Nobody Knows Anything

Even though we’ve been correct in predicting gold’s recent price weakness, let’s not get ahead of ourselves.
Anything can happen with gold right now.

Dear John,

I have to admit that I was crowing a bit last Friday.

I had predicted that upcoming good news on the economic front would lead to some price weakness in gold in the near future.

So when the stunning May jobs report came in showing a 2.5-million-job gain instead of the expected 7.5-million-job loss, the price of gold dropped about $40 and I looked like a genius.

I guess I bragged about that a little on Twitter.
Well, I’m writing today to make amends...and to urge you not to take anything I or any other “expert” predicts for gold as gospel.
We just don’t know.
Frankly, it’s the market’s job to make prognosticators look silly. And gold seems to take particular pleasure in dumping weak longs from the train just before it leaves the station.
Case in point: While gold lost $40 on Friday, it bounced back about $20 yesterday, and was up another $14 today before giving up most of its gains.
My point is, no one really knows where gold is going over the short term.
While my argument for weaker prices is sound and based on fundamentals like upcoming news flow (plus my 35 years of experience watching the price on a daily basis), the technical picture paints a different argument.
Consider that gold’s sell-off on Friday, while deep, was limited. And the metal’s rebound has maintained a bullish “flag” pattern in the price charts, indicating a potential upside breakout at any time.
Believe me, I hope that happens soon, even if it will defeat my prediction for a few weeks of price weakness.

Keep Your Eyes On The Prize

Once again, the one thing we can be very sure of is that the long-term trend for gold is upward.
There’s simply no way that our current debt load will allow for positive real interest rates. In fact, this debt load absolutely demands significant depreciation of the dollar and other fiat currencies. So what will be left for them to depreciate against?
Why gold, of course. As well as silver and other tangible assets.
We need to remember this amidst the daily, sometimes stomach-churning fluctuations in the gold price. And we need to make sure we’re invested in the right mining stocks to leverage this move.
This is where we really shine — not in predicting the unknowable short-term moves in gold, but in pinpointing the junior mining companies that will be the market’s next glamour stories.
We’ve succeeded at this for decades, before many of the current crop of analysts were even born. And we’re succeeding again, as our track indicates. (Our recent recommendations have been soaring in value after our picks.)
You can subscribe to Gold Newsletter here. But whatever you do, get involved in the best junior mining stocks now. These gains are too good to let them pass.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference