Now that #Gold has broken through its 200 day MA, will it Soar? Or is it Just Another False Start?

Gold: Off to the Races, or Just Another False Start? 

The Visual Capitalist 

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Commodity traders know that gold is highly cyclical, and that it takes significant changes in the fundamentals and sentiment to change the long-term price trend. That said, the latest news on gold is cautiously optimistic for those waiting for a rebound in the precious metal. Over the last few days, gold has broken through its 200-day moving average to reach its highest price in three months at just short of $1,200 per oz.

This type of technical breakthrough is rare: over the last six years, gold has touched its 200-day moving average on the upswing six different times. Each time gold emerged from these technical circumstances, the downward momentum of the gold price would remain unaffected.

The most recent breakthrough was in early 2015, but gold subsequently fell back through its moving average to finish off -14% lower than it started six months earlier. In 2012 and 2014, similar technical breakthroughs also occurred, ending in similar bearish fates.

The subsequent trading was particularly nasty in 2012. After the technical event happened that year, the gold price continued to fall over the course of 16 months by a whopping -28%.

That said, crossing the 200-day moving average is still regarded as an important technical event to traders. If you need proof, look back to gold's largest run in recent memory, which occurred in the aftermath of the Financial Crisis. Gold crossed its 200-day moving average while it was worth a measly $860/oz and soared 124% in value over the next 32 months. It would reach roughly $1,900 per oz, its highest price (in absolute terms) of all time.

So will crossing the 200-day moving average mean anything this time around? It's impossible to say, but there is certainly no shortage of other indicators that may suggest that it is time for investors to pile back into gold stocks.

Read the article online here: http://www.visualcapitalist.com/gold-off-to-the-races-or-just-another-false-start-chart/

Investors pile into Freeport on restructure hopes @MINING

Freeport
McMoRan has been mining copper, silver and gold at Grasberg in remote
Indonesia since the 1970s. In terms of reserves, Grasberg is still the
richest deposit on the planet

Investors pile into Freeport on restructure hopes | MINING.com

Frik Els | October 6, 2015

Copper and
gold giant Freeport-McMoRan (NYSE:FCX) was trading higher as much as
6.7% on Tuesday with already more than 28 million shares in the owner of
the iconic Grasberg exchanging hands by midday.

At the time of the oil and gas acquisitions in December 2012 Freeport was worth more than $30 billion

The Phoenix-based company announced on Tuesday that it's trimming its board and is reviewing its oil and gas business in a return to its roots as a copper-focused miner.



The announcement of "alternative courses" for the oil division which
could include an outright sale comes less than three years after Freeport acquired   Plains Exploration Production for $6.9bn and bought back for $3.4bn in cash McMoRan Exploration, a deep sea drilling company, which it spun off 18 years ago.

The
news comes not longer after it was revealed that activist investor Carl
Icahn has taken up a substantial stake in the business.

Last
month Freeport, which vies with Chile's state-owned Codelco as the world
number copper miner in terms of output, became the first major copper
miner to announce its slashing capex and production to cope with the
depressed copper price.

That led to a huge surge in the stock
which after today's rally is worth $13.2 billion, but year to date
Freeport has been decimated with shares down by half.

At the time of the oil and gas investment in December 2012 Freeport was worth more than $30 billion.

Investors pile into Freeport on restructure hopes | MINING.com

‘Time to warm up to #gold?’ @Mineweb

#UBS thinks gold looks good at these levels.



This from Mineweb:



‘Time to warm up to gold?’



Analysis



UBS takes on this (obviously leading) question.

Kip Keen | 23 September 2015 09:24



HALIFAX – This, UBS analysts ask in a recent note, answering as you’d no doubt guess: “Yes.” In making their argument, they raise some interesting questions. In particular: Are the bears over-playing the yield card?



UBS sets the scene of gold’s decline, noting “The prospect of Fed normalising policy has been the main driver for gold’s correction over the past few years.” But UBS takes the position that the market has gone too far, punishing gold ahead of presumed (and now delayed) rate hikes. In this, UBS sees a new – and lower – world order of interest rates coming to bear less than might be expected, which could be seen as good for gold.



“But the possibility that the market may be overestimating the terminal rate suggests that current weak sentiment and price expectations may also be overdone,” UBS analysts write. To UBS this suggests an opening to buy.



“Positioning has declined considerably over the past couple of years and has now become very light. There may be an opportunity, especially for long-term oriented participants looking to diversify portfolios, to rebuild positions at more attractive levels.”



Meantime, UBS points out, as others, to what has so far been solid demand for gold, especially in Asia, it’s primary consumers. Summarizing what seems fairly clear from World Gold Council data from recent years, UBS notes that the easy cuts to demand have been made, driven by investment buyers (coins, bars).



“In contrast, demand which is more linked to cultural/religious traditions seems to have been more stable and we would expect this to continue,” UBS writes.



Indeed, India has long been a mainstay of the market, and in the past decade China, in particular its general consumer, but also the government, has emerged as buyers of more or less equal importance.



UBS turns to a chart of the seasonal buying in India and China (long noted by analysts and observers of the sector) showing that imports of gold typically peter out mid year, as they have this year, but then usually tend to pick as the end of year approaches.



Will this once again prove true with gold prices lower now than at the beginning of the year, spurring a bit of bargain hunting? Maybe not directly related, but it is intriguing that leading precious metal sellers like the Perth Mint have already noted a substantial pick up in coin and bar buying.



So UBS cozies up to gold, seeing a lot of the pain in both the price and equities behind. “Any further downside is likely to be contained, and we expect the market to ultimately find stability, which should provide the foundations for a moderate recovery over the coming years.”



Among miners it names AngloGold, Acacia and Randgold as buys. It also reckons AngloGold Ashanti, Fresnillo, and Hochschild debt is worth a look.



 Read the article online here: ‘Time to warm up to gold?’ - Mineweb