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Gold & Precious Metals

Silver Investors Face "Bloodbath" Crash - Commercials Hold "Immense" Silver Short Positions

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Posted by Clive Maund: Gold - Silver & Oil shares

on Tuesday, 09 October 2012 03:24

A bloodbath is believed to be imminent in the silver market, now that its cheerleaders have herded their flocks into the corral, ready to be fleeced again.

In the last update posted early last week, we expressed the view that an intermediate top was forming in gold and silver, a view that is reinforced further by the inability of both metals to break higher later in the week, and the now towering Commercial short position in silver as revealed by the latest COTs.

On its 6-month chart we can see how silver has continued to track sideways beneath a resistance level approaching $35. It had a go at breaking out upside on Thursday when the dollar apparently broke down, but failed, and weakened again on Friday. If we look carefully at this chart we can see that, following failure of the steep uptrend that began in the middle of August, a potential Double Top is completing beneath this resistance that portends a drop, and we have already observed several bearish candlesticks with long upper shadows developing beneath the resistance, which is a big reason why we turned bearish. Failure of the support level shown, which is probably imminent, can be expected to lead to a brutal plunge.

silver6month061012

.....read more and view 3 more charts HERE

(Ed Note: Clive Maund's latest on Gold including the powerful line "Commercials now have massive short positions in gold and immense short positions in silver" )

Gold Price Set for Sharp Drop, Opportunity to Go Short

by Clive Maund

It has been widely assumed across the markets that the forces of deflation have been vanquished by the Fed's making it plain a couple of weeks ago that it is going to throw all of its firepower into the battle to defeat it. So let's make this as clear as possible - the forces of deflation will not be defeated by anything until they done their work of expunging the massive overhang of debt from the system. The Fed's latest stated policy is merely a display of desperation and a symptom of intellectual bankruptcy in that they seem to think that more of what created the problems in the first place is now going to somehow fix them. We are going into a depression anyway, and they have made it plain that for good measure they are going to destroy the currency into the bargain. In reality, all they are trying to do is buy as much time as possible - they know they are cornered and that the system is doomed and procrastination is all that is left to them.

Anticipation of the QE to eternity proclamation by the Fed drove the dollar down steeply, and simultaneously drove the Precious Metals higher. After the announcement was made the dollar crept higher as the dollar unfriendly news was then all priced in and it was oversold and entitled to a relief rally, and at the same time the Precious Metals trod water, moving sideways.

Right now the belief is widespread that the dollar has just completed a "bear Flag" and that another vicious downleg is starting, which will synchronize with a big rally in the Precious Metals, that many investors have positioned themselves for, but we are instead seeing important and compelling evidence that before the dollar continues much lower it will first stage a significant countertrend rally that will trigger a fairly short but possibly brutal selloff in Precious Metals markets, and if another deflationary scare should occur at some point despite the QE largesse, any such rally could be amplified by a Pavlovian flight into US debt and thus into the dollar. Let's now review this evidence.

Our 3-year chart for the dollar index shows that there is now a quite high degree of "compression" - it has dropped a considerable distance below a still flat 200-day moving average to become oversold. The tendency to proportion in markets points to a rally of the kind projected on this chart, to complete the Right Shoulder of a large Head-and-Shoulders top. Why, fundamentally, might it do this? - here's one very good reason; right now sentiment towards the dollar is awful, it is at negative extremes with only about 7% confident of a dollar rally. That kind of extreme just by itself is enough to generate a rally, if only because there's virtually no-one left to turn bearish. Another good reason is that upon the Fed's QE announcement the dollar was broadly written off as "toast", with those doing the writing off temporarily forgetting that many other countries have plenty of reasons of their own to debase their currencies, not least Europe, which pipped the Fed at the post when the German court members, dressed in fancy red finery, and perhaps feeling the nozzle of a gun at their backs, cleared the way the day before the Fed's revelations for massive European QE. So as the various fiat currencies jockey for position in the race to the bottom, the heat could come off the dollar for a while, with the worst news regarding it now in the public domain.

usd3year061012

....read more & view 5 more Clive Maund charts HERE

 



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Gold & Precious Metals

Boomer-Geddon & The Ring of Fire

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Posted by Bill Gross & Other Authors

on Monday, 08 October 2012 13:53

ring of fire2

Bill Gross, the head of PIMCO, the world’s largest bond manager, has published a jeremiad (see below) that makes my “Boomergeddon” thesis look Pollyanna-ish by comparison. To avoid an economic meltdown, says the money mogul, the United States needs to close its fiscal gap by $1.6 trillion, equivalent to 11% of the GDP. In my book, I anticipated the need to close the budget gap by a measly $1 trillion — and found the task to be so daunting as to be almost impossible.

