Morning Report Monday 9 March 2015
Gold was hammered, down $US32/oz. (-2.7%) on Friday, its largest fall in over a year. The US unemployment data released on Friday was extremely positive, increasing the likelihood of an interest rate rise in the US by the middle of 2015 – see chart 3. Higher rates, with no obvious inflation, is very bearish for gold which pays its holders nothing. I have received a number of questions from subscribers in recent weeks about where we should look to buy into gold stocks, but fundamentally I find it impossible to be optimistic gold at present.No market pundits were talking the “Gold Story” when we bought both RRL and NCM in late 2014, but over recent weeks, it has been receiving more airplay which is a classic contrarian sell signal. Importantly, I need a combination of positive fundamental and technical factors to start aggressively buying a stock/sector. The gold sector is one where everything must align for me to start buying as I certainly can find logic in Warren Buffett’s thoughts on the precious metal:
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