Jason Farrell

Billionaire John Paulson, who lost over $700 million after April’s gold crash, has cut his holdings by half. As one of the last major institutional holders of gold ETFs, Paulson & Co.’s exit may signal the bottom in the gold market we’ve been waiting for.

Two major institutional players also give us reason to be enthusiastic. JP Morgan is advising its customers to go long on gold “with a four-five week time horizon,” citing further supply squeezing in South Africa and seasonal pickup in India:

“Gold supplies could be constrained in September if labor strikes are initiated in South Africa. There’s typically some positive seasonality to the gold price in August/September helped by India, which is still the largest single (28%) gold market.

“Often this strength correlates with the Denver gold conference. The conference attracts many of the larger gold investors, and given the other positives for the metal… we would not be surprised to see a stronger gold price in the run-up to the show.

“We’d encourage shorter-term investors to consider getting long the gold space with a four-five week time horizon.”

And Goldman Sachs recently increased its position in SPDR Gold Trust to 4.4 million shares… more than six times what it held at the end of March.

The market is already taking notice. Spot gold blasted past its $1,350 resistance earlier today and is headed for higher ground.

“It’s been a crazy ride,” says Greg Guenthner in today’s Daily Reckoning, “but the breakout is finally here. I expect gold to continue its volatile rise in the near term.” Greg recommends snatching up mining stocks. Matt Insley over at Daily Resource Hunter recommended mining company Franco-Nevada (FNV) on Aug. 14.

Jason Farrell

For The Daily Reckoning

P.S. Every morning, Greg Guenthner’s Rude Awakening examines the day’s market moves and shows you where to find opportunities in today’s volatile markets. Click here to get Greg’s tips delivered right to your inbox!

You May Also Like:


Bullish at the Bottom: The Supercycle Continues

Frank Holmes

While the overall trend is up, there are often short-term bursts of volatility. And looking over the next decade or so, the trends driving the current commodity supercycle remain in place.

Jason Farrell

Jason M. Farrell is a writer based in Washington D.C. and Baltimore, MD. Before joining Agora Financial in 2012 he was a research fellow at the Center for Competitive Politics, where his work was cited by the New York Post, Albany Times Union and the New York State Senate. He has been published at United Liberty, The Federalist, The Daily Caller and LewRockwell.com among many other blogs and news sites.

Recent Articles

Greeks Turn to Gold on Bank Bail-in and Drachma Risks

Mark Obyrne

The Greek stock market is down 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case. Mark O’Byrne has the full story…


The Market’s An Emotional Wreck –Now What?

Greg Guenthner

Remember, the great commodity boom took more than a decade to play out. Prices skyrocketed across the board. But what goes up must eventually come down. Gold and silver lost their wings in 2013. Copper went into a death spiral late last year. And I don't have to tell you what's happened with oil over the past six months...


The Wreck of the Monetary Hesperus

David Stockman

For 73 months running, the Fed has lashed the money markets to the gross financial anomaly of zero interest rates. Never before in the history of the world has any central bank dared to hand out so much free money for so long. David Stockman has the scathing report… and how it will splatter into a world of hurt…


“Two Percent Inflation” and the Fed’s Current Mandate

Ron Paul

Dr. Ron Paul, via his Ron Paul Institute for Peace and Prosperity, has written a full-blown indictment of the Fed and their 2% inflation target. It’s below, complete with 14 lessons we’d be wise to heed. It’s lengthier than our normal feature, but well worth your time...