Trading Gold: Breakout or Fake-Out? (w/ Peter Boockvar)

Trading Gold: Breakout or Fake-Out? (w/ Peter Boockvar)


Welcome to real visions trade ideas today. We’re sitting down with Peter book four of bleakly advisory group It’s great to have you here always fun to be here. Thanks Justine So today let’s talk about gold and the spectacular rise We’ve seen it’s it’s broken out of almost this five year channel that it’s been in What do you see going on? How high do you see it potentially going? Well within that channel every time it got to the upper end I always said this is it. This is it This is it. We’re filing in a breakout of the channel But I feel like the fundamental situation and the technical Basis is coming together that this really is Going to break out of the upper end of that channel And this this is the beginning of a more sustained move to what I believe will be the previous highs and of 2011 So could you go through the fundamentals that you’re seeing that is pushing this move higher? So it’s a combination of we’re on the cusp of a Fed easing cycle now how quickly they they do this or How low they go remains to be seen but we have to assume that this is going to right now the bond markets pricing in three cuts this year and Based on what Powell has said and they look to going back to zero at some point Even though I think that’s a terrible idea, but that seems to be their intent then you also have a dollar that’s beginning to weaken off that and you have importantly the economic fundamentals in the US that is Deteriorating and why the Fed is looking to be so aggressive? So you combine those factors and gold finally has a bit and lastly Which is adding to this is that there’s now an amazing relationship Between the price and gold and the dollar amount of negative yielding securities Around the world and you go back over the last two years and you chart the price of gold versus on Bloomberg you can literally get the amount of the dollar value of Negative yielding bonds and they are pretty much Mimicking each other because now when you have twelve and a half trillion dollars of negative yielding securities of the sovereign bond market That’s about a quarter. That’s an extraordinary amount So here you have gold which yields you nothing? But actually yields you something against a negative yielding asset which actually is not really an asset It’s now a liability for those people that own it So go has really benefited from that in addition to getting a lift from those other factors so gold has been in that sort of channel you talked about was over the last two years at least it’s really been like 1213 50 and sort of just the ping-pong back and forth. So once we started to get above 1375 1400 it started to wake people up because it also happened in conjunction with Bitcoin Bitcoin sort of blew out to the upside as well Do you see Bitcoin right now? Rallying for a lot of the same reasons that gold is so it seems that that is now the Kidd the case rather than Bitcoin With its sort of rally up to 20,000 I felt like the thesis then is different than the thesis now I think the thesis now and this move higher and Bitcoin is very similar to how people look at gold and It’s back to an asset with limited supply negative yielding interest rates central banks that are out of their minds that are losing control and not helping the economy and let’s have a An area of safety. Let’s have a forum of value so I think Bitcoin and gold really are now being defined in very similar ways whereas Bitcoin maybe was going to be a transactional Coin and you’re gonna buy some pizza with it. Well, I don’t think that’s the case and the same thing with gold It’s a store of value and I think people are now grouping them together So, well, I have no opinion on where the price of Bitcoin ends up I still pay attention to it in terms of the messaging that it gives to markets Because I think that the messaging That it is giving is very similar to what gold is saying and then they’re now sort of speaking the same language So then in terms of gold are you also looking at technicals as well? So the 1375 level I believe when we talk about this channel and sort of breaking out from this downtrend I think was really that key level and now that we’ve gotten above that now 1,400 is sort of becoming this sticky level I know it’s a round number and you just sort of picking it out of thin air But when you’re talking about an asset like this you sort of trend to round numbers but I believe that you look at a chart going back to 2012 2013 this is really sort of a massive multi-year bottom that we’re we’ve created here sort of this reverse head and shoulders that I believe has real potential of Going back to those 2011 highs and it’s not just the technical It’s a combination of of the fundamentals and technicals that are really coming together and why I think this time is different in Terms of not being a fake-out with previous rises and goldware again and I’m guilty of this as well as others that this is it this is it because I really be this is going to be it and One other thing I want to distinguish this potential easing cycle ahead for the Fed versus the last infinity type easing