Top Market Blogs
Suddenly Apple Is Relevant Again?
By Jeff Pierce
Months ago I proposed the idea that Apple was going to be in for a correction and that it was possible for the Nasdaq to go up even with Apple going down. At the time it was nearly inconceivable to think that it could happen and yet it did just that.
And then last month when the Nasdaq looked as if it was going to have a more serious correction, Apple suddenly came to the rescue and suddenly matters to this index. I have no theories as to why this is happening, it’s just something I noticed today.
So the next question is just how far can Apple realistically go? I’d say there is a better then average chance we’re just about there with an outside chance this goes to $500 before hitting the brick wall of resistance. If you’re long and want to press your luck selling into that $500 level would be smart, but know that this could resume it’s downturn any day now.
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The Real Reason Gold Felland Why It Has Already Stabilized: Lawrence Roulston
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The Widening Chasm
That some sectors of the economy will be doing better than others is natural. If you're a landlord or mobile-apps coding genius in San Francisco, the economy is excellent. Those working in the vast North American oil-patch are experiencing a boom economy. Realtors in resurgent markets such as Miami are having their best year since the top of the bubble in 2007.
This can be viewed through any number of lens, one of which is the inherent inequality of capitalism: capital and labor flow to what is most profitable at this point in time, and capital and labor left stranded in low-yield, declining sectors suffer poor returns and lower wages.
This inequality can be seen as the systemic cost of a dynamic economy in which capital and labor are free to move to better opportunities.
It can even be argued that the more dynamic and fast-changing the system, the greater the inequality, as those who move fast enough to take advantage of new opportunities reap most of the gain (The Pareto Distribution of 80/20 is often visible in these sorts of distributions).
Economic systems that can be gamed by bribery or purchased political influence are also inherently unequal, as those with power are more equal than those without power. This is the classic feudal society or crony-capitalist kleptocracy.
Those benefitting within the crony-capitalist kleptocracy will of course claim that the society is a meritocracy and their advantages are the result of their own hard work and brilliance (and perhaps luck if they are honest enough to admit to being lucky).
As a result, it is difficult to tease apart the capitalist functions of the U.S. economy from the cartel-state, crony-capitalist kleptocracy that I call neofeudalism.
What we do know is that the top 1/10th of 1% is reaping most of the income gains.
We also know that household debt has far outstripped the growth rate of the economy as measured by GDP, evidence that much of the prosperity is based not on wealth creation or savings but on expanding credit:
And we know that real income (adjusted for inflation) has declined. Since this is the median household income, we can project that the bottom 90% are actually doing much less well than shown here, as income gains mostly flow to the top 10%.
Individuals are not powerless to change their circumstance. This is the basis of the American Dream (and also the Chinese Dream, Mexican Dream, Iraqi Dream, etc.) The question then becomes: how is the system "wired," i.e. what are the obstacles, incentives and disincentives presented to individuals who are trying to better their circumstance?
It's important to ask this question, and to be honest in our assessment of victimhood, oppression and individual responsibility.
The widening chasm refers to both the income chasm between the financier class (1/10th of 1%) and the 99.9%, and the chasm between the real economy and the official narrative of the economy. The essence of propaganda is to substitute an officially conjured narrative for independent critical thinking.
In the American propaganda narrative, the central state and bank are admirably supporting a "recovery" that though uneven in places is soundly on the path to widespread prosperity. The primary support of this narrative is ginned-up statistics (bogus unemployment rate, etc.) and asset bubbles inflated by easy credit to the masses and unprecedented low-cost credit to the financier class. These are the basic tools of propaganda: choose a metric that you can control or game, and make that the measure of success.
In the Vietnam War, the body-count of enemy combatants was the metric chosen by the propaganda machine to measure success. Unsurprisingly, stacks of dead civilians were duly counted to boost morale and to mask the failure of the war's managers.
Nowadays the unemployment rate is the new body-count: a metric that can be gamed to reflect an illusory success. Just erase tens of millions of people from the workforce, count every 4-hour a week job and dead-reckon a few million jobs were created outside the statistical universe (the Birth-Death Model of small business creation) and voila, the unemployment rate magically declines even as the economy and the job market stagnate.
The other metric of choice is the stock market, which has been inflated by central bank policies and identified as the gauge of recovery by a political class anxious to deflect inquiries into its systemic corruption and monumental policy failures.
The official narrative carefully leaves the kleptocracy, crony-capitalism and cartel rentier arrangements firmly in place. As noted above, those benefitting from the cartel-state neofeudalism defend their perquisites as "natural," i.e. the result of meritocracy. This adds another layer of propaganda persuasion to the official narrative.
An independent, critical account of the American economy would soon raise questions about the structural causes of inequality by asking cui bono, to whose benefit is the system arranged? If we can honestly say that the system's primary source of inequality is a dynamic economy that rewards the top 10% who are best able to deploy skills and capital, then that suggests one set of potential remediations.
If however we find the system is unequal largely as a result of its cartel-state structure, then that suggests a political and financial reset is needed to clear the deadwood of corruption, malinvestment and state/central bank manipulation of statistics, finance and credit. We had to destroy the economy to save it. Indeed.
