1. As 2015 comes to an end, gold feels solid. There are many factors coming into play in 2016 that should incentivize investors to add to their positions, and do so with comfort.

2. Please click here now. Double-click to enlarge this daily gold chart. A week ago, I suggested gold was forming a key inverse head and shoulders bottom pattern.

3.The pattern has two heads, and a bit more work may be required to complete a right shoulder in the $1062 area. Overall, I like the technical action, and Chinese New Year buying is likely the fundamental catalyst that can launch a nice January rally.

4.Please click here now. Inflation is suddenly on the move in Saudi Arabia, and in a country that already embraces gold, that’s going to add to demand.

5.The Saudi government has announced that the price of gasoline with an octane content of 91 will be hiked by about 66%! The government’s budget deficit is approaching $100 billion, and FOREX reserves are sinking.

6. Ominously, as the financial situation of the Saudi government deteriorates, the risk of civil unrest grows. Will a terrible crisis in Saudi Arabia be the trigger of the next global financial meltdown? I don’t know, but I do know that it’s critical to own gold bullion before geopolitical risk gets out of control.

7. Please click here now. Double-click to enlarge this important US dollar versus Japanese yen weekly chart.

8. If Saudi Arabia does tumble into a crisis, US dollars and US bonds may not be the safe haven they were during the 2008 financial crisis. Incredibly, the dollar began losing upside momentum against the yen a year ago, in spite of unprecedented QE in Japan.

9. There’s a big head and shoulders top pattern in play for the dollar on that chart, and it’s testing a major uptrend line that extends back to 2012.

10. Also, Janet Yellen is trying to raise rates with experimental tools, and if her experiment fails, money could pour out of the dollar, and into gold and the yen!

11. It’s important for gold investors to be proactive rather than reactive. A lot of US stock market investors were badly burned in the 2000 and 2008 meltdowns, and they reacted by buying gold. They bought general equity stocks before those meltdowns, also as a reaction, to low rates.

12. Investors should only react to price changes, and do so with modest buying on declines. Price rallies should be used to “prune” holdings. Pruning a tree (very light selling) or adding fertilizer to it (very light buying) is not the action known as “trading”.

13. Traders use my www.guswinger.com trading service to trade GLD & GDX very successfully, but trading needs to be separated from investing. In the big picture, Western gold market investors should think like gardeners. They can use my unique pyramid generator at www.gracelandupdates.com to systematically prune and fertilize any golden tree!

14. When an investor reacts to fundamental events and perceived scenarios with sudden movements of sizable capital, the odds of achieving long term success in any asset class become negligible.

15. The world has experienced many crises, and it will experience many more, until the end of time. If Saudi Arabia disintegrates into a “Mad Max” state like Iraq or Syria, it will be far too late for investors to “react” to the situation by buying gold.

16. Fear trade enthusiasts should also embrace the idea that the next major crisis in the West may not be as predictable as a lot of analysts want to believe it is.

17. Please click here now. India continues to move closer to a massive 80% chop in the gold import duty.

18. In India, gold is traditionally the scapegoat for high crude oil imports and massive government corruption. In early 2013, the Indian current account deficit had reached almost 5% of GDP. It’s down to under 2% now, and India’s most powerful jewellers are getting very good vibes from the nation’s finance ministry. A duty chop in the next national budget appears to have a green light!

19. Also, the PBOC-controlled Shanghai Gold Exchange (SGE) is set to launch a gold fix around April. That’s around the same time that India’s next budget is released. April is shaping up to be a very interesting time for gold price enthusiasts!

20. The news for silver is, arguably, even better than for gold! On that note, please click here now. Indian imports of silver have been surging, and are approaching 8000 tons on an annualized basis. The import duty applies to silver as well as to gold. A chop in that duty could lead to even bigger demand for silver.

21. In the Western gold community, the World Gold Council (WGC) has a bit of a bad name. A new World Silver Council is being launched, in India, and that should also help to significantly boost silver demand.

