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Timing & trends

5 Reasons Why The Euro Crisis Not Solved & 2 Actions To Take

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Posted by Larry Edelson - Uncommon Wisdom

on Monday, 12 March 2012 06:05

Many already think that the European sovereign debt crisis is passing. That the latest bond deal and bailout for Greece solves everything.

But as far as I’m concerned, nothing could be further from the truth.

First, severe austerity measures do not create growth. So there’s no way Greece can grow its way out of its debt morass, even after the latest debt write-downs.

The proof is simple math. Before the Greek crisis flared up, debt-to-GDP in Greece stood at 120%. Today — and I repeat, even after all the write-offs — Greek debt-to-GDP stands somewhere north of a whopping 160%.

That’s more than 40% higher than it was at the beginning of the crisis — and the austerity measures are literally causing the Greek economy to implode, creating some of the worst social chaos we have seen in modern times.

Second, Italy, Portugal and Spain still remain vulnerable dominos. Each and every one of them is in hock way over their heads. And each and every one of them is just beginning to feel the impact of austerity measures.

Unemployment among youth is as much as 25%. Corporate and personal bankruptcies are surging. Social discontent is on the rise again. And tensions between countries within Europe are as high as ever.

Third, European banks themselves don’t buy any of the solutions. They show no confidence in Europe’s ability to survive the crisis.

That’s why Europe’s banks are holding on to money for dear life. Rather than lend into the economy, these banks are hoarding their cash, stashing droves of it at the European Central Bank (ECB) …and even scrambling to deposit hundreds of billions with Western central banks for safe-keeping.

Fourth, Europe’s economy as a whole is sinking. The ECB’s latest economic projections show the economy may contract 0.1%. That may not sound like much, but the previous forecast was for 0.3% positive growth.

Worse, that’s not going to help Europe’s internal financing needs this year. Italy and France alone have over $795 billion in debt that will have to be rolled over this year. With growth sharply slowing, plus uncertainty about which dominoes will be the next to fall, there’s a very real chance of a massive bear market collapse in European debts this year that takes down the entire European Union.

Fifth, high energy prices are making matters all that much worse. It would be one thing if we were seeing $35-a-barrel oil and cheap gasoline prices. But we’re not. So, high energy prices are certainly not helping the situation in Europe. Period.

Neither is inflation. With austerity measures squashing growth all over Europe and inflation on the rise, Europe is facing a double whammy in the months ahead. More hits to economic growth, more trouble rolling over debt and, soon, another renewed rise in social discontent.

In short, nothing, and I mean nothing, has been solved in Europe. There may be a lull in the crisis, but it will soon return with a vengeance.

As for the United States — don’t kid yourself. The U.S. economy looks better only because Europe looks so bad. In reality, the U.S. debt mountain is in even worse shape. And when it falls, it will fall hard.

Fortunately, we have some time before it crumbles. But not much. And as long as Europe’s crisis worsens, the U.S. will look like the better place to invest.

Which is precisely why the U.S. dollar is starting to rally again.

My suggestions …

A. Keep most of your liquid funds in cash, ready to be deployed on a moment’s notice, but as safe as can be right now. The best way: A short-term Treasury-only fund in the U.S., or the equivalent.

B. Hold on to all long-term gold holdings. You do not want to let go of those. Gold is heading to well over $5,000 an ounce over the next few years.

In the short term, however, I would not be surprised to see gold — and silver — move lower.

For one thing, as the U.S. dollar strengthens again, some of the shine will come off of the precious metals, even as Europe’s problems fester.

For another — and very importantly — both gold and silver failed to give monthly buy signals on Wednesday, February 29.

In fact, they failed miserably, with gold plunging more than $100 an ounce, more than 5.5%, in a single day and failing to take out the monthly buy signal at $1,789.

Silver, meanwhile, plunged almost 10% on February 29 and failed to close above its monthly buy signal at $35.85.

These are significant failed signals that strongly suggest that my forecast for lower metals prices — before they truly break out to the upside — remain on target.

Indeed, the next important levels of support for the metals — which I expect to see tested in the weeks ahead — are now at the $1,490 level in gold and the $29 level in silver. If those levels give way, even lower prices could be seen in the short term.

So if you’ve acted on any of my recent suggestions for light speculative bearish positions in gold and silver via inverse ETFs such as the ProShares UltraShort Gold (GLL) and ProShares UltraShort Silver (ZSL), I suggest you continue to hold those positions.

