Timing & trends

R. Russell: "Gold is looking increasingly interesting"

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Posted by Richard Russell - Dow Theory Letters

on Wednesday, 30 January 2013 10:00

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With Gold & Silver up sharply this morning, it might pay to look at what the GodFather of Financial writers the 89 year old Richard Russell had to say 5 days ago - Ed


Richard Russell: "The chart below almost speaks for itself.  Spot gold is in a rising trend and is touching its 50-day MA.  The nearby target is to climb above 1700.  There has been terrific resistance to gold's rise -- it's as if every penny higher has been fought against by the anti-gold group (and who could that be but the Fed?).  RSI and MACD are both bullish:.

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"GDX has been a lagger, both in the general market and a laggard vs. gold.  I think this ETF (holding the larger gold mining shares) would be a good item to put in your portfolio and forget about.  The gold mining stocks have big leverage to gold -- if or when gold finally takes off".

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"GDXJ is the ETF containing the speculative smaller gold mining stocks.  My advice, take a small position in GDXJ and forget about it for a while.  MACD is bullish.  I think it could be a surprisingly good long-term holding.  But for GDX and GDXJ you are going to need patience"

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Getting back to the general market, the Transports are surging into record high territory.  All that's needed now is a confirmation by the Industrials.  The Dow closed yesterday at 13,712.13 just 452 points below their record high of 14,164.53 established in 2007.  Below we see the Dow, climbing up a steep trendline.  

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"The public is bullish.  The retail investors are the most bullish they've been in four years.  Volume implications and MACD are bullish.  RSI is about to enter overbought area.  So shouldn't the Dow climb to new record highs?  Sure, so what's stopping it?  Just that old axiom, “The best laid plans of mice and men” -- Then we have Russell's axiom -- There's only two sure things in the market -- surprise and uncertainty!"


To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.

About Richard Russell

Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business.

Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.

The Letters, published every three weeks, cover the US stock market, foreign markets, bonds, precious metals, commodities, economics --plus Russell's widely-followed comments and observations and stock market philosophy.






Timing & trends

Theatre of the Absurd

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Posted by Bob Hoye - Institutional Advisors

on Tuesday, 29 January 2013 17:13



Well, the debt ceiling number has always been there, but it is often changed, when it is expedient. Never down and always up, and lately, with some drama. However, it does provide a chance for a voice of sobriety. The attached chart by Ron Griess shows that the debt level already exceeds the "limit".

The political drama could more specifically be called "Theatre of the Absurd". Only popular with the participants; the public and the markets could soon say "Enough!".

While we can hardly restrain our anticipation of such a revulsion, it would be prudent to watch the charts.

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.....go HERE for the entire article including:









Timing & trends

Why Germany Wants its Gold Back

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Posted by Peter Krauth - Money Morning

on Tuesday, 29 January 2013 12:41

After spending more than 50 years in foreign hands, Germany's gold is finally going home.

In a recent watershed decision the Bundesbank, Germany's central bank, has decided at least half of its gold should be held in its own vaults.

Since the Bundesbank is the second-largest gold holder in the world, that's going to mean moving 54,000 bars of the shiny metal.


According to Der Spiegel:

"Finally, in 2007, "following numerous enquiries," Bundesbank staff members were allowed to see the facility, but they reportedly only made it to the anteroom of the German reserves.

So why would the Federal Reserve deny the Bundesbank a full inspection and audit?

That question has been rich feed for the rumor mills ever since the news broke.

It shouldn't take until 2020 for it to make its way back home. Seven months -- maybe. Seven years means something else is up.

So let's have a closer look at the surrounding facts...

....whole article HERE


Timing & trends

Be ready to pull the trigger

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Posted by Larry Edelson - Uncommon Wisdom

on Monday, 28 January 2013 07:53

"Gold is on the verge of another failure, dangerously close to another leg Down not UP" - Larry Edelson

Unlimited money-printing from the Federal Reserve. Unlimited euro-printing from the European Central Bank. Unlimited yen-printing from the Bank of Japan ...

North Korea about to stage a rocket test directed at striking the U.S. North Korea now threatening war with South Korea. Terrorist actions in Algiers. In Mali.

Bankrupt Spain. Greece. Italy. France going down the tubes. Britain on the edge of its third recession since 2008, with its fourth-quarter 2012 GDP contracting more than expected.

Unemployment in Spain’s 16-to-24 age group just hit 55% and overall unemployment, 26.6%, the worst in Spain’s history.

Washington in debt past its eyeballs, and desperate. So much so, it’s acting as though the debt doesn’t exist at all — once again kicking the issue down the road, this time to May 18. And more.

