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Gold: The Bargain of a Lifetime

The June 28th Gold Catalyst

Written by Ian Cooper
Posted April 27, 2012

You knew this was coming.

You knew it couldn't last forever.

That bull market in gold you've come to know and love?

It's over...

Done. Kaput.

At least, that's what the fools in the mainstream press would have you believe:

  • "Gold's Decade-Long Bull Run Is Dead, Gartman Says" Forbes

  • "The Gold Bull Market is Over" — Seeking Alpha

That big run-up to unthinkable sub-2k highs in a short period of time, followed by panic selling, has led to the fairy-tale conclusion that the bull market for the yellow metal is over.

gold chart 042612

But if you're smart — and I know by virtue of the fact that you're reading Wealth Daily that you are — you'd buy gold here on dips for one simple reason...

Fundamentally, nothing has changed.

The main catalysts for gold going up are still there.

And even higher prices are on the way for patient investors.

Gold is climbing on news that the Fed could use further quantitative easing to stimulate the economy — and on reports that economic conditions could warrant exceptionally low levels for the federal funds rate for the next two years, at least...

That means gold will run higher on a loose monetary policy and excessively low interest rates.

And the Eurozone crisis is far from over, strongly suggesting higher gold prices are on the way.

I see no reason to even think the gold bull market is over — not by a long shot.

Coming June 2012

Mark my words: Shortly after June 28, 2012, gold will begin to climb back to $1,800.

And if I'm wrong about this, I'll eat crow.

Because on June 28th, the National Defense Authorization Act of 2012 (NDAA), signed by President Obama in 2011, will take effect...

It'll try to make it nearly impossible for Iran to sell oil to the world markets.

It will sanction any company or country that attempts to deal with Iran's central bank or buy Iranian oil.

And it will force other countries to choose between buying Iranian oil and being cut off from dealings with the U.S. economy.  

However, as the Huffington Post points out, the act could backfire on us...

For the plan to work, oil demand would have to remain steady and other exporters would have to replace Iran’s roughly 2.5 million barrels a day on the global market. 

For instance, Saudi Arabia has increased the amount of petroleum it pumps, and is promising a further rise in output this summer in an attempt to flood the market and allow countries to replace Iranian purchases with Saudi ones.

But experts doubt the Saudi ability to do this long term and — most important of all — global demand is not steady. It’s crucially on the rise in both China and India.

For Washington’s energy blockade to work, Saudi Arabia and other suppliers would have to reliably replace Iran’s oil production and cover increased demand, as well as expected smaller shortfalls caused by crises in places like Syria and South Sudan and by declining production in older fields elsewhere.

Of course, other nations are concerned about the repercussions of the National Defense Authorization Act.

Because once that oil is taken off the market, oil will surge.

Japan, which has been supportive of moves against Iran, is uneasy...

"The higher oil prices, the more affluent Iran becomes," says Japan's Finance Minister, referring to the likelihood of some countries ignoring the sanctions and continuing to buy from Iran.

And the act's sanctions put China in a bind because they must now choose between avoiding doing business with Iran and being cut off from dealings with the United States — neither of which the Middle Kingdom can afford.

China will follow India's lead, though, bartering goods, services and gold for Iranian oil, sideswiping any foreseen problems with the United States.

This could send the price of gold screaming higher as China's need to replenish its gold outflow increase in the process.

Why Gold Critics are Wrong

There is absolutely no indication on a long-term chart of gold that the bull market is over...

It's simply pausing and consolidating into a coiled spring pattern after last year's sharp rally.

How can the bull market be over when the only solution to our debt problem is buying more debt, which only further devalues fiat currencies and makes problems worse?

Don't listen to the mainstream press. Gold still has room to run...

So buy the dips. Buy all the gold you can.

Stay Ahead of the Herd,

Ian Cooper Signature

Ian Cooper

follow basic@IanLCooper on Twitter

Ian Cooper has been trading stocks and options for 12 years. He contributes options, stock, and energy commentary to Wealth Daily, Wealth Wire, and Options Trading Pit. He's the Coach behind Options Trading Coach, a beginner's guide on how to trade options. Ian teaches thousands of loyal subscribers the many ways to be profitable from options rather than simply buying stocks alone. For more about Ian, take look at his editor's page.



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