Ditto for my suggestion for bearish speculative positions on the euro via the ProShares UltraShort Euro (EUO) …and for the stock market via inverse stock index ETFs such as the ProShares UltraPro Short S&P 500 (SPXU).

EU-crisis-First-image

Don’t overtrade them, though. Those are speculative positions and I cannot help you via this column with precise timing and risk management. So keep that in mind.

Best wishes,

Larry

P.S. I’m just putting the finishing touches on the March issue of my Real Wealth Report. If you’re already a member, be sure to check your inbox this Friday, March 16, for my latest forecasts and a lot of news about how Real Wealth is going to help you get positioned for profits. If you’re not a member, this is a fantastic time to get started.

To join for the year, click here now. It will be the best money you spend this year. I repeat, click here now.

Larry Edelson has nearly 33 years of investing experience with a focus in the precious metals and natural resources markets. His Real Wealth Report (a monthly publication) and Resource Windfall Trader (weekly) provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management.

For more information on Real Wealth Reportclick here.
For more information on Resource Windfall Traderclick here.



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Timing & trends

What’s hot, what’s not and loving volatility

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Posted by Mickey Fulp: The Mercenary Geologist

on Friday, 09 March 2012 00:00

bullish-exchange-320

MINING.com editor Andrew Topf sits down with mining analyst Mickey Fulp, who topped the site’s list of recommended mining bloggers and newsletter writers. In this brief interview on the sidelines of the PDAC convention in Toronto, Fulp touches on gold stocks, current market volatility, and two metals he likes best right now: uranium and graphite.

Andrew Topf: What metals are you bullish on right now?
Mickey Fulp: Copper, gold and uranium, and I’ll put graphite into that too.
Andrew Topf: Right, graphite seems to be the belle of the ball right now.
Mickey Fulp: It is, it’s the next big thing it reminds me very much what happened with REEs in 2009. We’re building a bubble in graphite, every snake oil salesman, shark and charlatan is swimming aorund in Coal Harbor in Vanouver right now. Every Vancouver promoter is scurrying around trying to find a shell to throw a graphite project in, so it looks very much like the next big thing. Like other area and commodity plays the juniors will rush in and 95% of them will fail and the ones with good deposits and good business plans will succeed.

.....read the entire interview HERE

 



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Timing & trends

CAUSE, EFFECT & THE FALLACY OF A RETURN TO NORMALCY

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Posted by The Burning Platform via Peter Grandich

on Thursday, 08 March 2012 00:00

“Thousands upon thousands are yearly brought into a state of real poverty by their great anxiety not to be thought of as poor.” – Robert Mallett

Debt-Is-Slavery

I hear the term de-leveraging relentlessly from the mainstream media. The storyline that the American consumer has been denying themselves and paying down debt is completely 100% false. The proliferation of this Big Lie has been spread by Wall Street and their mouthpieces in the corporate media. The purpose is to convince the ignorant masses they have deprived themselves long enough and deserve to start spending again. The propaganda being spouted by those who depend on Americans to go further into debt is relentless. The “fantastic” automaker recovery is being driven by 0% financing for seven years peddled to subprime (aka deadbeats) borrowers for mammoth SUVs and pickup trucks that get 15 mpg as gas prices surge past $4.00 a gallon. What could possibly go wrong in that scenario? Furniture merchants are offering no interest, no payment deals for four years on their product lines. Of course, the interest rate from your friends at GE Capital reverts retroactively to 29.99% at the end of four years after the average dolt forgot to save enough to pay off the balance. I’m again receiving two to three credit card offers per day in the mail. According to the Wall Street vampire squids that continue to suck the life blood from what’s left of the American economy, this is a return to normalcy.  

The definition of normal is: “The usual, average, or typical state or condition”. The fallacy is calling what we’ve had for the last three decades of illusion – Normal. Nothing could be further from the truth. We’ve experienced abnormal psychotic behavior by the citizens of this country, aided and abetted by Wall Street and their sugar daddies at the Federal Reserve. You would have to be mad to believe the debt financed spending frenzy of the last few decades was not abnormal.   

saupload clip image002 289 29

The Age of Illusion
“Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces.” - Sigmund Freud

In my last article Extend & Pretend Coming to an End, I addressed the commercial real estate debacle coming down the pike. I briefly touched upon the idiocy of retailers who have based their business and expansion plans upon the unsustainable dynamic of an ever expanding level of consumer debt doled out by Wall Street banks. One only has to examine the facts to understand the fallacy of a return to normalcy. We haven’t come close to experiencing normalcy. When retail sales, consumer spending and consumer debt return to a sustainable level of normalcy, the carcasses of thousands of retailers will litter the highways and malls of America. It will be a sight to see. The chart below details the two decade surge in retail sales, with the first ever decline in 2008. Retail sales grew from $2 trillion in 1992 to $4.5 trillion in 2007. The Wall Street created crisis in 2008/2009 resulted in a decline to $4.1 trillion in 2009, but the resilient and still delusional American consumer, with the support of their credit card drug pushers on Wall Street, set a new record in 2011 of $4.7 trillion.     