New video with CHS and Gordon Long: Peak Consumption
Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart:
1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy
Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).
We are not powerless. Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.
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TF Selling “Key Downside Risk” as Gold “Struggles in Sideways Resistance Range”
WHOLESALE gold market prices fell to $1460 an ounce Tuesday morning, around ten Dollars lower than where it closed last week, as the FTSE in London ticked higher following yesterday’s UK bank holiday.
Other European stock markets also edged higher, while the Euro gained against the Dollar immediately following the release of better-than-expected German factory orders data.
Silver meantime fell below $23.70 an ounce, nearly 2% down on the week so far, while other industrial commodities also ticked lower.
“Gold is struggling against the important resistance range at $1469 [an ounce] and $1504.33,” says technical analysts at UBS.
“Support is at last week’s low of $1440.57, a break below this would pave the way to test $1424.63 and even$ 1405.02, the 38% and 50% retracements of the April-May recovery, respectively.”
“Our view is more sideways consolidation before another test to the downside,” agree technical analysts at bullion bank Scotia Mocatta, who also cite support at $1440.
On the New York Comex, the number of bearish short gold futures contracts held by smaller private traders, classified by the Commodity Futures Trading Commission as ‘Nonreportable’, exceeded the number of bullish long futures they held last Tuesday, according to weekly data published by the CFTC Friday. It is the first time this category of trader has been reported as holding more short than long contracts since February 2001.
So called Managed Money meantime – a category that includes hedge funds and other professional money managers – held slightly fewer short contracts than a week earlier, although at 65,224 contracts the aggregate short gold position of fund managers remains elevated compared to recent years.
Gold exchange traded funds saw their twelfth straight week of outflows last week, implying ongoing selling of their shares by investors, according to data from Bloomberg. The largest gold ETF, SPDR Gold Trust (ticker: GLD), saw its total gold holdings fall to a 44-month low of 1062.3 tonnes, compared to more than 1350 tonnes at the start of the year.
“We continue to believe exchange-traded product outflows remain a key downside risk [for the gold price] in the near term,” says Suki Cooper, precious metals strategist at Barclays Capital.
The Gold Fund run by hedge fund Paulson & Co., the GLD’s biggest stakeholder, ended April down 27%, Bloomberg reports, citing “two people familiar with the matter”. As well as GLD shares the fund also specializes in investing in gold mining equities.
“We expect the physical [bullion] demand to support the [gold] market,” say analysts at banking group ANZ.
“[But that] could prove difficult to maintain in the face of rallying equity markets,ETF outflows and speculative financial shorts… additionally, global inflation concerns that could support gold are benign. We expect to see a pick-up in prices through the second half of 2013, where gold should trade in the mid-high $1500 an ounce area.”
ANZ today cut its 2013 average gold price forecast to $1573 an ounce, forecasting an average price next year of $1648 an ounce.
“To suggest the gold price makes a lot of upside from here requires either a global crisis or a re-emergence of inflation,” said Gary Dugan, private bank Coutts’ chief investment officer for Asia and the Middle East, in an interview quoted by Bloomberg today.
Coutts now holds between 1% and 2% of its clients’ money in gold, down from 6-7% as recently as September, he said.
Gold imports to mainland China through Hong Kong more than doubled in March, net of exports, according to latest data from the Census & Statistics Bureau cited by Reuters.
The surge came as part of China’s 26% rise in first-quarter gold consumption, reported today by the China Gold Association.
Over in the West meantime, April’s gold price drop was met with increased demand for physical gold bullion from self-directed individual investors, according the Gold Investor Index from online precious metals exchange BullionVault, which hit a 16-month high at 58.6 last month.
Ben Traynor
Gold value calculator | Buy gold online at live prices
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+
(c) BullionVault 2013
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
Gold and Silver: Sentiment Reversal is Inevitable
Gold and Silver: Sentiment Reversal is Inevitable
The usefulness of sentiment’s stealth crystal ball is about to be revealed to the litany of unsuspecting precious metal bears and skeptics who have convinced themselves that gold’s bull market is either over or, at the minimum, in need of lengthy ongoing retesting, restructuring and consolidation.
This article will bring us up to date as to the degree of current bearish sentiment regarding both gold and silver using no fewer than 5 sentiment indicators (with 9 illustrative charts), as well as provide the reader with an opportunity to observe the price outcome of previous bearish extremes using these sentiment indicators.
When we begin the sentiment indicator discussion we will look at charts of the put/call volume ratio (options) of SPDR’s Gold Trust ETF (GLD) and iShares Silver Trust ETF (SLV), then examine Hulbert’s Gold Sentiment Index, followed by the Blees Rating, then gold’s Commercial and Non-Reportable (futures) traders positioning detailed in the most recent Commitment of Traders Report (COT) from the CFTC, and conclude with a daily gold futures price chart that includes the corresponding readings of the Ulcer Index indicator.
But first, let’s briefly consider the concept of investor sentiment.
My observation is that sentiment’s crystal ball, particularly when observed at an extreme, works reliably despite conflicting and clever arguments of either a technical or fundamental nature, and plays the ultimate trump card in foretelling a market’s reversal of price direction.