22. Please click here now. Double-click to enlarge. That’s the daily silver chart.

23. There’s a nice inverse head and shoulders bottom pattern in play, and a January rally would take the price of this mighty metal closer to the “AISC Threshold” for many miners. A number of Western silver mining companies have AISC (all-in sustaining costs) in the $16 area.

24. Some investors may be wondering whether they should own silver bullion or the silver mining stocks. I suggest owning both assets. If Indians are buying over 7000 tons a year, Western investors should buy some too. With the launch of the WSC (World Silver Council), silver mining companies may have a new friend. 2016 will be a great year for gold, and an even better one for silver!

Stewart Thomson of Graceland Updates, Guest Contributor to MiningFeeds.com

1. The year of 2016, for a veritable myriad of reasons, looks very good for gold and related assets.

2. First, while gold bullion recently traded below its summer low, about 75% of GDX component stocks are trading higher. That’s a classic technical bullish non-confirmation, it is significant.

3.Please click here now. Double-click to enlarge this daily chart of Barrick. The company has reduced debt levels significantly, and is trading sideways during tax season. That carries bullish implications for the entire precious metals sector.

4.Please click here now. Double-click to enlarge this Agnico Eagle daily chart. The “Golden Eagle” appears to be establishing an up channel in the face of lower bullion prices, and the company does not engage in hedging.

5.For gold bullion itself, a substantial array of bullish price drivers appear set to take the “price discovery stage”.

6. Please click here now. Double-click to enlarge this daily gold chart.

7. From a technical perspective, there’s a commodity-style double bottom pattern in play, and that may be part of something much bigger, and much more bullish.

8. On that note, please click here now. That’s another look at the daily chart. Gold appears to be steadily carving out a large inverse head and shoulders bottom formation.

9. Gold is traded as currency on major bank FOREX desks, but because it is a central bank reserve asset, it’s very difficult to assign clear cut bull or bear market labels to its price action.

10. Regardless, volume must rise with a primary trend. If price declines and volume does not rise, the primary bull market remains intact.

11. Please click here now. That’s the quarterly bars gold chart. At some point in the future, the highs in the $1900 area will become a major support zone, as the $1033 area is now.

12. Note the rising volume with rising price, and declining volume, with declining price. The primary trend is unchanged, and it is bullish.

13. An analyst carries a degree of responsibility. When an investor in a major asset class has drawdowns, care must be taken not to break the spirit of that investor. Investor spirit needs to be nurtured and strengthened.

14. In that regard, when gold declined into significant quarterly bars support in 2008 at $728, my job was to nurture the spirit of gold community investors, so they could muster the intestinal fortitude required to hold positions, and buy more. I did that job to the best of my ability.

15. The Western gold community is now entering the year 2016, as gold approaches another mighty support zone, this time at $1033. It’s unknown whether gold enters that support zone, or rallies from just above it.

16. What is known is that this is a major buying area, and a generational low appears to be in the works for both the bullion and the miners. Intestinal fortitude, and nurturing of investor spirit, are all that is required now.

17. Many investors have asked me if US bond and real estate markets could be topping, now that the Fed is raising rates. The answer is that junk bonds have probably topped and are likely headed vastly lower. Real estate (except beachfront property) appears set to ooze lower in price, and it will probably do for several decades.

18. In regards to the US T-bond itself, the tools Janet Yellen is using to raise rates are somewhat supportive of long term bonds. I think the best way to summarize the T-bond market is that the party is ending, but rather than getting “blown away”, long term T-bonds are more likely to fade away, like the rotary phone did.

19. So, I would not short the T-bond. Shorting enthusiasts should focus on junk bonds and leveraged real estate.

20. Geopolitics is a bullish 2016 wild card, and the PBOC gold buy program looks set to continue relentlessly. The SGE gold fix is scheduled for a spring launch, and that coincidentally comes at the same time as cycle master Marty Armstrong predicts a horrific sovereign debt crisis will appear. Marty is widely followed by many money managers, and their liquidity flows can be sizable.