My thought in trimming spending and/or raising revenues by $1 trillion a year was to create a U.S. budget surplus over the course of a normal economic cycle, factoring in modest surpluses during boom years and modest deficits during recessions. But Gross looks beyond the current business cycle, emphasizing crushing long-term obligations to Social Security, Medicare and other entitlements that are only beginning to kick in and will become more onerous in the decades ahead. Scarily, in his most recent essay, he doesn’t even mention the debilitating burden of paying interest on a national debt that recently passed $16 trillion and is growing relentlessly higher.

Looking at the fiscal balance sheets of the world’s major economies (as well as Greece for a point of comparison), Gross shows the U.S. in a fiscal “ring of fire” in the company of the United Kingdom and Japan. As seen in the chart above, the current deficits of all three countries are as high as Greece’s and their structural (long-term) fiscal gaps are larger.

Armageddon is not “around the corner,” Gross opines, but he does see the possibility of a “fiscal train wreck over the next decade.” It is often said that the U.S. is the cleanest of the dirty shirts, implying that we have less to fear than others do. Gross disagrees. “When it comes to debt and to the prospects for future debt, the U.S. is no ‘clean dirty shirt.’ The U.S., in fact, is a serial offender, an addict whose habit extends beyond weed or cocaine and who frequently pleasures itself with budgetary crystal meth. Uncle Sam’s habit … will be a hard (and dangerous) one to break.”

.....read the Writer's bottom line HERE

Bill Gross, the Ring of Fire, and Gold Prices

Deborah Baratz via Money Morning

That's because Gross, the Pacific Investment Management Co. (PIMCO) founder and co-chief investment officer, released his October 2012 investment outlook Tuesday that came with a warning for the U.S. and investors. 

Gross said that U.S. fiscal problems have put the country in a "Ring of Fire" that'll burn investors if they aren't protected by gold and real assets. 

Gross warned that recent studies have concluded that "[T]he U.S. balance sheet, its deficit and its "fiscal gap' is in flames and that its fire department is apparently asleep at the station house." 

......read more HERE

Damages

(The Ring of Fire of Essay by Bill Gross)

- The U.S. has federal debt/GDP less than 100%, Aaa/AA+ credit ratings, and the benefit of being the world’s reserve currency.

- Studies by the CBO, IMF and BIS (when averaged) suggest that we need to cut spending or raise taxes by 11% of GDP and rather quickly over the next five to 10 years. 

- Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow, and the dollar would inevitably decline.

.....read Bill Gross's The Ring of Fire  HERE

 

 

 

 



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Gold & Precious Metals

Danger Zone or Launch Pad - Strong Analysis Below

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Posted by Ira Epstein VIA

on Friday, 05 October 2012 08:29

The first Presidential Debate is out of the way.

President Obama didn’t come with his “A” game. In fact, he came with no game. Politicians are like cats in that they have many lives and the President clearly used one of his nine lives up last night.

Does this mean Mitt Romney is now favored? No, but he did a good job, one that was strong enough to most likely put him seriously back in the race, especially  in the key states that will determine the next President. He needs Ohio and Florida, so polls over the next few days will give an idea as to just how well Mr. Romney did in winning over some Ohioans and Floridians. Let’s not forget Colorado either.