Sometimes the occurrence of a high volume “capitulation selling” event provides the most obvious observation of sentiment exhaustion. But there are numerous other means to assess this phenomenon and we will get to these shortly.
Sentiment extremes, simply put, tell us that there are too many traders at one end of the boat and therefore the boat is about to tip over. Sentiment can strongly suggest that the trade, as some say, has become “crowded”. When someone finally yells “fire” in the “crowded” room there are so many of the market’s participants motivated to get out the same door and in the same direction that most get trampled – unable to reverse their trade fast enough.
Another way of characterizing a sentiment extreme is to say that the trade simply runs out of buyers or sellers, as the case may be. The extreme price momentum in one direction “exhausts” itself of all available ammunition to continue the trend and is sometimes signaled when someone yells “fire” in the “crowded” room, but often comes to a conclusion unrecognized by most traders as price reverses direction in an unassuming manner.
Yet another saying is “when everyone is thinking the same thing, then no one is thinking”. The sentiment indicators we will look at today will give us a clear sense as to whether this saying is potentially a significant and foretelling factor in future precious metal price movement.
And yes, there are indeed two players for each trade – the buyer and the seller. In our present precious metals situation, this leads us to consider the concept of shares moving from “weak” hands to “strong” hands.
The Claude Resources (CGR) shares I have been accumulating and holding with a considerable draw down are in “strong hands”. Barring some unanticipated but significant company news, I have resolved to not sell any of my position even if price should continue to fall from the current $0.30 per share to $0.10.
However, as Claude Resources share price has fallen from about $1.00 last September to around $0.60 last January and just a couple months ago $0.50, obviously there have been too many shares of CGR still held by “weak hands”. This will change because when the last “weak hand” is willing to sell their last share at this incredibly exaggerated market price that, obviously, will be the bottom.
You may have heard comments when a particular market bottoms and then begins to trade higher and then continues to trade even higher yet, despite “bad” news, the assertion that the bullish price movement seems to make no sense – that it cannot possibly be sustained. At this time it appears to nearly everyone the common sense question to ask is how “bad” news that used to cause a market to go into free fall now seems to have absolutely no negative effect? And to observe that as this market continues higher, it always leaves behind those traders stuck in pessimism to declare that the market is “climbing a wall of worry”. That is, the “bad” news continues in the media, yet this particular market’s price reversal continues upwards.
These thoughts are precisely what make this article’s argument dead on target, in my opinion. That is, sentiment at extremes can and often does trump both technical and fundamental analysis. We are about to examine a number of these sentiment indicators which will leave little doubt that the precious metals market is presently at a sentiment extreme of historical proportion.
As markets usually swing from one price extreme to another, and markets usually swing from one emotional extreme to another (such as fear to greed), I believe the following sentiment indicators and their readings literally guarantee the continued reversal of gold and silver price to the upside.
So let’s now take a look at the 5 sentiment indicators I have prepared for detailing the current gold and silver market sentiment and see what they are telling us.
We will begin with the put / call volume ratio of the options trade of the SPDR Gold Trust ETF (GLD) and iShares Silver Trust ETF (SLV). Charts courtesy of Schaeffer’s Investment Research.
*Click on any chart to ENLARGE
The red line in the charts are the ETF’s price movement over the recent 2 years (GLDabove, SLV below). The blue line is the put / call volume ratio. This considers the trading day’s volume of puts traded and is divided by the volume of calls traded. Generally, the higher the put / call ratio, the more bearish traders are about the ETF’s likely price movement, while the lower the put / call ratio, the more traders believe the ETF is bullish and going to rally higher.
Undoubtedly you have noticed that both charts reveal that the put / call ratio is at the highs of the past two years; meanwhile price is at the lows of the past two years. I will leave it to you to observe the repetitively flip flop relationship between this sentiment indicator and price movement. For me, anyway, this indicator leaves little doubt as to the upcoming direction of GLD and SLV.
Next up is the Hulbert Gold Sentiment Index. This chart courtesy of Mark Hulbert’s Newsletters. The chart that follows this first chart is courtesy of Short Side of Long.
This first Hulbert Gold Sentiment Index chart shows us that gold sentiment at present is even more depressed than at gold’s infamous 2008 low.
The second chart offers a sweeping view of gold’s price movement over the past 17 years, as well as the locations of noteworthy extremes of bearish sentiment. And incredibly (and once again) our current bearish sentiment breaks all previous records with a reading of -31%.
Now we will turn to the Blees Rating with another pair of charts. The Blees Rating is simply a calculation that uses the COT report data on the positioning of commercial traders in comparison to their positioning 18 months previously.
The first chart is one that I made. It looks at the price movement of gold since September 2008 in the upper portion of the graphic, and displays the corresponding Blees rating in the lower portion of the graphic. The Blees rating this week, for the second week in a row, is 100. The green bars I added to the chart are intended to draw your attention to price action once a Blees rating of 100 is triggered.