21. It can be persuasively argued that Indian demand is the most important big picture driver of the gold price. When India “sneezed” with a gold duties virus in 2013, the Western gold price immediately looked like it caught financial Ebola. For the past two years, India has suffered from drought, and that’s reduced the rate of demand growth significantly.

22. For the good news, please click here now. The bottom line for 2016 is, “Out with El Nino, and in with La Nina!” Bumper crops across India would create a huge surge in both official and unofficial gold market demand!

23. The 2000 stock market crash involved retail stock market investors. The 2008 crash involved institutional and local government OTC derivative investors. Each crisis is intensifying, and each crisis is affect the price of gold to a greater degree.

24. I’ve argued that the Fed must raise rates, to reign in the US government’s insane obsession with debt. If that creates a government debt crisis, so be it. Gold price parabola fans should know there is nothing more bullish for gold than a global sovereign debt crisis. Santa has been pretty good to the Western gold community during the 2015 tax season, and 2016 looks like it may be a truly golden year!

Stewart Thomson of Graceland Updates, Guest Contributor to MiningFeeds.com

1. When times change, champions change with the times. To survive in the West’s new era of long term slow growth, business owners have essentially had to reinvent themselves. Their mantra is adapt or die.

2. The gold market is also changing, and so the champions known as the Western gold community need to change with it. To understand part of the change, please click here now: http://www.graceland-updates.com/images/stories/15dec/2015dec8malabar1.png Gold price discovery is moving, slowly and consistently, from the West to the East.

3. In another two to three years, Chindian and mid-East demand will probably surpass global mine and scrap supply. It’s already adding stability to the gold price discovery process, and that will accelerate. Having said that, it’s important to remember that gold is money, and like fiat money, there is more to price discovery than just the demand/supply balance of physical gold.

4.It’s true the amount of physical gold held in the COMEX and LBMA vaults that is eligible and registered for delivery is not that large, but most euros and dollars traded on the FOREX markets alongside gold are not delivered to the buyer by the seller either.

5. Price discovery for an asset can be determined with a casino-like process, with legitimacy. The gold trading volume in London and New York, although stagnant, dwarfs that of the rest of the world.

6. Because gold is a currency, price discovery for gold is not so much about “who has the fizz” (physical gold), but about who trades the most volume, betting on the price.

7. I’ve predicted that Shanghai will surpass New York in terms of trading volume, and thus in domination of price discovery. That process is in play now,but it will take another 2 – 5 years for the actual volume to rise above the levels of London and New York.

8. I’ve also predicted that gold trading volume in Dubai will ultimately surpass Shanghai, making the “city of gold” the fitting master of global price discovery. The bottom line is that most of the world’s physical gold trades through the Dubai and Shanghai exchanges, but the bets on the price of that gold are far bigger, for now, in London and New York.

9. The good news for Western gold community investors is that the growth of trading volume in both Dubai and Shanghai is strong and consistent, and that is occurring while London and New York volumes are stagnating.

10. Events and processes in the West will continue to have a big effect on gold price discovery, for many years to come, even after price discovery becomes dominated by Shanghai and Dubai.

11. On that note, the December 15 – 16 FOMC meeting is arguably the most important meeting of the past seven years. That’s because Janet Yellen can’t simply “flip a switch” to raise rates the way her predecessors could.

12. Because of the Fed’s QE program, the refusal of the US government to downsize itself has not resulted in a debt crisis. That may be about to change.

13. Most gold gurus think rate hikes are about supposed economic growth, while I’ve vehemently argued they are about putting pressure on the government to shrink itself, and about reversing money velocity. From a “PR” perspective, it’s very difficult for Janet to state publically that she’s planning to raise rates to essentially attack the US government’s ability to borrow, and to reverse the deflationary effects of Ben Bernanke’s QE program.

14. MSM (mainstream media) and many pundits in the gold community talk endlessly about “rate hikes decisions”, but the new era reality of implementing those hikes is highly complex, and potentially dangerous.

