The latest newsletter from NIA: LVN mentioned a couple timesGoldman Sachs' Head of Commodities Research Jeffrey Currie said earlier this week that despite gold breaking out big in recent months, he is
maintaining his bearish outlook on gold with a 2014 target price of $1,050 per oz. This immediately caused gold to sell off $40 per oz earlier this week.
NIA believes that Goldman Sachs has been trying to manipulate gold and gold mining stocks lower, while they are secretly loading up with gold and shares of gold mining stocks. They appear to time their bearish announcements to be released exactly when a major gold breakout is imminent, in an attempt to kill the momentum.
Currie was quoted as saying, “Gold will start moving lower once there is more confidence in the recovery, without significant inflationary concerns.” In NIA's opinion, "confidence" in the "recovery" is already at a peak right now. At this current time, the media is showing practically zero inflationary concerns - when inflation should be the media's #1 concern.
Price inflation is all around us. Whether it be meat and dairy prices skyrocketing to new all time highs,palladium used in automobile manufacturing soaring to new 13-year highs, health insurance prices and college tuition costs continuing to explode to record highs, rents rapidly rising, heating costs soaring, or cable TV prices rising dramatically - price inflation should be America's #1 largest concern, but it continues to getdownplayed by the media due to the government's phony/fake CPI.
The
Dow Jones recently reached a new all time nominal high -
not because of a recovery, but
solely due to inflation. If you ask the average American if they are better off today vs. year 2007 - 90% of them will say
no, they are worse off. If you take a look at
NIA's chart of
Official Real GDP vs. NIA's Adjusted Real GDP, which adds a conservative 2% to the annual price deflator - NIA's
Adjusted Real GDP gives a
more accurate illustration of the so-called "recovery".
Adjusted for the real rate of price inflation, America's GDP is barely above its 2009 low.Money printing never leads to economic prosperity, but instead causes economic distortions, overconsumption, and malinvestment. With the total market cap of U.S. stocks now up to 122% of GDP and approaching its all-time high from 2000 of 142% of GDP, the stock market is clearly in a major bubble. Goldman Sachs would like this current market to surpass 142% of GDP and become the biggest stock bubble in world history, but NIA doesn't believe it's likely. The only stocks that are extremely undervalued today and will rise dramatically in the years ahead are gold/silver miners and some agriculture producers.
How ironic is it that gold mining stocks have become so extremely undervalued with a HUI/Gold ratio of 1/2 its long-term average - due to rapidly rising gold production costs!? On the one hand gold was declining because everybody believed there was no inflation, yet on the other hand, inflation was driving gold production costs through the roof. The mainstream media would call rising gold production costs a good thing - because it was a sign the economy was recovering, not a sign of inflation - what insanity!
The good thing is, NIA's favorite gold/silver stocks including OceanaGold (TSX: OGC), Levon Resources (TSX: LVN), and Minco Silver (TSX: MSV), dramatically reduced costs last year. This will cause gold producers likeOGC to see an explosion in profits this year as gold prices rebound, while ensuring that the large cash positions of silver exploration companies LVN and MSV last for many years without any major near-term dilution.
Early this morning, NIA sent out an extremely important analysis about the Dow/Gold ratio. NIA explained how theDow/Gold ratio reached a medium-term peak on December 31st of 13.80 before dipping to a short-term lowon March 14th of 11.65, and bouncing to a short-term peak on June 9th of 13.52. Afterwards, the Dow/Gold ratio dipped to a low on July 10th of 12.63, before bouncing yesterday to 13.19.
NIA predicted that "the 2013 year-end Dow/Gold ratio of 13.80 is likely to hold as its medium-term peak"and that "the next move for the Dow/Gold ratio in the immediate near-term future is back down to 12.63." Today, after news of Russia possibly shooting down a passenger jet, the Dow Jones declined 161.39 to 16,979.81 while gold rose $17.10 to $1,316.90 per oz. This caused the Dow/Gold ratio to decline from 13.19 to 12.89 in a single day! We could see the Dow/Gold ratio fall through 12.63 any day now, which will confirm that 13.80 was the medium-term peak and setup a move to below 11.65!
Not only is the Dow/Gold ratiodeclining due to gold outperforming the Dow Jones, but the HUI/Gold ratio israpidly rising from gold stocks outperforming gold. Over just the last two days, the HUI/Gold ratio has risen from 0.18 to 0.185 - and is very close to its medium-term peak of 0.187.
After a two month period of silver outperforming gold, with the gold/silver ratiodeclining from a medium-term peak on April 30th of 67.78down to62.93 on June 30th, silver has been trading even with gold in recent weeks - with the gold/silver ratio trading in a very narrow range of 62.23-63. Today, the gold/silver ratio declined slightly to 62.40 and is approaching the low end of its short-term trading range. Look for the gold/silver ratio to test its medium-term bottom of 60.46 over the next 30-60 days.
LVN bounced from its intraday low today and will likely continue bouncing strong tomorrow - new 52-week highs will arrive immediately after their resource update, in NIA's opinion. Agria (GRO) finished today up nicely - its chart looks amazing and we believe it is getting ready to repeat its move from February/March.