The red bar I added connects a Blees rating of 99 with price just before our infamous episode of a two day price crash in gold. Though I neglected to add another red bar in September 2008, you will notice that nearly the same thing happened at that time. That is, the commercial traders bellied up to the bar with a reading of 94 then apparently and correctly smelled a rat. They backed off and price indeed made one final swoon. Then in early November 2008 they bellied back up to the bar and held a 100 Blees rating for 2 consecutive weeks followed by another week at 99. They nailed the true bottom. I have no doubt they have done it in 2013, as well.
The following chart of $GOLD courtesy of SmartMoneyTrackerPremium details the locations of the maximum Blees rating since 2003.
Our next pair of charts looks at the positioning of gold futures traders as reported in the most recent Commitment of Traders (COT) report. Both charts are courtesy of GotGoldReport by Mr. Gene Arensberg.
First up is the commercials (dark blue line) and their net positioning of gold futures contracts since 2008. The price of gold is shown in magenta.
This group of traders is considered the smartest of the players and are hedgers by nature. It is indeed rare to find their net positioning anywhere near to just slightly short, as they are now positioned. Incidentally, they are now positioned exactly as when they correctly called the 2008 bottom.
In Mr. Arensberg’s accompanying dialog with these charts he noted that the commercial traders method of operation is to add shorts as price rises and add longs (or sell shorts) as price falls.
But interestingly, as gold has been raising $150 over the past two weeks, the commercials have been doing just the opposite of their norm. Instead of adding to their shorts as price has gravitated higher, they have reduced their shorts and added to their longs.
Yowzer! My take is that the commercials are essentially saying to the market, “bring it on”.
Now for the chart of the little guys trading gold futures, otherwise known as the non-reportables.
You can see that for the first time since 2008 this group (sometimes also known as the ‘dumb money’) has a net position that is just barely short (below ZERO). In effect, this group does not have any skin in the game and that has not been seen before. They have been suckered into losing their net long position and will have to buy, buy, buy when they figure out the trend is up.
And finally we conclude our pondering of 9 charts with this daily chart of gold futures (/GC) from 2007 and forward.
I created this chart and have added in the lower panel the Ulcer Index indicator. This is a volatility indicator that measures downside risk. The higher the indicator reads the higher the risk is considered to be if one continues to hold ‘Old Turkey’.
From a sentiment point of view, the higher the indicator reads the scarier the ride for the long investor. I looked at this indicator on the daily gold futures chart back 20 years and I can tell you what we just experienced was the first place roller coaster drop of the past 20 years. If you still have your lunch (like me) you are likely qualified as a “strong hands” investor.
So there you have it. Sentiment on GLD and SLV options is crazy extreme, Hulbert’s Gold Sentiment Index reveals sentiment is not only more bearish than the 2008 bottom – it’s more bearish than any time in the past 17 years (at least). The Blees Rating has been at the max of 100 for two consecutive weeks. The smart money commercials of the Comex gold futures market, despite the $150 rally we have had off the capitulation low a couple of weeks ago are not being shy. Price has been going up and they have just added to their long positions and reduced their short positions. Meanwhile the non-reportables have played themselves right off the field and will have to become buyers to get back in the game. And finally, the Ulcer Index confirms that gold has taken a hit that should have left EVERYONE running for the door.
You know, I don’t make this stuff up. And after putting about 10 hours non-stop into making this article what it is, I have nothing more to say other than encourage you, another time, to consider the evidence that sentiment plays a powerful role in the trading markets and that if there was a better precious metal setup than the one we presently have – I simply do not believe it.
Best always,
John
tsiTrader@gmail.com
Further Declines in Gold
These past few weeks it seems like paper gold is out and physical gold is in.
The fall in the price of gold has triggered a new run on physical gold that shows no sign of abating. Record amounts of money have exited ‘paper,’ i.e. futures and ETFs, and headed straight to the bank or the mint to be exchanged for coins and bullion bars, that is if one can get them. The strength of physical retail buying has taken dealers and mints around the world by surprise, leaving them scrambling to keep up with demand. The sudden surge is evidence of pent-up demand, particularly from China and India.
There seems to be a growing disconnect between paper and real gold. It’s very likely that the paper sellers didn’t foresee the rush to physical gold. Could it be the case that the physical market is lagging behind and will eventually catch up and sell off too? Let’s look at some of the evidence.
Physical Gold, an investment company, said there were waiting lists of three weeks for some coins, and four to six weeks for gold bars whereas previously all would have been available within a few days.
The US mint had to suspend sales of certain coins as buying increased. It sold an estimated 210,000 ounces of gold coins in April – almost three and half times more than the 62,000 it sold in March.
The Perth Mint worked overtime over the weekend to manufacture enough stock to meet orders, which are at levels last seen in the 2008 financial crisis (confirmation of the 2008 – now analogy).
There are reports that both Istanbul and Dubai are out of investment bars, according to Bloomberg, with wholesale and bulk buyers paying a premium of between $6 and $9 an ounce for kilo bars.
A U.S. coin shop said that sales of Krugerrand have increased 468 per cent last week as investors rush to get the precious metal at what they see as a bargain rate.
The Financial Times wrote that Asia is witnessing one of the strongest waves of physical gold buying in thirty years. ‘Buyers Scour Asia for Physical Gold’, proclaimed the headline.