15. Janet is experimenting with using non-bank entities to raise the Fed Funds rate, but her experiments have involved limited amounts of capital. As things stand now, the amount of bonds Janet would have to sell in the open market to hike rates, and keep them hiked, would probably collapse the bond market, creating a massive panic in stocks and real estate as well.

16. To actually raise interest rates on the reserve currency of the world is much harder than it seems, when open market sales are ruled out. In my professional opinion, Janet is going to deliberately force some bank reserves out of the Fed and into the private sector.

17. She’ll attempt to replace those with non-bank assets. Non-banks can’t loan out their investor money, while banks can. So, even a small movement of loanable bank reserves into the private sector could produce a dramatic reversal in US money supply velocity, which is the main driver of inflation.

18. Janet’s plan to raise rates appears to have significant inflationary implications, which is fabulous news for gold investors. It may be why gold stocks are staging what is arguably a historic bullish non-confirmation with bullion right now!

19. Please click here now: http://www.graceland-updates.com/images/stories/15dec/2015dec8gold1.png Double-click to enlarge. That’s the hourly bars gold chart. I predicted a strong decline ahead of the US jobs report, and a big rally when it was released, and that’s exactly what happened. I sent a key intraday alert to my subscribers on Friday, to sell some gold, and short some, near the height of the upside action!

20. Now, the FOMC meeting comes into focus. Gold may pull back to the $1057 area, before moving towards $1097, but there is a nice little inverse H&S bottom pattern in play. That’s good news for rally enthusiasts!

21. Please click here now: http://www.graceland-updates.com/images/stories/15dec/2015dec8gold2.png Double-click to enlarge. That’s a longer term gold chart, using daily bars. Gold may be entering what I refer to as “technical head and shouldering”, where one small inverse H&S bottom pattern morphs into a bigger one. This technical action also fits with what Janet appears to be trying to do with money velocity via her rate hikes experiment.

22. Gold stocks and silver stocks had a fabulous day on Friday, and a horrific follow-up yesterday. Please click here now: http://www.graceland-updates.com/images/stories/15dec/2015dec8gdx1.png Double-click to enlarge. That’s the GDX daily chart. Volume has risen on the rally, and yesterday’s down day volume was a little softer than on Friday’s up day volume. GDX refuses to make new lows while bullion does.

23. Please click here now: http://www.graceland-updates.com/images/stories/15dec/2015dec8aem1.png Double-click to enlarge. That’s the daily chart for Agnico Eagle. It’s arguably a better proxy for the gold stock sector than Barrick. Yesterday, the “Eagle” only gave back a portion of Friday’s superb performance, and it’s soaring far above its recent lows, while bullion struggles.

24. Gold stocks like Agnico Eagle are poised for a great year in 2016, partly because of policy changes from Janet Yellen, and partly because of growing Chindian demand, but the most important catalyst of all for gold stocks may now be institutional players who view any move lower in bullion from here, as a reason to buy gold stocks aggressively!

Stewart Thomson of Graceland Updates, Guest Contributor to MiningFeeds.com

-For over four years, capital has been flowing from Europe into the US Currency and Economy to get better returns.

-The rising dollar and S&P 500 crushed commodities and emerging economies over the past several years.

-Geopolitical uncertainty throughout the world is rising especially in the Middle East where now Russia and the West are taking on ISIS.

-Rapidly rising US dollar caused horrible bear market in mining equities.

-High US dollar is slowing down economic growth domestically which could be exacerbated by higher rates. Meanwhile, Europe and emerging economies may be bottoming and improving with the negative rates.

In May of 2011 I sent out this chart and published an article entitled, “The Euro-Dollar Dance Doesn’t Fool Gold And Silver Bulls”.

I predicted that the Euro (NYSEARCA:FXE) made a bearish technical reversal, while the US dollar (NYSEARCA:UUP) was oversold and could bounce higher to resistance. The chart clearly shows the historical inverse relationship between the Euro and the Greenback which I called the “Euro Dollar Jig”. When one moves up, the other moves down.