RetailJan2012

.....read more HERE




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Timing & trends

Another Golden Triangle: The reason there's still big money to be made in Precious Metals

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Posted by ChartWorks - Ross Clark via Bob Hoye's Institutional Advisors

on Wednesday, 07 March 2012 00:00

"The most bullish examples would see the pattern develop into a series of lows around $1690 or an A-B-C correction, as experienced in 2010, which holds around $1660 (50% retracement from the December lows). A close above $1775 would be the catalyst for a challenge of $1900 to $2155. At the other extreme, a failure to hold $1625 (62% retracement from $1523) would imply that the December lows will be taken out."

....read and view all charts HERE



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Timing & trends

Four Cycle Turns Warn of a Stock Market Top in March 2012

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Posted by Robert McHugh_PhD - Comment by Mark Leibovit

on Tuesday, 06 March 2012 07:24

Mark Leibovit  - STOCKS - ACTION ALERT - SELL (Looking to Buy In A Month or Two)

What's interesting is that the year to date has been the best start in stock indices since 1998 according to Dow Jones Newswires. As of the close today this is the 45th consecutive day without a triple digit decline. A canary in the coal mine? Today is 'Turnaround Tuesday', so with markets down a bit yesterday perhaps we can stage a rally today. But wait! Tomorrow is 'Weird Wollie Wednesday' and often either tomorrow or Thursday, according to the lore, there should be a shakeout ahead of a week from Friday's Options Expiration. Is all of this just noise? Well, maybe not. We're approaching that time of year when the markets often experience some form of indigestion. Yesterday, though the volume was NOT excessive, nevertheless we did volume increase to the downside. Benjamin Netanyahu spoke last night (covered sole on Fox News) before the American Israel Public Affairs Committee (AIPAC) and warned that time is running out for Iran. Folks, brace yourself. Sometime before now and the end of May, we're likely to see a full scale confrontation unfold as the Mayans watch from the heavens. Would this be a good time to be in the marketplace? Markets don't like uncertainty. I think the answer is no. The 50 and 200 day moving averages in the S&P 500 current sit at roughly 1323 and 1270. These are the next two potential downside targets if the S&P 500 cannot post a new high between now and the first of April. Apple, Inc. took a bit of a nosedive today. If Apple can't rally (and it was about the only big stock doing so), the writing may be on the wall. Think about it. I can't imagine one mutual fund, one institution, one endowment or one growth portfolio not owning Apple. Everyone now owns it, but where are the buyers should these folks decide to sell? I have avoided Apple because it is technically way, way too, extended and would only arouse my interest if it sold off back into the low to mid 400s - maybe lower. I've changed my mind. Time to flip to a SELL signal. Let's see where the market is come the beginning of April or even perhaps the end of May. If the market rallies a bit higher first and you decide not to sell here, I would use that strength to lighten up. Now is a time to step aside and watch from the sidelines. I still believe there could be another big rally, but let's revisit this market in a month or two. I am going to cash! - Mark Leibovit - for a VRTrader TRIAL SIGNUP go HERE

Four Cycle Turns Warn of a Stock Market Top in March 2012

There is a lot of cycle evidence that suggests a top is coming in March 2012. How significant a top is hard to say, but the odds are the coming decline will be at least in the 10 percent area. If this coming top is the top of Grand Supercycle degree wave {III}, then stocks will begin a decline that could retrace 50 percent or more of the market over the next several years, with large chunks of decline occurring incrementally, followed by normal 40 to 60 percent retracements as stocks work toward significantly lower levels. This weekend we will present this cycle evidence, which we believe is compelling.

First of all, the last phi mate turn date was in December, which led to a two month rally of significance. It was a major phi mate turn. March 7th is the next phi mate date, and the only phi mate turn date since that December turn. It also is a major phi mate turn, meaning its phi mate, its partner date, was also a major turn.

stock-market-cycle-top-march-2012-1

....read & view more charts HERE



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