Gold liked Romney’s performance as it is up sharply the morning after the debate. In fact it’s knocking on the door of fresh highs for 2012. Now don’t think this is solely because of one debate, it’s not. Today Turkey moved its forces to heightened alert and will be calling on NATO members to defend Turkey’s boarder with Syria after border towns in Turkey were bombed by Syria and Turkish citizens killed. Turkey can well defend itself, so Syria is crazy to be looking to start up with Syria unless Syria wants to drag Iran into this mess. Iran is reportedly moving soldiers to its border with Turkey so Middle East problems have clearly not gone away. They are simmering and will soon boil over.

Since my last report not a lot has changed on the world scene. The ECB is prepared to aid Spain. Spain hasn’t yet asked for help, since the open markets are still buying Spanish debt in bulk and at reasonable levels and Mr. Rajoy needs a better political correct time to ask for help. Spain is able to sell debt at reasonable levels because buyers of the bonds expect Spain to ask for help from the ECB very soon, which will increase the value of the bonds.

Greece has not reached a deal with the troika on releasing the next round of financing as the troika doesn’t think the plan proposed to save billions of Euros in 2013 and 2014 is credible. In fact there were reports today that Spain, the Netherlands and Finland want to postpone the decision on releasing the next 31.5 billion euro tranche of Greek bailout aid until the Nov 12 meeting of Eurozone finance ministers.

Israel said it won’t attack Iran until the spring. Syria attacked Turkey overnight and Iran is readying its army on the Turkish border. This is gold’s environment.

Pictures do better than words at times. This is one of those times. Look at the Seasonal Chart below. I haven’t changed it in months.

1

Prices continue to follow the historical picture of rising prices from August, now through September and possibly into year end. There’s little doubt that at this point in time, the above pattern is at work and the fundamentals at work support it.

In my last report, written about 3-weeks ago I wrote that; ”I have been looking for the 1775-1800 range to be the first resistance point, but never expected it to be hit this early into the seasonal cycle.” Here we are only in mid September and 1775 has already been hit, with the strongest seasonal part of the year ahead. To me this means there’s room for more gains on the horizon.”

What more can be said. Prices are trading against the $1800 price level now and I see more gains ahead, but ones that have to be fought stubbornly for. Not ones off of sudden soaring drives higher.

Monthly Chart

2

The above Monthly Chart pattern remains in a bullish mode with each high being higher than a previous high, each low higher than a previous lows and prices staying over the 18-Month Moving Average of Closing Prices.  Only getting back under 1554.4 would at this time negate the bullish chart pattern.

I labeled the Bollinger Band Top on the above chart. Its value currently comes in at 1843.9 at this time. Given that the Slow Stochastic Study is not overbought, this seems a reasonable upside target.

Keep in mind that Monthly Charts move very slowly as each line on the above chart represents about 22-business days. In order for gold to get under 1554.4., prices would have to drop nearly $245, not an event that seems likely in the intermediate term.

Weekly Chart

3

The Weekly Chart is very bullish as it has an embedded Slow Stochastic reading. This can be seen on the bottom graph on the above chart. When both the “red” K-line and the “gold” D-line are going sideways over an 80-reading for several weeks in a row, I say this study is locked in…embedded. To me this means that those bullish have control of the market and that prices should be pressured to move higher.

A sign that the uptrend is going to correct would come when the red line closes under 80. I don’t see this current chart formation as being close to that occurring, so I remain bullish for that reason.

The 18-Day Moving Average of Closes, the red line running through the Weekly Chart Data, is well under the last break low of 1735.8. This means that this Moving Average is not going to provide an entry point if prices are going to continue moving higher now.

Anywhere you decide to enter, the number as I see it that you don’t want broken is 1735.8 as that would destroy the pattern of higher highs and higher lows. In fact, I am thinking that 1735.8 should not be seen again in 2012 if the bull case is going to hold through year end.

Daily Chart

4

I’ve placed an image of a bottle on this chart and no, it’s not due to a drinking issue.

I often mention how Bollinger Bands widen out and narrow in. If you look at the bands and the bottle, you can see somewhat similar shaping. As the Bands narrow in, market pressure builds up behind the bottleneck. The narrower the neck gets, the powerful the move when it break out. You might say when the pressure blasts out of the neck. At that time prices move to widen the bands out and the process enters a trend stage.