012813-img-01And gold is now nearly $257 below its all-time record high. It can barely rally.

Every time it does, the rally fades away and now, the price of gold is dangerously near an important weekly sell signal on my systems, which stands at $1,657.

I would love nothing more than to tell you that gold has finally embarked on its next leg up to $5,000-plus.

But the fact of the matter is that there is no evidence that it has. Period.

In fact, gold is telling you exactly the opposite: That there isn’t even record demand for gold right now. That instead, demand is actually slumping.

That more debts are about to be liquidated than the central banks can offset with money-printing.

And that inflation has not yet broken out to the upside.

That’s why I’m sticking to what my models say: The next phase of gold’s bull market (and all commodities for that matter) — is not yet here.

Which is precisely why I’m still not ready to stick my head out and load up on more gold. Nor should you.

My forecast — despite all the hate mail and pressure I get to change it — has also not changed: Based on my systems and models, I will not turn bullish again on gold until either …

A. Spot gold has closed above $1,823 an ounce on a weekly and monthly basis. Or …

B. Gold cracks the $1,527 level and plunges to the $1,400 level, and even a tad lower.

I know that’s not what you want to hear. I know that you are as eager as I am to see the next leg of gold’s bull market begin.

I know that you want to buy more gold, load up on it and ride it to glory over the next few years. So do I.

But when a market as sensitive as gold is to geopolitical events … as sensitive as gold is to money-printing and bankrupt governments … doesn’t do what logic says it should be doing, then something else must be going on. Markets are never wrong.

So what is gold really telling us? With all the money-printing going on, why hasn’t gold broken out yet?

With busted governments in Europe, why isn’t gold rallying?

With new war threats coming in from North Korea and from terrorists, why isn’t gold flying to the upside?

Why, in the face of all that, is gold instead dangerously close to issuing another weekly sell signal on my systems, and threatening to plunge anew?

To those of you looking for a fundamental explanation, the reasons are simple:

I see two major forces at work right now that are overpowering all the others …

First, money-printing — even when virtually all major central banks are doing it — means nothing when most of the money being printed is merely ending up sitting in the banks. I’ve said that before and it’s still largely the case.

It means consumers aren’t interested in adding to debt by increasing their borrowings and credit lines … and the velocity of money, or its turnover, is virtually non-existent.

Ditto for corporations that are conserving cash and largely paying down or refinancing debt rather than taking on new debt. Or choosing to buy back their own shares.

Second, fears of North Korea’s recent threats or renewed terrorist uprisings are — at this time — also actually suppressing gold. It’s causing just enough geopolitical uncertainty to put savvy investors in a “cash mode” of thinking … and not quite enough uncertainty to drive them directly into gold.

Both of the above forces will — down the road — become bullish forces for gold. But as those who recently attended the Weiss Wealth Summit in Florida already know from my presentation at the event, none of the above forces will become bullish until it’s time for them to do so.

And based on my work, that’s not likely until later this year. And from much lower prices in gold.

I know that’s difficult to understand. But do listen to the markets and what they are telling you. The markets, I repeat, are never wrong. Only the interpretations and expectations are.

So stay the course. Build up your stash of cash ammo so that when it does come time to pull the trigger on gold again and back up the truck, you will be able to.

Ditto for silver and other natural-resource and tangible-asset investments. While their time to shine is not here yet, it will come again, I assure you that.

You want to be fully ready and able to capitalize on these forces. If you listen to the pundits who proclaim the next bull market is here every time gold rallies $5 or $10 … or even $25, you won’t be ready. You’ll be far more likely to suffer massive losses. Ditto for silver.

Stay the course, build up your ammo, and be ready to pull the trigger when I issue a headline like “Back Up the Truck, NOW!”

Best wishes,


Larry Edelson has over 34 years of investing experience with a focus in the precious metals and natural resources markets. His Real Wealth Report (a monthly publication) and Power Portfolio 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 Power Portfolioclick here.



Timing & trends

The Market Has Changed - Time To Sell The World

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Posted by Equedia

on Sunday, 27 January 2013 14:23

robot-evolution3The advent of computers and the internet have brought much change to the industry. Brokers are no longer required to trade stock; anyone can trade stock for less than $10 a trade. Algo-machines now represent probably well over 30% of daily volume on any exchange in a given day. These trading software platforms place and make trades in nanoseconds and often hold stocks for no more than 16 seconds. Just ask the guys at Tradebot

When I wrote last year that the S&P would hit 1500, most experts thought I was nuts. The fundamentals weren't there to justify it, and to some degree they were right. But the market has changed. So much in fact that technicals, and a lot of what experts have studied throughout their careers, are no longer relevant - at least not entirely. 

