Wednesday, August 2, 2017

Despite Negative Sentiment Some See Signs of Coming Rally in Gold

Gold has been somewhat lackluster in recent years along with silver. After the huge rally leading to an all time high in gold around $1900 an ounce and a big move up in silver to nearly $50 an ounce, it's mostly been all downhill for both metals. Of course there have been a few minor rallies along the way, but anyone who bought gold and silver near those highs and held them is down quite a bit.

All this has led to a very high level of negative sentiment in the market for gold and silver. US Mint coins sales are down this year after being pretty strong for several years. Gold and silver mining company stocks did have a nice run in the first half of 2016, but then proceeded to give up much of those gains and have been less than exciting in 2017 so far. Are there any indications that things might change in 2017?

Lately, I am seeing a number of different indicators that seem to suggest the gold market could move higher even as most do not expect that right now. Below is a bullet point list of various different factors that might come together to give gold and silver a boost.

- Jim Rickards forecast to me in an email in March 2017 included a comment that he felt gold would rally in the last half of 2017. You can see his email to me on that in this article.

- Andrew Maguire's comments about the launch of a new gold backed cryptocurrency (BullionCoin) that we have covered here. He says the launch of this new currency will generate tons of additional new demand for physical gold and silver that will "reset" gold and silver prices higher due to demand vs. available supply in the actual physical markets for both metals. See more details on this in the timeline below.

-IMF says the US dollar is overvalued by 10 to 20 per cent. If that is true and the US dollar drops that much, gold should get lift from that.

-Reuters reports that India will lower taxes on gold which may boost demand there

-some technical analysts believe they see indications that a major rally is coming for gold and silver. Here is one and here is another. Stewart Thompson sees a possible eventual gold break above $1335 leading to a move towards $1400 in this commentary.

-there are no signs of letup in gold buying by China (and Russia) even as both gold and silver appear to be seeing peaks in production volumes by miners

So there you have it. All combined these factors seem to indicate conditions favorable to gold and silver demand at a time when the supply may be peaking out. Mines cannot quickly respond to falling production because of the lead time required to get mines up and running. Contrarians also believe that when sentiment is low, that may be another sign that a market is making a bottom and ready to move higher. 

We'll keep an eye on the gold and silver markets the rest of this year and see what happens. Gold is one of the key signals we always watch anyway in terms of things that can indicate there is systemic stress.
Added notes: Following the Andrew Maguire Trail in 2017

As we await news on the official launch date for BullionCoin, I thought it might be interesting to provide a list of links that track what Andrew Maguire has said during 2017 about a "major event" that would lead to a "reset" in the gold price based on a surge in unexpected physical demand for gold (and silver too).

Here is that list:

TFMetals Report - the first mention of a "reset" in the gold price (excerpt below)

"Based upon the footprints into February, I stated that there was a potential for price reset in as little as 90 Days. Although this window may possibly be extended to the end of the 2nd Q, the action since my assessment on Feb 6th has reaffirmed my view. " -- 2-20-17

No mention of BullionCoin yet- just a 3-6 month time window to watch for a gold price reset.

King World News - refers to his mention of a gold price reset again  3-31-17

King World News - he again talks about a price reset he says is "inevitable"  4-22-17

Kind World News - he says to watch for a big event in the gold market "in 26 days" 6-9-17

In this interview he repeats that he still looks for a gold price reset within the 3-6 month time frame ending in August 2017 that he has mentioned now several times. In this interview he also talks about a "large sovereign gold buy order" 

King World News - alerts readers that some entity deleted a portion of their Maguire interview 6-10-17

King World News publishes the text of the portion of the interview they say was deleted by some outside entity who hacked into their system. This is what they say was deleted:

Eric King:  “This summer surprise that you say is in front of us in the gold market, Andrew, I know you can’t say specifically what that is, but can you give a hint at what is in front of us that’s going to be the shocker in 26 days?”

Andrew Maguire:  “What we are going to see is a massive amount (absolutely enormous tonnage) of physical gold buying coming in and it’s completely unexpected and unanticipated.” 

July 5th (26 days from the day Andrew said to watch for a big event in the gold market "in 26 days") comes and goes with no big event happening. His statement was published on King World News on 6-9-17. July 5th was 26 days later.

Andrew Maguire issues this twitter comment on July 5th apparently to explain that he realizes nothing happened on July 5th and that it is because of a delay.

"Short delay 1st ever institutional grade Crypto currency.$Billions of physical orders ready to rumble ."

This is the first reference I can find from Andrew about BullionCoin which we have covered here as noted above.  He also issues 2 other additional twitter comments here and here again mentioning tons of buy orders for physical gold and BullionCoin. 

Kind World News - Alerts readers about the "event" in the gold market Andrew has been talking about - 7-7-17

In this brief update Andrew Maguire says that 250 tons of "sovereign size" gold buy orders will soon hit the market. He expected that on July 5th, but explains it is just delayed and that he is "100% certain that this (massive sovereign physical gold purchase) is coming."

After this point I made the decision (on 7-19-17) that this could be a significant story impacting the gold and silver markets that I wanted to cover on the blog at least through the initial launch of BullionCoin. I initiated contact with a rep for Andrew Maguire by email and provided a set of questions in hopes of getting some more detailed information about these generic comments about BullionCoin and the 250 tons of physical gold buy orders. 