cycle in 2013 We had QE 3 you know infinity QE is that we entered that year and the gold bulls such as myself after being Goble since 2000 was ok. This is what’s gonna finally get us to this parabolic epoch move above 2000 2500 werever and ended up failing in 1900 and The exact opposite happened gold totally broke down while the Fed was trending at printing a trillion dollars in 2013 And that is because the market said, you know what the economy is good. The Fed is helping Let’s rely on the Fed and everything is the macro situation is spine y own gold. I don’t care what the feds doing Now we’re renting entering a different form of an easing cycle But the fundamentals around the world are deteriorating the dollar is softening You have all these negative yielding securities, which didn’t exist in 2013 really you had only I think it was maybe Sweden or Denmark that started down that road So that’s what separates this time versus that time so could you review the levels that you’re looking at for gold as well as the stop-loss that you would have so we gold topped out 1900 and 2011 bottoms at 10:50 in December 2015, but for the last couple years Gold’s been trading this called 1200 to 1315 range I see ok Maybe you have downside to 1250 If the Fed backs off from there their rate cutting and all the sudden there’s a trade deal and all of a sudden The world is a happy place again So call that your downside but your upside if this is really it and a new bull market really has resumed the new bull market usually takes out the highs of the previous bull market of 1900 and you could get a rise above 2,000 so, you know your 1400 downside 1250 but your upside north of 2000. How long do you see this taking to play out? Well, I would say conservatively the next couple years but the way that things happen in this world so quickly and You could easily see a Fed that gets more aggressive and if they actually follow through with three cuts and the dollar really rolls over then you could see that move by the next six to 12 months instead of having to wait 24 months and It’s going to take silver with it to throw that into the mix Silver has lagged because it’s been more industrial and people worried about growth sort of the situation with copper But gold is going to be more of a pull upward in silver than the economic situation. Whichever it might be When that moves so silver is going to go up much higher – if I’m right on gold and wood You see the biggest risk here being the Fed where there other things in play? No, I I think potentially the Fed if they don’t Go as aggressively as at least the bond market suspects They will now originally there was a thought that oh, maybe Powell is different. Maybe he’s different than yelling Maybe he’s different Bernanke, but he’s really no different. He voted for QE all this qyz He voted for zero interest rates for seven years and in a speech in Chicago not too long ago He said when we go down to the go back to the lower bound and we will Which means that he is intent on going back to zero if need be Whereas if he was truly different he would say, you know It will stop at one because going below one and the Fed Funds rate is going to produce us nothing It’s not going to help us. It’s going to trap us like the ECB in the BOJ It’s gonna damage our banks just like those central banks have damaged the equity of and profitability of their banks We’re not going to go there but he’s really no different and they seem intent on going back there So if you all of a sudden gets religion, yeah, maybe maybe The the rally and gold won’t be to the same extent But if he’s just the same like all the others which he seems to be Then I don’t think it’s gonna be a head once Alright, can you recap your trade thesis in 30 seconds? So I don’t believe this move higher and gold is the same fake out that has teased us gold bulls For all these years going back to 2012 and particularly 2013 when the Fed went to QE infinity I think you have softness in the US economy the Fed that is responding with rate cuts eventually The dollar that is now softening and you have a growing pile of negative yielding securities that has now proven to be a strong correlation to the price of gold because gold is a positive yielding security against those that Are yielding less than nothing? So buy gold here at around 1400 I see upside Breaking. It’s 2011 peak with downside of only about $150 per house. Great Peter. Thank you so much. Thank you. So Peters bullish on gold Specifically he thinks it will break 2000 dollars over the next few years and sees downside risk as low as 1250 Just remember this is a trade idea and not investment advice. You should do your own research consider your risk tolerance and Investigating lean for real vision. I’m Justine Underhill You

42 Comments

  1. Gold in $/ounce has appreciated 41 times the early 1971 price of $35. This makes me nervous, because the overall purchasing power of a US dollar has declined by only one-sixth since that time, for most commodities & services purchased in the USA, outside of ultra-inflated areas like coastal California. In other words, I wonder if gold has already seen most of its appreciation versus the dollar.