Gold is in an uptrend. The red low arrows and green high arrows show that the market is making higher highs and higher lows over the 18-Day Moving Average of Closes, shown as the red line. Next upside target is the Bollinger Band Top of 1798.8.

Whether this chart pattern runs out of pressure or “blasts” out of the neck of the bottle so to speak has to do with what the Slow Stochastic Reading does. If it embeds, I expect a move towards $1850 an ounce. If not, I expect prices to trade a bit more sideways and still resolve to higher prices.

What could hurt the Daily Chart is getting under 1773, the last break low. Bears might say that if 1773 were taken out, a pullback to the Bollinger Band, currently near 1739.6 would be a downside target.

Summary

I think you should get long or be looking to get long gold. I will be covering where in my Twice Daily Updates for my subscribers, as I see events unfold.

 

Please call you Ira Epstein Division of the Linn Group for more specifics.

You can subscribe to my recommendations by going to www.iraepstein.com. It is there that you will see on the right hand side of the page, Oral and Written Subscription Page. Simply click on and become a subscriber. It’s inexpensive by design, offers two oral and written updates a day, access to my private Webinars where I cover 35 charts three to four time and week and more.

Call 1-866-973-2077



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Gold & Precious Metals

Potential Intermediate Term Targets for Gold & Gold Stocks

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Posted by Jordan Roy Byrne - Daily Gold

on Wednesday, 03 October 2012 11:51

The precious metals complex rebounded strongly in August and September, which is typical when the larger trend is bullish. We believe the larger trend turned bullish with the bottom in May. However, weeks ago we noted targets of $1800 for Gold and 57 for GDX as resistance points. The market has begun a corrective period which should last deep into October. Nevertheless, such a correction would provide an excellent entry point before the market makes its next move higher. Today we examine potential medium term and intermediate term targets for Gold and the gold stocks.

Starting with Gold, we find it correcting and consolidating after reaching resistance at $1800, which was an obvious short-term target. Upon a break past $1800, the initial target would be $1900. Since $1800 is stronger resistance than $1900 we can apply its distance from the bottom ($1550) and that projects to another target of $2050.  Upon a breakout past $1900, the market could be setting up for a potential cup and handle pattern which projects to a minimum of $2250.

oct1goldtgt

Next we analyze Gold in terms of its trend channels. Note that trendline A defined resistance from 1999 to 2010 and has defined support in 2011 to 2012. The next trendline resistance comes into play at $2350 in Q3 2013 and $2550 in Q4 2013.

oct1goldtl

Moving to the shares, we note that GDX faces its next major resistance at $65. A potential cup and handle pattern projects to the $90-$93 zone.

oct1edgdx

The GDX vs. Gold ratio shows 0.40 to 0.45 as a potential future target zone. Figures of $2250 for Gold and 90 for GDX equate to a ratio of 0.40.

oct1edgdxvgold

The precious metals complex is correcting in the near-term and we expect that to continue for the next several weeks. Following the correction we see immediate upside targets of $1900 for Gold and 63-65 for GDX. Essentially, the next breakout should result in a retest of the former highs. Moving beyond the medium term, we see a target zone for Gold of $2300 to $2500 and GDX to 90-93. The timetable for such is in the next 15 months. In the meantime, the sector is correcting and we expect that to continue for the majority of October. Thus, be advised that the coming weeks will be an opportunity to accumulate your favorite positions at lower prices. If you’d be interested in professional guidance in uncovering the producers and explorers poised for big gains then we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

 

 
 

 



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Gold & Precious Metals

MARC FABER: I'm Bearish On Stocks, Gold And Everything Else

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Posted by Marc Faber via Business Insider

on Tuesday, 02 October 2012 08:11

That said, Marc posted on his blog today that "I WILL NEVER SELL MY GOLD".

gold picture

Marc Faber is still convinced that there's a 100 percent chance of a global recession and that stocks are due for a big sell-off.

While Faber favors gold, he thinks that it too is due for a correction after staging a huge rally.

He spoke with Fox Business News on Friday:

.......read more and watch the entire interview HERE

About Marc Faber

Dr Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. Between 1970 and 1978, Dr Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, which acts as an investment advisor and fund manager.

 



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