I also discovered that GoldVu (an ABX and BCX member) already had quite a bit of detailed information on BullionCoin on its web site. I contacted David Gibson of GoldVu and confirmed BullionCoin is the cryptocurrency that Andrew has been talking about in his twitter comments posted above. He also informed me that until the launch date, GoldVu is the "leading source of specific information relating to BullionCoin prior to its launch" available on the internet. I exchanged some emails with David with some questions that he kindly answered. I would add that Andrew Maguire is on the BullionCoin Steering Committee and that he will provide the next authorized information about BullionCoin on his twitter feed.

I learned that the answers to some of the questions I sent Andrew Maguire probably won't be available until the official launch announcement.The rep for Andrew Maguire told me it was too early to release the white paper for BullionCoin. The rep informed me that Andrew hoped to answer my questions at some point and that the white paper would also answer some of the questions I sent in. I then published the information I had in this article on 7-19-17. Since then I have provided regular updates as a few new bits of information trickle in from various sources.

Andrew Maguire issues two new comments on Twitter here and here on 7-30-17 stating that the launch date for BullionCoin will be announced in the middle of the first week of August 2017. He also says that there is some kind of tie between the launch of BullionCoin and the 250 ton gold buy order he had mentioned in his King World News update on 7-7-17. I could not tell for sure from his tweets if the 250 ton order is one large order from a sovereign or orders he expects from investors in BullionCoin related to the launch. 

On the morning of 8-2-17: Andrew Maguire puts this comment on his Twitter feed. It says he will give us an update on the BullionCoin launch later today.

Latest Update on 8-2-17: Andrew adds this Twitter comment that the BullionCoin web site will launch next week (Aug 7-11) and that the white paper will be available. Looks like the next news on this will come next week.

8-9-17: BullionCoin help web site appears online here.

8-11-17: Two new Twitter comments from Andrew Maguire here and here. They say BullionCoin will launch on 8-15-17 along with the white paper. Timed to coincide with the 46th anniversary of Nixon taking the US off the gold standard.

8-14-17: BullionCoin sends out a pre launch email to everyone who expressed interest in it. The contents of that email were posted here in this article.

8-15--17: BullionCoin launches its web site and white paper as expected. There wa no mention of what level of institutional support exists or impact on orders to buy gold and silver on the web site.

8-15-17: Ink barely dry on the BullionCoin launch news when this blockbuster news is released by the ABX (Allocated Bullion Exchange). This article contains the statement from ABX, the reply from Digital Gold, Ltd. (BullionCoin), and also a statement by David Gibson of GoldVu (ABX member and the main source of information available on BullionCoin prior to its launch).

Updated comments 8-15-17: Clearly the statement from the ABX and the reply from BullionCoin to that statement casts considerable doubt on the credibility of all the comments made this year regarding a gold price reset related to huge demand for physical gold and silver related to BullionCoin. Unless some other news of significance surfaces on this that impacts the gold price or market, this 8-15-17 update will end our coverage of BullionCoin. It does not appear that BullionCoin will have any major impact on the gold market or gold price based on the news we have out today. It appears the trail ends here.

This is the timeline of the public trail we can document from Andrew Maguire as of this writing. All this has surely created a lot of interest and a bit of high drama. On the one hand there is huge interest in this story. My blog article on this got many times the reader views of a normal blog article and also got picked up across the internet on other sites generating many thousands of additional reader views. Clearly the interest in this story is there. 

On the other hand, some people are now very skeptical because of the failed prediction (in terms of the original timing) by Andrew Maguire that major news impacting the gold market would be announced on or around July 5th. I think these people will remain skeptical until tangible official news is announced by the ABX or BCX which is understandable (note the mixed reviews in the comments section of this twitter comment).

From my perspective I have no doubt that BullionCoin will launch whatever the date may be (latest info says the week of Aug 7-11). My contacts with people involved in the ABX and BCX along with all the pre launch promotion that is being done (like a pre launch webinar I listened in on) leave little doubt in my mind we will see BullionCoin launch. Here is a video promo on YouTube that was used to attract interest in that webinar that was hosted by a physical gold retailer in the UK. This retailer plans to offer BullionCoins along side physical gold and silver that they sell now in their existing marketing system. I am told a number of other similar webinars have been held during the pre launch for BullionCoin.

The biggest question for me is the level of institutional support BullionCoin will have at the launch with entities like banks, funds and merchants. There are suggestions it may be very strong (see excerpt just below from GoldVu), but we won't know until any news is announced (note 8-3-17: I am advised that some information on the GoldVu web site may be out of date so it is possible this information could be):

"BullionCoin will be the world's first digital currency fully adopted and used by banks & financial institutions. This institutional access is going to turbo charge the global mainstream uptake of BullionCoin."

The only other major question I have is if the 250 ton buy order is one sovereign order in addition to whatever other gold buy orders may exist directly tied to the launch for BullionCoin. These questions are more related to the size of the impact all this will have in the gold and silver markets than if BullionCoin will launch. If all the above information pans out, we should know a lot more by the end of August (which was the tail end of Andrew Maguire's original 3-6 month timeline). I plan to just continue to follow the story at least until launch date and report what actually happens. At that time, I will evaluate whether the news announced is significant enough to continue to follow this story. 

Added note: I have added a new page to the blog that provides real time market quotes for a variety of major markets and commodities along with a table of foreign exchange cross rates. You can find it in the page list in the upper right hand corner or just click here.

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