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Timing & trends

Comex Gold Inventories Collapse By Largest Amount Ever On Record

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Posted by Tekoa Da Silva: Bull Market Thinking

on Wednesday, 10 April 2013 07:41

Gold-Reserves

A stunning piece of information was brought to my attention yesterday. Amid all the mainstream talk of the end of the gold bull market (and the end of the gold mining industry), something has been discretely happening behind the scenes.

Over the last 90 days without any announcement, stocks of gold held at Comex warehouses plunged by the largest figure ever on record during a single quarter since eligible record keeping began in 2001 (roughly the beginning of the bull market). See chart below.

warehouse-deliveries

......read & view more HERE



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Timing & trends

Weekly Key Reversals Speak Louder than Central Bankers

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Posted by Victor Adair

on Tuesday, 09 April 2013 06:27

VictorCQGMarkets were knocked around…and experienced several Weekly Key Reversals (WKR) this past week as Central Bank (CB) policies became increasingly unconventional…and as Market Psychology (MP) began to anticipate that CB's may go totally “off the reservation” as chronic weak employment foreshadows never-ending populist government entitlement programs…which will be “funded” with debt and taxes…as the Ruling Elite struggles to maintain some semblance of the status quo.

MP seems to be in the mood to start “seeking safety” despite the liquidity flood from the CBs…and something from the European Theatre, be it Italy or another Cyprus, may cause MP to embrace the “Sell in May and Go Away” theme.

The BOJ, the BOE and ECB all had scheduled meetings this past week. The BOJ took more-dramatic-than-expected steps to expand their monetary base (i.e. buy assets: bonds, stocks etc.) in line with their stated goal of moving the country from a deflationary state to a level of 2% inflation…and therefore the Yen had a very dramatic WKR down while the Nikkei had a very dramatic WKR up. (The Nikkei is up ~53% since the Key Turn Date of Nov 15, 2012 – a date when Market Psychology realized that Abe would become the new Japanese PM and begin to implement his inflationary policies…the Yen has fallen ~18% against the USD to its lowest levels in 4 years.)

The BOJ actions drew considerable media comment: for instance both George Soros and Bill Gross noted that this was very dramatic action…and implied that the law of unintended consequences might kick in. The BOJ apparently feels as though they have no choice but to take extreme measures. Japan has been in deflation for 2 decades…their population is shrinking…their demographics are dreadful…the “drama level” of their actions are reminiscent of Paul Volker in 1979 breaking the back of inflation (and inflationary expectations) in the USA.

The BOE meeting had little market impact but the ECB meeting (and the following Draghi press conference) saw the Euro trade to 5 month lows Vs. the USD then turn sharply higher with a WKR.

Big Picture Questions: Ambrose Evans Pritchard of the Telegraph asks the question, “What if QE from the Central Banks never ends?” Fair question. We were led to believe that QE was designed to get economies going again…their activities would be an interim substitute for private sector spending…and once the private sector revived then QE would end. Well…what if the private sector doesn’t come back? High unemployment may be chronic…and government entitlement spending may keep increasing…some would see that leading to a major bust…stagflation…but what if the Central Banks just keep QE going? What if they just monetize the government deficits? How would the markets respond if that became the predominant Market Psychology? Would that mean ultra-low interest rates for a very long time? Would that mean even greater “reaching for yield” as the public and the pension funds need more income?  Would that mean Dow 36,000 etc.?

Big Picture Response: I have had nearly all of my net worth in cash for a long time…which has meant that I’ve missed some bubbles…and some crashes. I’ve divided my cash into two parts: short term trading accounts and long term savings accounts. I actively move in and out of the markets with my trading accounts while my long term savings sit idle in the bank. I’ve been reluctant to “reach for yield” with my savings (perhaps because I haven’t had to) and I’ve been reluctant to “buy into” what I see as potentially illiquid assets…principally real estate. I’ve anticipated that asset prices would likely have a major “wash-out” and that would be the time to buy. That’s still my opinion…but…if CBs get really determined to turn cash into trash then I may have to “go to the market” and swap my cash for “stuff.”    

Currency wars: In earlier blog posts I speculated that the Koreans might get “cranky” if they lost export market share to the Japanese because of the falling Yen…well, in line with the old mantra, “Don’t get mad, get even” I note that the Korean Won has fallen ~8.5% Vs. the USD since mid-January…which means that the Won has stayed about level with the Yen since then. “Currency wars” have moved off the front page…but be prepared for more “competitive devaluations.”

