Expect A Turnaround In Gold To $2000, Gold Miners To Benefit

The US fiscal cliff deal has temporarily eased the crisis in USA but would prove inflationary as it continues to raise debt. This will prove beneficial for precious metals and related stocks. The world will soon realize gold (GDXJ), silver(SIL), uranium (URA) and critical metal (REMX) miners may be the safest place to be as the U.S. is rapidly losing its status as an economic juggernaut.

We may be in the beginning of a hyper-inflationary rally where interest rates could begin soaring and the dollar could hit new lows. This could cause another decline in the housing market and put pressure on banks. There is plenty of cash on the sidelines who may be seeking alternatives in the form of the undervalued commodities (DBC) and miners (GDX) especially as the dollar is forming a bearish head and shoulders formation and the Canadian Venture is breaking out above the 50-day moving average.

Gold, silver and the undervalued miners may be on the verge of a major turnaround higher. The Venture looks like it may be on the verge of a breakout as it crosses above the 50-day moving average.

Gold and silver may be on the verge of breaking above the 200-day moving average and starting its next leg higher. Stay tuned.

Despite current weakness in gold around the $1650 area we expect a turnaround in gold with a new leg up to $1800 area and eventual breakout at $2000 in 2013. Despite noises heard in the Fed minutes of a purported exit from quantitative easing, Central Banks around the world have flooded the markets with fiat currency.

Around the world gold has outstripped every competitive currency for the past ten years, yet the mainstream fail to understand the importance of owning gold and the gold miners. Recently we have been in a sideways basing period in gold where the price has bounced between $1800 and $1550. Gold may now be forming the base for a major breakout at $1800

For the past ten years gold has been the place to be yet the masses have still not yet participated. The recent consolidation like 2008 may prove to be a great discount opportunity.

Disclosure: No positions in stocks mentioned.

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