Swiss refiners have run out of kilo gold bars (cost around $48,000). There is now a one-month wait for delivery.
Physical stocks of gold held at CME Group’s Comex warehouses in New York have dropped to a near-five year low in a further sign that gold’s price crash unleashed a frenzy of demand, according to a Reuter’s report.
Well…you get the point. The gold bugs are coming out of the woodwork and they want the kind of gold they can bite between their teeth. World over, private investors have taken advantage of the dip to pounce on physical gold. Keep in mind that there is some effort that goes into buying physical gold. It’s not like placing an order online for the purchase of ETF shares. Most physical gold buyers are not in it for the short term — they plan to hold on.
At Sunshine Profits we have always advocated physical gold over the paper kind for long-term investments. If your investment time horizon is more than a year, you want to purchase the physical metal, not somebody’s promise to pay you some money down the line based on the price of the metal. For short-term trades, however, ETF shares are ok. On a side, note, if you didn’t see it previously, we have two sections that should help you choose the best investment and speculative vehicle: How to Buy Gold and Gold / Silver ETF Ranking.
To see what is in store for the price of gold in the following weeks, let’s turn to the chart section – we will start with the yellow metal’s medium-term chart (charts courtesy by http://stockcharts.com.)
A closer look shows us that gold has actually corrected to its previous support level (declining, dashed line) and verified this as resistance. At this time, it could just be a pause within a rally, but generally the main short-term trend here is down, although we have had a correction of about one half of gold’s recent decline. It seems now that the move to the downside will continue and the RSI suggests this is clearly possible. It is no longer oversold and is pretty much in mid-range levels. Moreover, in last week’s essay (Gold Price in May 2013) we discussed the importance of long-term cycles on the gold market – the cycle suggests further declines and formation of the final bottom in the next several weeks.
Let us move on to the chart of the yellow metal from the non-USD perspective.
Here, gold prices are not at the 50% retracement level but rather lower. Other than that, this chart is similar to the previous gold charts and it seems that the short-term trend here will continue to the downside.
Finally, let’s have a look at the Dow to gold ratio chart.
This chart suggests that we will see lower gold prices. The reason for this is that the declining resistance line for the ratio has not been reached.
Summing up, the strength in the physical market suggests that the bull market is intact and that what we’re seeing now is just a major correction within the secular bull market. However, it seems that declines in gold prices are not over yet. The bottom appears likely to be a few weeks away and this gives the market plenty of time to move lower. Gold corrected 50% of its decline and could now move lower once again. The Dow to gold ratio indicates a strong resistance line has not yet been reached. This supports the premise that gold’s final bottom is not yet in.
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Thank you for reading. Have a great and profitable week!
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold Trading & Gold Investment Website – SunshineProfits.com
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Disclaimer
All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
How to Trade Gold, Silver & Precious Metal Miners
How to Trade Gold, Silver & Precious Metal Miners
How to trade Gold and other precious metals related investments is not that complex. But you must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices).
Since 2011 when gold and silver started another major bull market correction the best position has been to move to cash or sell/write options against your positions to protect your investment until the next trend resumes.
If you take a look at the chart below of gold you will notice that in 2008 we had a similar breakdown in price which purged the market of investors who where long gold. And if you compare the last two breakdowns they look very much the same. If price holds true then much higher prices are likely to unfold at the end of 2013.
The key here is for the price to move and hold above the major resistance line. If it can do that then we are looking at a possible breakout to $2600 – $3500 gold. With that being said gold and silver may just be starting a bear market. Depending what the price of gold does when my resistance level is touched, my outlook may change from bullish to bearish.
Also with last weeks economic numbers getting better in the USA I do have concerns that gold may be starting a bear market but we will not know for several more months yet.
Gold Daily Technical Chart:
Major technical damage has been done to the chart of gold. This can be seen as bullish or bearish price action but until price and volume pattern unfolds which puts the odds on the bullish or bearish side I remain neutral.
Silver Daily Technical Chart:
Silver is in the same position as gold. The question is if this is a shakeout or breakdown…
Gold Mining Stocks Daily Monthly Chart:
Gold mining stocks broke down a couple months ago and continue to sell off. If precious metals continue to move lower then mining stocks will continue their journey down. The chart below made in February and it has in most part played out as expected. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for a new position when the time and chart become bullish.
How to Trade Gold, Silver and Mining Stocks Conclusion:
In short, precious metals continue to be in a down trend. While they look to be trying to bottom it is important to remember that the largest moves take place in the last 10% of a trend. So we may be close to a bottom but there could be sharply lower prices yet.
The time will come when another major buy or short signal forms and when it does we will be getting involved. The exciting part is that it could be just around the corner. If you want to keep current and take advantage of the next major move be sure to join me free newsletter here: http://www.GoldAndOilGuy.com/
Chris Vermeulen
The case against deflation
Regular readers will know I am in the inflation, possibly hyperinflation camp; but there are those that think the future is more likely to be deflationary. In the main this is the view of neoclassical economists, Keynesians and monetarists, who generally foresee a 1930s-style slump unless the economy is stimulated out of it.