Markets: Several WKR across asset classes (stocks, commodities, currencies) may mean that this past week was a Key Turn Date…it’s too early to say…but the reversals may be an early indication that MP is changing. Stocks: WKR down in the S+P and the FTSE. TSE had a terrible week, now negative on the year. WKR up in the Nikkei. Commodities: WKR down in Brent, WTI and Gasoline. Note: Nat Gas is at its best levels in 18 months…trading about double last year’s lows. Gold: Not a WKR but it rebounded $40 Thurs/Fri after touching the lows of the last 18 months. Gold shares dropped to new 12 year lows Vs. gold bullion. This blog has warned several times over the past two years against trying to “find a bottom” in gold shares. Currencies: WKR down (Big Time) in the Yen, up in the Euro, Pound and pretty well everything Vs. the Yen. Bonds: Japanese bonds dropped (briefly) to an all-time low yield…yields on “top quality” government bonds have fallen for the past three weeks…really fell the last three days…US and CAN 10 year yields are at 1.75%, German 10 years are at 1.2%...and Japanese 10 years are at ~0.50%.

Short term trading: On Feb 20 I covered a short gold position I had maintained for over a year…I bought gold in early March…added to that on the Cyprus story…but covered this past Tuesday at a small loss. Gold had a great opportunity to rally on the Cyprus story…and didn’t take it…so I covered my long positions…went short for a day and then went to the sidelines.  I had short term profitable trades long CAD, short NZD and short S+P this past week…went flat ahead of the Friday employment reports and remained flat into the weekend.

Anticipating:  WKR's across a number of markets may be signaling that this past week was a Key Turn Date…too early to say…but…for my short term trading accounts I’m anticipating that Market Psychology may start to “seek safety.” I’m therefore looking for an opportunity to short the stock market, buy the USD and…perhaps…buy gold.

Futures and futures options are the best way to trade currencies, metals, stock indices and many other financial and commodity markets. Call 604 664 2842 to talk with a futures broker.



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Timing & trends

INSIDE: HOW TO AVOID LOSING YOUR SHIRT!

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Posted by Larry Edelson - Swing Trading

on Monday, 08 April 2013 07:11

Last week, I told you about the hundreds, if not thousands of readers that wanted my head for remaining bearish on gold and silver.

Well, gold and silver have taken the shirts off the backs of loads of investors and analysts who refused to listen to me!

Gold has now cracked major support at the $1,583 and $1,554 levels. And silver has now sliced right through key support at $27.58.

Chart1s

Chart2s

What’s more, it is now confirmed: Gold should head much lower, first to the $1,480 level, then even lower to below $1,400. Silver should plunge as low as $20 in the weeks ahead.

Why are traditional safe-haven assets plunging when there are so many problems in the world?

In a nutshell, it’s because they’re not safe-haven assets right now.

I can already hear my email inbox beeping like crazy over that statement. I’ll be accused of treason.

But the simple fact of the matter is that for a variety of reasons, other asset markets have now become safe havens. Namely, the dollar and U.S. equities.

And that’s because right now, there are other overriding concerns on investors’ minds.

First off, there are the new and justifiable fears of confiscation, set off by the Cyprus event. If your deposits in a bank aren’t safe, then how safe could gold be? After all, it was confiscated once before by Roosevelt.

Second, almost the entire world already knows that the sovereign bond markets of Europe and the United States are just about the worst investment one can make.

Stop there. Money deposited in a bank is not safe. Money invested in a European or U.S. sovereign bond is not safe, and no yield to speak of either.

Third, is there safety to be found investing in the euro? Hardly!

Is there safety to be found in the Japanese yen, which is actively and aggressively being devalued? Hardly!

Is there safety to be found in the Chinese yuan, which just hit a 19-year high against the U.S. dollar? Perhaps there is longer-term. But right now the yuan is not international enough and not liquid enough to handle the amounts of capital that are on the move.

So then, what and where is the best place to put your money today? It has to be an investment that is …

1. Extremely liquid and can handle huge amounts of investment.

2. Largely safe from government confiscation.

3. Offering at least some sort of chance to generate a decent income.

4. Denominated in a currency that is being, at least right now, less actively devalued than the Japanese yen and at risk of outright failure like the euro.

If you follow the above thought process through logically and unemotionally, you can now see why millions of investors, corporate fund managers and even corporate treasuries are opting to put their money into the U.S. dollar and the U.S. equity markets rather than just about anything else right now.

Of course, the above is an oversimplified explanation of the actual process underway now in the markets and the forces that are at work.

But it is precisely what’s happening.

Look, I love gold as much as any of you. Over the long-term there is no better store of value.

But gold (and silver) is a commodity just like any other. At times, its safe-haven aspect will shine, while at other times, other asset markets will perform that role.

