| Dear John, Not to belabor the point, but I’ve warned you this would happen. I predicted that gold would weaken in anticipation of the Fed’s December rate hike.
That’s happening right now, as the price has dropped through key technical levels and prompted follow-on selling. As I write, the metal is down about $17 today, falling to around $1,245. After a brief rally late last month to $1,295, the decline over the past 10 days has been pretty consistent.
Remember, I’ve been predicting that gold would repeat that pattern of selling off before the December Fed meeting, only to begin a major bull run in the aftermath of the expected year-end rate hike.
That’s just what it’s done the past two years. In fact, the December 2015 Fed meeting marked the end of a nearly five-year-long bear market.
But in both previous cases, the gold price took a steep dive before its rebound, crushing the hopes of gold bugs around the world.
That’s just what’s happening right now. And I couldn’t be happier. It’s Darkest Before The Dawn
...But Then It Gets Really Bright! I remarked recently about how amazing it was that gold was up in 2017 about as much as the S&P 500 index.
Given the euphoric nature of the bull rally and the positive press stocks have received (in contrast to the negative reporting on gold), most investors would have assumed that gold was actually down this year.
In fact, even after the price decline of the last week or so, gold is still up about 8% this year.
But — and this is a big “but” — gold’s gain this year is less a function of how much it has risen, and more a function of how far it fell late in 2016.
Remember, the metal started to drop as the presidential election loomed. Then, after Donald Trump’s victory, it plummeted from about $1,300 to a low of $1,130 in the days following the Fed’s December 2016 meeting and rate hike. The lesson is, don’t be surprised — or overly dismayed — by the yellow metal’s decline as we approach this year’s December Fed meeting. If past form holds true, gold will steady and begin rallying at some point over the next few weeks. Until then, we need to simply absorb the body blows that the market is giving us.
In fact, this is also the time to make money by picking up the bargains being created in the junior mining sector.
The record of the past two years not only shows that gold should rally over the next few months, but also that undervalued junior companies with large gold resources could more than double in value as gold recovers.
Frankly, you can learn all about this remarkable opportunity in our next issue of Gold Newsletter. This will be our annual blockbuster, year-end double issue that will feature full coverage of this year’s New Orleans Conference...plus my specific recommendations for year-end junior mining bargains. If you subscribe to Gold Newsletter right now, you’ll receive this special double issue when it’s released next week. It’s an incredibly valuable opportunity, especially when you consider that I’ll let you subscribe at half-price if you use the link below.
I urge you to do so now — this opportunity will not last. All the best,
Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference
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