Rather than repeatedly go into the errors of their ways, we must accept that they are in charge. They have decided that prices must not fall, and they see moderate price inflation as a necessary stimulant to business: this is the reasoning behind Helicopter Ben Bernanke’s defining statement, when he made it clear that central banks could spray the economy with endless fiat money if need be.
Given this determination to stop prices falling, worries that the outlook is deflationary are unlikely to be realised. But there is a second group of commentators which believes that in a slump there will be an unstoppable credit contraction as banks are forced to foreclose on failing businesses. This, they say, will lead to a mad dash for cash to pay off debt, leading to fire-sales of assets as credit contraction spreads to otherwise sound businesses. The imperative to pay down debt will overwhelm central banks’ attempts to replace it with cash.
The error here is to misunderstand where we are in this sorry tale. The belief common to all deflationists, that the developed world has so far avoided a severe economic contraction, is wrong. The fact that this is not often recognised must be blamed on the irrelevance of nearly all government statistics. Not only are they self-serving, but they do not allow for the increasing meaninglessness of government money. The only hard statistics are unemployment, which despite official attempts to water them down, cannot conceal the fact that there has been a slump since the banking crisis.
The banking crisis marked a sudden increase in consumer preferences in favour of money, assuredly egged on by banks who switched almost overnight from risk-tolerant to risk-averse. This is why GDP numbers in most major countries took such a heavy knock, reflecting money being withdrawn from economic activity. That was the event deflationists are worrying about today.
So deflationists are forecasting an event that happened five years ago and their fears have already been disproved by massive monetary intervention. That is not to say the slump is over: far from it. Current indications are that things are about to get worse everywhere. But the nightmare cycle of falling asset prices becoming self-feeding and a dash for cash has already been prevented.
So successful was the Fed leading other central banks to save the world in 2009 that the precedent is established: if things take a turn for the worse or a systemically important financial institution looks like failing, Superman Ben and his cohort of central bankers will save us all again.
Call it kryptonite, or failing animal spirits if you like. It is closer to the truth to understand we are witnessing the early stages of erosion of confidence in government and ultimately its paper money. Ordinary people are finally beginning to suspect this, signalled by the world-wide rush into precious metals last month.
Alasdair Macleod
Head of research, GoldMoney
Alasdair.Macleod@GoldMoney.com
Twitter @MacleodFinance
Corvus Gold Begins Aggressive 20,000 Metre Drill Program at North Bullfrog Project, Nevada
Corvus Gold Inc. has started its first phase, 20,000-metre, 2013 North area drill program at the North Bullfrog project, Nevada. The program will utilize core drilling to follow up on high-grade and stockwork vein systems in the Yellow Jacket zone, a reverse circulation (RC) drill program designed to expand the bulk-tonnage resource focusing on recent higher-grade zones and a water well rig to complete the environmental baseline monitor well network for future permitting activities.
As outlined in the 2013 exploration program announced on April 9, 2013, drilling will focus on:
- The expansion of the recently discovered Yellow Jacket zone and other associate structural zones to determine size and shape of the high-grade gold and silver mineralization; previous results in this zone including: NB 12-138 — 72.4 metres of 1.74 grams per tonne (g/t) gold (Au) and 98.7 g/t silver (Ag) including 4.3 metres of 20.0 g/t Au and 1,519 g/t Ag; NB 12-183 — 71.6 metres of 1.40 g/t Au and 28.9 g/t Ag, including 8.9 metres of 5.4 g/t Au and 129 g/t Ag;
- The expansion potential of a recently discovered higher-grade, potential starter pit targets north and to the west of the currently defined Sierra Blanca deposit; previous results in this area including: NB-12-117 — 51.8 metres of 0.80 g/t Au located west of the existing Sierra Blanca resource; NB-12-118 — 45.7 metres of 0.56 g/t Au located northwest of the existing Sierra Blanca resource NB-12-119, 48.8 metres of 0.50 g/t Au located north of the existing Sierra Blanca resource; NB-12-123, 139 metres of 0.27 g/t Au located north of the existing Jolly Jane resource.
Jeff Pontius, chief executive officer, stated: “We are very excited to begin our follow-up drilling at our new discoveries at the North Bullfrog project. Our new Yellow Jacket zone is of particular interest as it represents a new Nevada high-grade gold and silver discovery. The potential starter pit targets offer potential to add substantial early mining ounces to the already plus-one-million-ounce gold oxide resource, further enhancing the North Bullfrog mining project.”
About the North Bullfrog project, Nevada
Corvus controls 100 per cent of its North Bullfrog project, which covers approximately 68 square kilometres in southern Nevada just north of the historic Bullfrog gold mine formerly operated by Barrick Gold Corp. The property package is made up of a number of leased patented federal mining claims and 758 federal unpatented mining claims. The project has excellent infrastructure, being adjacent to a major highway and power corridor. The company’s independent consultants completed a robust positive preliminary economic assessment on the existing resource in December, 2012.