At the time the Euro ETF was trading around $140 and the US dollar was hitting new lows, today 4 years later the currencies are in exact opposite positions. The Euro is hitting new lows at $105 while the US dollar is testing highs not seen since the 2008 deleveraging.

I expressed concern back in 2011 that the US dollar could bounce to resistance. I never expected the greenback to get this strong and overbought testing 2008 highs with all of the trillions of dollars printed. I thought gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV) would continue their uptrend with the dollar as a safe haven. Unfortunately, that did not occur.

I predicted back in 2011 that Europe would follow the US by printing and that further bailouts of weak Euro nations would cause a decline in the Euro. As I expected back in 2011 capital flowed to the oversold US dollar.

Commodities (NYSEARCA:DBC) and precious metals did not rally with the dollar as a safe haven and caused a major commodity de-leveraging putting pressure on major mining financial institutions such as US Global Investors, Sprott, Pinetree, Dundee and many others. In 2011, many funds began to raise cash and reduced their exposure to junior mining related equities (NYSEARCA:GDXJ). This has been going on now for more than four years, turning into one of the worst bear mining markets in history.

This bear market is going on for years now as the US dollar bounces higher, while all other currencies including the Euro have been in freefall. This may soon change as the moves in the S&P 500, US Treasuries and Dollar are way overextended into nosebleed territory.

Don’t be fooled, the US dollar is overbought and ready to turn over while the Euro and precious metals could finally see the bounce they have been waiting for over 4 years. The exact opposite conditions of what we saw 4 years ago.

The cheap Euro with negative interest rates is boosting exports from Europe where manufacturing is hitting new highs, while the US which is expected to raise interest rates is showing signs of a potential recession in 2016. US exports are slowing down. Europe’s economy is speeding up and they are lowering rates, while the US is slowing down and they are going to raise the rates. This could cause the US dollar to turn over while the Euro and emerging economy currencies bounce higher as they grow while the US slows down.

Back in 2011, I predicted the US’ attempt to democratize the Middle East would be a failure. Now most of the Middle East is in turmoil and Islamic terrorism in Europe and the US is increasing – just look at the recent attacks in San Bernardino and Paris.

The wars of the past decade in the Middle East have caused sovereign debt in Western nations to skyrocket and absolutely nothing has been accomplished. Debt limits are pushed higher. The credit ratings are poor in my opinion and should already have been downgraded by reputable agencies.

The investors who are short precious metals may soon need to cover as the Dollar reaches risky overbought territory and may soon make a double top. The S&P 500 (NYSEARCA:SPY) has doubled in the past four years and could see a major correction if we move back into recession. The best protection right now is to stick to undervalued assets in energy (NYSEARCA:XLE) and mining (NYSEARCA:GDX) and to avoid the momentum trap in the over-inflated S&P 500, US Dollar and Treasury Bonds (NYSEARCA:TLT).

Remember we are in tax loss selling season which should hit the beaten down sectors the worst such as energy and junior mining stocks. At this time, buyers who have cash can get exceptional deals if they place stink bid as some sellers just write off some of their investments.

Disclosure: I own none of the securities quoted.

Briefly: In our opinion, no speculative positions in gold, silver and mining stocks are justified from the risk/reward point of view. In other words, we think that taking the rest of the profits off the table is justified from the risk to reward point of view. It seems likely that we will re-enter the short positions shortly, though.

The precious metals sector moved higher yesterday, while the USD Index declined. There was no meaningful action in gold – it remains below the previous 2015 lows – but silver invalidated its recent breakdown and the USD Index invalidated its recent breakout. Is gold the key market to focus on, or are other markets just as important and can change the outlook for gold on their own?

The reality is that many more markets impact the gold market than just gold itself, however, gold itself remains the most important one (we did the math behind the above and will present a corresponding report in the following months). Before moving on to the conclusions, let’s take a look at the charts (charts courtesy of http://stockcharts.com).

