Gold Bears Get Trumped by Clinton Email FBI InvestigationWednesday November 16, 2016 14:17
Last week, the miners were heading lower into the weekend which gave me the impression of leading gold lower into the US election. However, as I submitted my weekly missive last Friday suggesting a final miner washout being possible into Super Tuesday, November 8th, FBI Director James Comey released a statement saying the FBI is going to continue the previously closed investigation into Hillary Clinton's emails from her time as secretary of state.
This bombshell announcement less than two weeks before the election has now prompted a major newspaper to ask Mrs. Clinton to step down and remove herself from the ticket. The polls have also now turned towards a Trump victory as the so called “monster vote” is waiting to be tabulated next Tuesday. This is in reference to the millions of previously unregistered voters who have never voted but will come out of the woodwork just to vote for the anti-establishment candidate Donald Trump.
As Mr. Trump edges closer to a possible victory, the $1250 “Brexit” gold bottom becomes more solid as bullion investors change the focus from an impending Fed rate hike, towards a possible Trump presidency and the repercussions of his presidency should he take office. Just as Brexit triggered “loss of faith in government” bullion buying, Trump gaining in the polls is beginning to have the same affect on the sector as we get closer to the election.
Hillary Clinton has now become the first ever Presidential candidate to be under active investigation by the FBI. Donald Trump has promised to “drain the swamp” and instill Congressional term limits on Capitol Hill. Also, this election may not even be over on November 8th, as I believe the outcome could possibly be officially contested by either side after losing.
I am still looking for a weekly close above 26 in the GDX before being comfortable calling a bottom on this miner correction as next week is shaping up to be very volatile in the markets. I am writing this before the Non-Farm Payrolls report (NFP) for October being released early this morning. Going into this report, the GDX has back tested the 50 day moving average with the gold price doing the same around $1300. This also coincides with the GDX 26 level as it is heavy resistance and needs to become strong support in order for higher prices to be maintained. If we get a weekly close above 26 GDX and gold $1308 today, then the sector may be beginning to price in a Trump victory.
However, a sell off into the weekend here after the NFP release at 8:30am PST may trigger a move to the final low I had been expecting as the miners could easily be caught up in a short term broad market panic after the election next week. It may be wise to have some cash at the ready to buy possible fishing line sell offs in your favorite miners. Since the futures market has now factored in a 79% chance of a rate hike in December, US election jitters have become front and center in the minds of bullion buyers. These factors make it a tough call either way before the market reaction to the US election results are priced in, so it is best to be prepared with plenty of cash in order to make sound miner investment decisions in the aftermath of the US election.
David Erfle is a 52 year old self-taught mining sector investor. He stumbled upon the mining sector in 2003 as he was looking to invest into a growing sector of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver sector he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September, 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full time job. He personally survived two bear markets, witnessed incredible sector changes and had to alter his investment philosophy numerous times in order to adapt to changing market conditions."