The project currently includes numerous prospective gold targets with four (Mayflower, Sierra Blanca, Jolly Jane and Connection) containing an estimated indicated resource of 15 million tonnes at an average grade of 0.37 g/t gold for 182,577 ounces of gold and an inferred resource of 156 million tonnes at 0.28 g/t gold for 1,410,096 ounces of gold (both at a 0.2 g/t cut-off), with appreciable silver credits. Mineralization occurs in two primary forms: broad strata-bound bulk-tonnage gold zones such as the Sierra Blanca and Jolly Jane systems; and moderately thick zones of high-grade gold and silver mineralization hosted in structural feeder zones with breccias and quartz-sulphide vein stockworks such as the Mayflower and Yellowjacket targets. The company is actively pursuing both types of mineralization.
A video of the North Bullfrog project showing location, infrastructure access and 2010 winter drilling is available on the company’s website. For details with respect to the assumptions underlying the current resource estimate and preliminary economic analysis, see the technical report entitled “Technical report and preliminary economic assessment for the Mayflower and North mine areas at the North Bullfrog project, Bullfrog mining district, Nye county, Nevada,” dated Dec. 6, 2012, and available under the company’s profile at SEDAR.
Qualified person and quality control/quality assurance
Jeffrey A. Pontius (CPG 11044), a qualified person as defined by National Instrument 43-101, has supervised the preparation of the scientific and technical information (other than the resource estimate) that form the basis for this news release and has approved the disclosure herein. Mr. Pontius is not independent of Corvus, as he is the chief executive officer and holds common shares and incentive stock options.
Gary Giroux, MSc, PEng (B.C.), a consulting geological engineer employed by Giroux Consultants Ltd., has acted as the qualified person, as defined in NI 43-101, for the Giroux Consultants Ltd. mineral resource estimate. He has over 30 years of experience in all stages of mineral exploration, development and production. Mr. Giroux specializes in computer applications in ore reserve estimation, and has consulted both nationally and internationally in this field. He has authored many papers on geostatistics and ore reserve estimation and has practiced as a geological engineer since 1970 and provided geostatistical services to the industry since 1976. Both Mr. Giroux and Giroux Consultants Ltd. are independent of the company under NI 43-101.
The work program at North Bullfrog was designed and supervised by Russell Myers (CPG 11433), president of Corvus, and Mark Reischman, Corvus Nevada exploration manager, who are responsible for all aspects of the work, including the quality control/quality assurance program. On-site personnel at the project log and track all samples prior to sealing and shipping. Quality control is monitored by the insertion of blind certified standard reference materials and blanks into each sample shipment. All resource sample shipments are sealed and shipped to ALS Chemex in Reno, Nev., for preparation and then on to ALS Chemex in Reno, Nev., or Vancouver, B.C., for assaying. ALS Chemex’s quality system complies with the requirements for the International Standards ISO 9001:2000 and ISO 17025:1999. Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples. Finally, representative blind duplicate samples are forwarded to ALS Chemex and an ISO-compliant third party laboratory for additional quality control.
US Oil Elliott Wave Technical Analysis – 7th May, 2013
STTG Market Recap May 7, 2013
Another day of autopilot gains for the market. Tuesdays have been extremely favorable in 2013; the DJIA is up something like 17 Tuesdays in a row; a strange situation. The market is also up 11 of the past 13 sessions. In the absence of any major economic news stocks simply melt up. The S&P 500 gained 0.52% and the NASDAQ 0.11% as technology stocks took a break from their recent big gains. Every day money rotates into something new so the indexes are generally holding up even as one group or another takes a day off. And it's not just in the U.S., over in Japan and Germany for example we are seeing multi year highs as every central bank pushes their chips in and asset prices appear to be the main target.
Nothing new to report on the indexes today other than they are now near the top end of recent ranges - we have not been here in quite a while.
The McClellan Oscillar is now in overheated territory - while it could in theory get well over 60 that is an extreme and rare case as you can see below with about 1 year of data, it happened over 3 short time frames. Probability says buying right here is not a winning strategy over the next 3-6 days as some rest is needed. This is the highest reading since early January.
Crude oil is also up against a key resistance area; bulls would like to see a new high here.
We'll take a look at some individual charts tonight using Marketsmith
First we have been mentioning the healthier action in cyclical stocks the past week and a half - you can see this in names such as Harley Davidson (HOG) which faces the consumer and Caterpillar (CAT) which is the essential cyclical stock. The former broke out of a range today on very good volume while the latter broke out of a long term downtrend late last week. CAT jumped over its 200 day moving average last Friday and 50 day today; in many ways it is acting similar to Apple after a long downtrend.
Meanwhile two stocks that were very hot cooled off today - First Solar (FSLR) and Tesla Motors (TSLA). These both have relative strength readings in the mid to upper 90s as they have been market darlings. Tesla is doing this right in front of its earning report tomorrow - no surprise as it is always a flip of the coin how a stock will do on its earnings and some momentum traders don't want to be around for that.
Speaking of earnings, we have Latin ecommerce play Mercadolibre (MELI) which is a poor man's combination of Amazon and Ebay in South America. The stock had a tremendous reaction to earnings it reported Monday evening.
