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It's Still Not Time to Buy Gold Yet

Thursday, December 1, 2016 5:47

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“I personally sold all my gold and gold stocks yesterday,” I told a crowd of 500 gold bugs at the Sprott Natural Resource Symposium in Vancouver at the end of July.

The crowd was shocked…

But my timing was nearly perfect.

Gold is down 12% since the beginning of August. And gold stocks – as measured by the VanEck Vectors Junior Gold Miners Fund (GDXJ) – are down more than 30%. That’s a serious fall in just four months.

Since then, I’ve checked in with you about once a month to tell you if it’s time to get back in… And now, at last, we’re seeing signs of a change for the first time in four months. Today, I’ll tell you the two things we need to see going forward…

The reason I sold was simple: By some measures, investors were more optimistic on gold than they’d ever been. In short, there was nobody left to buy. And when there’s nobody left to buy, the price can’t go higher.

After I sold, I figured this optimism would start wearing off… particularly as the price of gold and gold stocks started to fall.

It didn’t…

Investors were stubborn. They bought on the dips. They averaged down. They bought more. And more. Month after month, they refused to give up on gold.

The thing is, I can’t buy gold until these folks give up.

So every time I checked in with you here in DailyWealth, I couldn’t say “buy gold” – yet. We weren’t even close.

But now – finally – these investors are starting to give up…

Here’s just one example… Investors are pulling out of one major gold fund. It’s the kind of move we haven’t seen in the past three years. As Bloomberg reported on Tuesday…

Outflows from the SPDR Gold Shares exchange-traded fund (GLD) – far and away the largest exchange-traded commodity fund by assets – have totaled nearly $1.4 billion over the five sessions ending Friday, marking the highest withdrawals over such a period since 2013.

This is just one sign. There are many other signs that investors are giving up.

Here are two of the most important things we’re seeing…

1.	The shares outstanding of the main gold-stock exchange-traded funds are going down, and

2.	The bullish bets on gold futures are also going down.

Does this mean that it’s finally time to buy gold and gold stocks?

No. Not yet.

Hey, don’t shoot the messenger here… I’m just calling it like I see it.

We need to see two things before gold and gold stocks are a strong buy again…

1.	Gold and gold stocks need to move from “loved” to “hated” (or ignored). That process is underway, finally, but we are not there yet.

2.	Gold and gold stocks need to end their downtrends and start new uptrends. Again, we are not there yet.

If you’re a fan of gold, I’m sorry to be the bearer of bad news. But at least we are seeing some signs of a “buy” signal for the first time in four months.

More aggressive traders might dip their toes in as gold is getting more attractive, but I can’t give the signal just yet. I’ll let you know when it’s time to buy…

Good investing,

Steve

Source: http://www.stansberryresearch.com/dailywealth/3412/it-s-still-not-time-to-buy-gold-yet

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