STREET DOGS

On the heels of the Federal Reserve’s most recent quarter-point interest rate hike, gold and the precious metals complex have suffered a bearish reversal that deserves caution over the short and intermediate term. Fundamentally, the interest rate hike and accompanying policy statement, which indicated that the Fed would begin to taper down its balance sheet over the coming year, were interpreted by the market as supportive for the US dollar and negative for gold.

[But] we know that the Fed has printed nearly $4-trillion of fresh liquidity in support of the financial system over the past decade and the feasibility of it reducing this liquidity by any significant amount is doubtful.

Yet what is important over the short run is not so much fundamental beliefs, but rather how the market itself is reacting.

Those who ignored the actual response of the gold market in 2011 suffered severe losses as the precious metals declined through late 2015.

All the while, the Fed continued to print money. The market can move contrary to perceived fundamentals for many years. Caution is again advised at this juncture — Christopher Aaron.

Intermarket dynamics make for a bearish forecast. We expect gold miners to test the 2014 lows, and, if those give away, the 2015 lows. However, we also believe that will be the ultimate retest, and after that the gold bear will finally give up after six to seven years, making place for a renewed secular gold bull market.

So the answer to the question whether gold miners should be bought or not is simple, as gold miners are leading precious metals lower and seem far away from major support. [But] while this may not be the time to buy miners, it is the time to draw up a short list of outperformers which should be bought later in 2017. — InvestingHaven