The Latin American e-commerce powerhouse late Monday reported accelerating first-quarter sales that beat forecasts, though its EPS missed views. The Buenos Aires, Argentina-based company earned 40 cents a share. Excluding the impact of Venezuela's currency devaluation, MercadoLibre earned 53 cents, up 18% from the year-earlier quarter. That was a penny shy of the consensus of 11 analysts polled by Thomson Reuters. But Q1 revenue leapt 23% to $102.7 million, beating analyst views of $97.44 million. It was the second straight quarter of modest sales growth acceleration after four quarters of deceleration.
Original post: STTG Market Recap May 7, 2013
S&P 500 Elliott Wave Technical Analysis – 7th May, 2013
Out of nothing....
ROFLAMOOOOOOOOOOOOOOOOOOO
Bill Powers: Pickens and Stansberry Wrong, Shale Gas Production to Fall
Richard Karn: New Mining Technology Could Increase Profits
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Gold Should Pullback From These Levels
By Jeff Pierce
Given how oversold Gold was it doesn’t surprise me to see it rally off the lows, but in my opinion that move is just about over and now is the time to see what this “bottom” is made of. I expect this to pullback to $1445 and if it can hold that level then it may have a real chance at forming a decent trading bottom. If that level doesn’t hold then $1392 is a legitimate level that it could see next. If that can’t hold then all bets are off.
Bernanke's Neofeudal Rentier Economy
Federal Reserve Chairman Bernanke is a Reverse Robin Hood, robbing from the lower 95% and giving to the financier class. The Real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves (August 31, 2012).
It's worth understanding the mechanisms of this wealth transfer: in essence, the Fed extends low-cost credit (i.e. "free money") to the financier class which then uses this free money to buy rentier assets, that is, assets that generate economic rents for the owners, who add no value and create no wealth.
This is of course the neofeudal model: the financial aristocracy in the manor house own the rentier assets and the debt-serfs toil away to pay the rents and taxes. The financier class (i.e. those that benefit from the financialization of the economy) are as unproductive as feudal lords; they skim the profits generated by the debt-serfs while adding no productive value to the economy.
Financialization and Crony Capitalism Have Gutted the Middle Class (July 13, 2012) The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012) Why Krugman and the Keynesians Are Lackeys for the Neofeudal Debtocracy (April 24, 2013)
(I separate the bottom 95% from the top 4.5% and the .5% financier class for several reasons: 1) most of the stocks and bonds are owned by the top 5%; 2) the top 4.5% is shedding debt while the bottom 95% are adding debt; 3) the income of the top 4.5% is rising while household income of the bottom 95% is declining, and 4)the top 4.5% have access to lower-cost credit than the bottom 95%, but they do not have access to billions of dollars in nearly-free credit from the Fed or the shadow banking system like the financier class.)
Let's take rental housing as an example of this Fed-driven rentier economy. The financiers borrow $1 billion in nearly-free money and use these funds to buy thousands of houses for cash. Since they can offer cash, they beat out households with approved mortgage applications. This is the story one hears anecdotally: potential home buyers have a mortgage application approved, all they need is to have their offer for a house accepted. But the house is sold to an investor with cash.
So while the Federal housing agencies are offering low-interest, low-down payment mortgages to marginally qualified (or flat-out unqualified) buyers, the Fed is enabling the financier class to outbid conventional homebuyers.
Here's the key dynamic: cash earns no return, thanks to the Fed's zero-interest rate policy (ZIRP). This means the interest rate paid by the financier class is also near-zero. So the trick is to take all those billions of nearly-free dollars and use them to buy assets returning 3+% annually.
These include rental housing, stocks that pay hefty dividends (for example utility companies), municipal bonds, long-term Treasuries, dividends based on patents and royalties, and everyone's favorite low-risk investment, state-sanctioned monopolies and cartels. (no wonder Big Pharma stocks have skyrocketed.)
Zero interest rates rob from the bottom 95% who do not have equal access to low-cost credit and transfer that wealth to the rentier-financier class. The bottom 95% provide the capital (pension funds, 401K accounts, checking and savings accounts, etc.) for zero return, but their access to near-zero cost credit is restricted.
The financier class then borrows money from the Fed (or the "shadow banking" non-bank credit system that is ultimately backstopped by the Fed) at near-zero rates, which it then uses to buy rentier assets that yield 3+%. The financier class then skims the rents from the debt-serfs, who have been effectively robbed of trillions of dollars in lost interest by the Federal Reserve.
The Fed has directly created a neofeudal rentier economy and society. Giving the financier class unlimited access to free credit with which to buy rentier assets serves two purposes: 1) it drives the valuations of rentier assets ever higher, creating the useful (in terms of propaganda and perception management) illusion of economic vitality, and 2) it greatly enriches the financier class at the expense of the bottom 95%.
Goebbels would approve of the Fed's masterful propaganda campaign: rob the bottom 95% to benefit the financier class, all the while piously proclaiming that its policies were aimed at increasing employment for the bottom 95%.
In terms of propagandistic chutzpah, it doesn't get any better than this. Congratulations, Bernanke, Yellen, et al.
Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart:
1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy
Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).
We are not powerless. Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.
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