  2. This guy says bitcoin gives an indication for gold… its total value is less than whats traded in xauusd a day ……

  3. Ok so gold went down do to the rise in employment in the states, now gold is going up because China just said to Trump NO TRADE DEAL

  4. Our government will never allow gold to break out in a meaningful way. Buy it anyway for when the government fails.

  5. He’s completely forgetting about the futures market paper gold and silver manipulation. If that doesn’t break down it’s not going to go anywhere .

  6. Gold is a hedge against massive inflation coming soon. The real opportunity must be in silver, bullion as it cost less to buy the bullion than it does to mine it, that is crazy!

  7. Bitcoin's price benefits from Idiocracy.
    Assessing voluntary value to an invisible nonentity is most illogical. But after decades of using Government Fiat currency humans have been conditioned to accept, grade and add value to invisible nonentities. When logic is scarce and conditioning complete, the value of nothing can accelerate to very high levels and last for an eternity.

  8. mock my words… before gold spikes up.. it will take a substantial dip. This will happen during the recesion. So if you miss out… dont trip… dont buy. If you do your homework, youll realize what im talking about

  9. Gold will not break out until Bitcoin breaks down. Because as long as people are trapped in the digital ponzi they wont go to real value.

  10. I am not too sure if gold acts as a trading vehicle as it has before, there are too many other opportunities to make money in where you do not have to wait so long as well as have too many factors aline in order for the trade to work out. Having said,,, that what do I know?!?!

  11. If there is no demand for gold in WEST. Then send the gold to India , it will gulp all of it. Gold is priced 12:5 % higher in India, even then India imported 900 tons of gold last year.

  12. So if the printing of trillions of dollars in 2013 coincided with the drop in gold won't future MASSIVE printings coincide with a drop?

  13. The thing about these hot chic interviewers is that they seem so switched on and interested any arcane topic. In the real world women like this have nothing going on inside their empty heads. They dont need to. They are there to be entertained. To be pleased.

  14. You had a very very brief 1900 in 2012 as things fell apart. A month or two, then gold demonstrated its ability to drop 1000 points, then stay between 1250 and 1350 for 7 years of see saw. Good luck to you making money on all these reputed leaps of gold, just make sure you are liquid enough to sell at what you see as a peak, because peaks in gold are very brief, as you would hope in a zero dividend item, because as a long term investment gold is horrible. But the big boys will get to sell at peaks, not you. Gold in your hands is not a liquid investment, gold not in your hands is liquid but fake. The average person should feel good about forgetting golds coming quantum leaps. My advice posted for the last 5 years of buy 1200 to 1250, sell 1300 to 1350 because it is a rigged see saw market, was good advice.

    I could be wrong now, but a number in the Wall Street journal will not make me wrong. You selling your 1400 gold at 1900 and pocketing 500 an ounce – that would make me wrong. When the number gets high, the impact of stackers or governments selling is hard to predict. Fair chance your sale will not be on an exchange, but at a coin or pawn shop – so the numbers have to filter through some tiers before impacting the widely accepted fake paper price. While gold is real in an unreal world, it is not traded in the real world by little players, the big players dominate that world. I advise holding gold in a manner that assures you access to a liquid market within 7 days, not two months.

    If gold really was a liquid asset, most banks would loan money to you at their lowest rates if you let them hold 150 percent in gold from the day of the loan. Most banks will not loan a dime on any amount of gold period. When I can borrow 70 cents for a year on gold posted at $1 today, for an annual interest rate of 4 percent or less, I am all in and will rave about gold. Who wants my gold – but you have to be a bank or reputable institution, not a scammer buying gold at 30 percent discount.

  15. Gold declined in 2013 because of Comex paper shorting, period. Nothing to do with debt based positive macro outlook.

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