Those who used to study technical charting patterns have never studied the effects of these machines. It's a different world now. 

On the Canadian front, the big institutions are also benefitting from the little guys. They make trades for little cost and even get a kick back from the exchange based on the amount of trades they make. When everyone is scraping for pennies, you can bet the big guys are taking advantage of every retail trader they can by short selling and manipulating the markets any which way that benefits them. This isn't hard to do given the liquidity issues in the Canadian market which makes it really difficult for companies to thrive. 

Market Expectations

Congress has pushed the debt ceiling deadline out to mid-May to give both sides more time to pound out a budget agreement, so there are strong reasons to expect a favorable seasonal rally to continue.

There still remains a tremendous amount of cash on the sidelines earning next to nothing in savings accounts and bond funds to fuel a further rally. And as I mentioned in my letter, "Time to Sell the World," there is evidence that previously bearish investors who took money out of the stock market after 2008 are pouring back in. I also said that once the S&P pops passed 1500, we should all be much more careful as, "we have more downside than up at these levels."

The key to investing is to buy low and sell high; not buy high and sell higher. It may not necessarily happen this month, but I feel we're closing in on a near-term top. I started this letter saying this is the best January for the Dow Industrials since 1994. What I didn't tell you is that the best January in 1994 for the Dow Industrials was followed by a nasty decline of 10% the month after. 

I know investors remain bullish and sentiment has been pushed higher, but it's time to start peddling back a little and let your money breathe. Even if just a little.

The market has been up 11 of the last 12 days...

Time to Sell the World?

I believe the markets have topped in many countries around the world, including Germany, France, and the UK. That means it's probably time to sell Europe; the U.S. is getting very close. A rise above 1475 in the S&P next week could lead us to 1490. I predicted we would peak at 1500 last year within a twelve-month time frame, and we're awfully close to that number. 

I am not saying it's the end, but I we have more downside than up at these levels - especially in the short-term.

Next week may not be pretty for European markets. But then again, fundamentals haven't mattered in years, why should technicals?

(Btw, Greek unemployment data was just released and it wasn't good.  The broad unemployment rate for October has been revised to a new record high of 26.8%. The youth (15-24 age group) unemployment also rose to a new all-time high of 56.6%. The ratio of those employed (3.68MM) to unemployed (1.34MM) has now dropped to a record low 2.75x. What's even more staggering is that the total number of inactive workers (3.34MM) could soon surpass all those who are working. Inactive are those persons who are neither classified as employed nor as unemployed.)

Inflationary Dragons

Bill Gross, the world's largest bond fund manager and one of the smartest in the business, has been very bold in his statements regarding worldwide monetary and fiscal policy, and gold. 

In his most recent monthly investment outlook:

"Investors should be alert to the long-term inflationary thrust of such check writing. While they are not likely to breathe fire in 2013, the inflationary dragons lurk in the "out" years towards which long-term bond yields are measured. You should avoid them and confine your maturities and bond durations to short/intermediate targets supported by Fed policies. 

In addition, be aware of PIMCO's continued concerns about the increasing ineffectiveness of quantitative easing with regards to the real economy. Zero-bound interest rates, QE maneuvering, and "essentially costless" check writing destroy financial business models and stunt investment decisions which offer increasingly lower ROIs and ROEs. 

Purchases of "paper" shares as opposed to investments in tangible productive investment assets become the likely preferred corporate choice. Those purchases may be initially supportive of stock prices but ultimately constraining of true wealth creation and real economic growth. 

At some future point, risk assets - stocks, corporate and high yield bonds - must recognize the difference. Bernanke's dreams of economic revival, which would then lead to the day that investors can earn higher returns, may be an unattainable theoretical hope, in contrast to a future reality. Japan we are not, nor is Euroland or the U.K. - just yet. But "costless" check writing does indeed have a cost and checks cannot perpetually be written for free.``

Gross said that subject to the debt ceiling, the Fed is buying everything that Treasury can issue. He warns that we have this "conglomeration of monetary and fiscal policy" as not just the US is doing this but Japan and the Eurozone is doing this also.

Gross is a bond king, not a gold investor. But even he cannot stay away from the lustre of the shiny metal. 

On December 30, Gross tweeted:

"2013 Fearless Forecasts: 1) Stocks & bonds return less than 5%. 2) Unemployment stays at 7.5% or higher 3) Gold goes up......"

Gross may not always be right, and his timing not always be spot on, but he is certainly more right than wrong. And in the investment world, that makes him a superstar. 

Gold bears may want to rethink their strategy...

Ivan Lo

Equedia Weekly  


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