And right now, the dollar and U.S. equities have moved to the forefront. That will change, and commodities will move back to the forefront with gold leading the way higher …

But it’s not likely to happen until investors fully realize that Washington is just as broke as Cyprus, Italy, Spain, Greece, France, and others. And that’s a ways off.

So Here’s What I Recommend …

FIRST, do NOT look to gold and silver for safety right now. Their interim bear markets are not over, not by a long shot. Ditto for mining shares.

While there are going to be the inevitable short-covering rallies and bounces, gold, silver, platinum, palladium, and mining shares are all headed lower.

SECOND, if you are loaded up with gold and silver and mining shares from much, much lower prices and you decide to hold through thick and thin to capture their long-term potential, then at least consider hedging.

As I mentioned in my special Money and Markets alert on April 3, the best way to do so in my opinion is by purchasing shares in ProShares UltraShort Gold ETF (GLL)and ProShares UltraShort Silver ETF (ZSL).For mining shares, consider theDirexion Daily Gold Miners Bear 3x Shares (DUST).

THIRD, do not expect other commodities to rally right now either.

Copper is getting killed. Oil is now rolling over to the downside and has the potential to fall substantially. Grain markets are getting slaughtered. Soft commodities, such as coffee, sugar, and cocoa are also on the cusp of sharp declines.

FOURTHstay in the dollar now. The dollar is in an interim bull market. One good way to play it is via the PowerShares DB US Dollar Index Bullish Fund (UUP).

FIFTH, start deploying money into cream-of-the-crop U.S. equities. Buy on pullbacks. But only buy great U.S.-based multi-national companies that offer you a decent dividend.

Right now, the U.S. stock markets are due for a pullback. But the Dow Industrials gave me a very powerful long-term buy signal at the end of March. After the pullback passes, I expect the Dow to work its way up to near, or slightly above the 18,000 level ? possibly by early summer.

SIXTH, start making U.S. real estate investments. Most think I’m nuts on this one too. But U.S. real estate is dirt-cheap on an international basis and is becoming a safe-haven investment for capital that’s on the move.

Screen shot 2013-04-08 at 6.02.19 AMConsider well-capitalized real estate investment trusts and the like that spin off income.

And if you’re in the market for your first home, or a second home, now is a great time to buy and finance it at historically low mortgage rates, but do not finance with anything other than a fixed-rate mortgage.

If you’re super wealthy, look at some other asset markets too ? such as diamonds, art work, and numismatic coins. I am not an expert in any of them, but from a broad macro trend point of view, they are likely to skyrocket higher as safe havens for the super wealthy.

Best wishes, as always …

Larry



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Timing & trends

Faber : I am sure the Governments will one day take away 20-30% of my Wealth

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Posted by Marc Faber

on Saturday, 06 April 2013 15:15

“MF Global, the depositors were also raided. It is nothing unusual. Philosophically I believe that we shouldn’t have deposit insurances, blanketed insurances by governments because it would force savers to be very careful with which bank they would deposit the money. The good banks would pay very low interest and take low risks and the banks that take high risks would have high interest. By the way, in Cyrus, banks were paying very high interest like in Lebanon at the present time I can get 6% on my deposits. So the depositors should have known that something is dangerous, but I would say that the principal now is very important to understand. Until now, the bailouts in Europe and the U.S. were at the expense of the taxpayer. And from now onwards, in my view, the bailouts will also be at the expense of the asset holders, the well-to-do people. So if you have money — like I am concerned — I am sure the governments will one day take away 20-30% of my wealth.” - in a recent interview

The majority of people don’t benefit from a rise in the Stock Market

“If you look at what happened in Cyprus, basically people with money will lose part of their wealth, either through expropriation or higher taxation,” explained Faber. “The problem is that 92 percent of financial wealth is owned by 5 percent of the population. The majority of people don’t own meaningful stock positions and they don’t benefit from a rise in the stock market. They are being hurt by a rising cost of living and we all know that the real incomes of median households have been going down for the last few years.” - in CNBC

The Revenues will continue to disappoint and that Earnings could very well disappoint quite badly

"Given the poor outlook in Europe and the slowdown in emerging economies, which has been confirmed by companies like Caterpillar (CAT) and McDonald's (MCD), I would say that the revenues will continue to disappoint and that earnings could very well disappoint quite badly,"

 

 



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Timing & trends

The Skeptical Investor - April Update

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Posted by Mark Jasayko

on Friday, 05 April 2013 04:42

Produced by McIver Wealth Management Consulting Group


Mark Jasayko, CFA,MBA, Portfolio Manager with McIver Wealth Management of Richardson GMP in Vancouver.

www.McIverWealth.com



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