We can once again say that gold moved a bit higher yesterday, but ultimately closed well below the previous lows. Consequently, there was no invalidation of Friday’s breakdown and the bearish implications thereof remain in place.

Moreover, please note that it was once again the case that gold moved higher on low volume, which has bearish implications.

On Friday and Monday silver closed below the previous 2015 low (in terms of daily closing prices), and the implications were bearish, but not extremely bearish. In yesterday’s alert we wrote the following:

Silver moved lower by just one cent yesterday, but it’s actually much more significant than it seems at the first sight. After all, that was the second daily close below the previous low. Just one more close below $14.08 and the breakdown will be confirmed and the implications will be very bearish.

There was no additional daily close below $14.08. Instead, yesterday silver moved higher and closed the day at $14.16. This move was small, but the implications are important because, after all, it was the previous breakdowns’ invalidation. Invalidations mean that the market is not strong enough (at a given time) to hold the broken level and this indicates that the market is likely to move the other way in the following days.

There’s one more thing that one needs to keep in mind – silver’s technical signs are quite often invalidated if they are not confirmed by the rest of the precious metals sector. Consequently, the above observation (the invalidation of the breakdown below previous low in terms of daily closing prices) is not a game changer on its own – the fact that gold didn’t invalidate its breakdown is more important. Plus, silver didn’t invalidate the breakdown in terms of weekly closing prices, which is still a very important bearish factor for the following weeks.

Overall, the situation in silver became more bullish for the short term, but not significantly so and this change actually changes little for the medium and long term.

Mining stocks moved higher once again and the move higher was accompanied by rather significant (and rising) volume, which is a bullish combination. The general stock market rallied yesterday, which could be the reason for the above outperformance (of mining stocks vs. gold), but nonetheless, the above is at least a somewhat bullish factor for the precious metals sector.

The final chart for today features the USD Index. In Monday’s alert we wrote the following regarding the above:

Unfortunately, the short-term outlook is not as clear. The USD Index broke a little above the previous high (in terms of the daily closing prices), but the breakout is not confirmed. Will the USD confirm the breakout and rally further? Eventually or within the next several weeks – very likely, but it’s unclear whether this happens in the next several days. The USD’s cyclical turning point is here and given the current rally, the implications are bearish.

On the other hand, as we saw on the previous long-term chart, the USD is already after a sizable consolidation and it’s likely to move higher, so it could be the case that we will see a breakout shortly.

If we see a breakout, how high can the USD rally before correcting? It’s likely to rally to about 102 as that’s where we have the 61.8% Fibonacci retracement of the entire 2001 – 2008 slide.

How low can the USD Index go if it doesn’t manage to hold its recent gains? Probably to 98 or so (July and August highs).

The USD Index just moved below the 100 level and closed there, which means that its previous breakout above the previous 2015 high was invalidated. This has bearish implications for the USD Index and bullish implications for the precious metals sector. At the moment of writing these words, the USD Index is back at 100.04, but this move above 100 is both tiny and not confirmed by a daily close, so overall the situation is still more bearish than not.

Summing up, the outlook for the precious metals market is still more bearish than not for the short term, but at this time – based on the several short-term bullish factors – it seems that it’s only a little more bearish. With the odds of a continuation of the decline in the short term at about 55% – 60% or so, it doesn’t seem that keeping even a small short position is justified from the risk to reward point of view. Consequently, we are taking profits off the table with the remaining half of the current position and we are closing it. In short, the position had been opened with gold at about $1,150 and we closed the first half thereof based on the Nov. 27 prices (gold: $1,056.10) and we are closing the remaining half today. We expect to be back on the short side of the market shortly (unless we see strong bullish signals, which might make us go long, like it was the case on Jul. 27). Moreover, we will update our gold & silver performance page shortly.

To be clear – we think that this is an interim bottom and not the final bottom for this medium-term decline in the precious metals sector, and we think that after a corrective upswing another big (probably final) slide lower will take place.

To summarize:

Trading capital (our opinion): No positions

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position