://seekingalpha.com/article/4055752-patient-gold-now-delivers

Mar. 16, 2017 9:52 AM ET| Includes: DGL, DGLD, DGP, DGZ, DZZ, GDXJ, GEUR, GHE, GHS, GLD, GLDI, GLDW, GLL, GTU, GYEN, IAU, JNUG, OUNZ, PHYS, QGLDX, SGOL, UBG, UGL, UGLD

David Luo
Contrarian, gold, macro, commodities

(153 followers)
Summary

Buy the rumor, sell the fact paid off big time for the stock, bond, and gold markets after the Fed hiked interest rates by 25 bps.

Gold's "errant" behavior turns out to make perfect sense when we understand the true fundamentals of the economy and short-term factors.

This one day gain in gold isn't over, we should expect some further moves upward in the weeks ahead.

In the last few weeks, gold (NYSEARCA: GLD) has dragged us through a nail-biting, mental roller-coaster that all ended March 15. After Trump's speech on Feb 28, 2017, gold steadily tanked from its highs of around 1250$/oz to 1200$/oz. The GDXJ fell around 15% starting Feb 27, forecasting the underlying gold weakness. In the days leading up to the Fed rate hike, gold broke under 1200$ at some points, and I definitely broke a sweat as I wondered if the support would hold. After all, on Oct 4, 2016, when the gold price broke through 1300$/oz, it plummeted another 35 bucks to close out the day.

Despite all of the weakness, I wrote a Seeking Alpha article published on March 10th, documenting what I saw was an oversold scenario in gold and the gold stocks. In it, I predicted that gold would fall going into Wednesday, the FOMC meeting ending with the rate hike would be the catalyst that would drove gold prices higher afterwards, and I advocated buying into the Fed meeting because I thought the price would shoot up afterward. It turns out that this was exactly what happened. I cost-averaged (NYSEARCA: JNUG) and GDXJ on the days before Wednesday's meeting, which has resulted in a subsequently nice gain.

In this article, I'll update readers with my thoughts about why gold behaved as it did, and also about where gold is going after this hike.

Gold's Not-So-Errant Behavior

I've read a lot of comments from people here on Seeking Alpha about how they did not understand the rally in gold after the rate hike, and how it seems to defy basic economics. After all, wouldn't a rate hike mean a stronger dollar, stronger yields and lower bond prices, and further weakness in gold?