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Gold & Precious Metals

Gold Stock Truth Serum


Posted by Stewart Thompson: Graceland Updates

on Tuesday, 09 April 2013 07:38

  1. Is gold bullion leading gold stocks higher, or is the current “wet noodle” action of most senior gold stocks suggesting that the recent lows at $1540 will fail?
  2. I don’t think I’ll join the debate about whether the $1540 area is some sort of “ultimate bottom”, but I will suggest that both gold & silver seem to be getting ready for a nice rally.
  3. Please click here now. You are looking at the weekly chart for gold. Generally speaking, I believe in the “three strikes” rule. In baseball, it’s “three strikes and you’re out”.
  4. In the 2011-2012 timeframe, gold touched key HSR (horizontal support and resistance) in the $1577 area, three times.
  5. In 2013, gold has arrived there, for the 4th time. It’s unknown whether gold rallies strongly from here. It’s also unknown whether gold will fail here, and plunge lower.
  6. I will suggest that time in the congestion pattern “hourglass” is running out quickly, and a trending move, either up or down, will begin very soon.
  7. From a technical standpoint, congestion patterns have roughly a 2/3 chance of consolidating the primary trend (up in this case), and a 1/3 chance of reversing it. This is clearly good news for gold investors.
  8. Also, a poll taken at the recent Dubai gold conference showed that about 63% of the participants believed gold would rise to $3000 in 2014, and about 37% believed it would fall towards $1000.
  9. The poll and technical analysis of gold’s congestion pattern are roughly in “agreement” that gold should move higher.
  10. Please click here now. Right now, my focus in the gold market is this daily chart. Technically, it’s looking better and better.
  11. Gold is trading in a range between $1540 and $1620. A move below $1540 would open the (trap) door to about $1460, while a breakout above $1620 would suggest a rally to $1700.
  12. Note the position of my “stokeillator” (14,7,7 Stochastics series). It’s moved down nicely. In the $1615 area, I suggested that gold needed to rest, due to the nosebleed level of the stokeillator.
  13. Gold has rested, and looks to me now, like it’s a cat that is stretching lazily, after a wonderful nap. If I was a “dollarbug mouse”, I would consider looking for some serious shelter, very soon.
  14. The red lead line of the stokeillator sits near the 30 area, and it’s beginning to turn up. There’s a chance that it could decline towards the oversold area (below 20), if Wednesday’s critical FOMC minutes report contains a bearish surprise.
  15. Regardless, I’m going to predict that Friday’s employment report is where Ben Bernanke’s focus will be now.
  16. Please click here now. This shorter term hourly bars chart also hints that gold should move higher. I think the next minor trend move will be a rally towards $1620, rather than a decline to $1540.
  17. There’s a rough-looking head & shoulders pattern in play. If it fails, gold will probably fall to $1555-$1560, before mounting a more serious rally. I don’t think it will fail. I think the pattern will take gold up, to test the key $1620 HSR area.
  18.  Please click here now. You are looking at the daily chart for silver. My stokeillator “traded” down to about 15, and is now hooking up nicely.  Overall, silver looks better than gold. Its strong technical position also adds weight to the argument that gold’s rally can continue, even if it gets “whipsawed” by the release of the FOMC report.
  19. Most investors in the gold community own a lot of gold stock, with an emphasis on the junior sector. It’s been tough lately, but since the lows at $1540 occurred, the juniors have been looking better than the seniors.
  20. I believe that it’s critical to keep an eye on trading volume right now. Some technicians say that following volume is like drinking truth serum.  
  21. I don’t mind seeing the price of gold stocks decline further from here, but if that happens, I want to see volume decline, too. That’s bullish technical action. If there is a rally, and I think there will be, I want to see volume rise.
  22. Please click here now. You are looking at the GDXJ chart. If you can, check the volume at the end of each trading day. Check it for your favourite gold stocks, too.
  23. Do you see how low the trading volume was yesterday? The price declined, and so did volume. That’s bullish technical action.
  24. If price rises today, and I hope you all want that to happen, then volume should rise too. The bulls are beginning to fight back!

Apr 9, 2013
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
email for questions: stewart@gracelandupdates.com
email to request the free reports: freereports@gracelandupdates.com



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Currency

A Date Which Will Live in Yenfamy


Posted by John Mauldin: Mauldin Economics

on Tuesday, 09 April 2013 07:04

Unknown-1"All serious poker players try to minimize their tells, obviously. There are a couple ways to go about this. One is the robotic approach: where your face becomes a mask and your voice a monotone, at least while the hand is being played.... The other is the manic method, where you affect a whole bunch of tics, twitches, and expressions, and mix them up with a river of insane babble. The idea is to overwhelm your opponents with clues, so they can't sort out what's going on. This approach can be effective, but for normal people it's hard to pull off. (If you've spent part of your life in an institution, this method may come naturally.)"Dan Harrington, Harrington on Hold 'Em, Volume 1: Expert Strategy for No Limit Tournaments

"It's desirable that foreign exchange rates reflect fundamentals." – Haruhiko Kuroda

"You got to know when to hold 'em, know when to fold 'em,

Know when to walk away, know when to run.

You never count your money when you're sittin' at the table.

There'll be time enough for countin' when the dealin's done." – Kenny Rogers, The Gambler

Contents

THINGS THAT MAKE YOU GO HMMM...
Putin: Russia May Profit from Cyprus Crisis
97% of Spain's Social Security Pensions Are Invested in Spanish Government Debt
Down and Out in Paris
North Korea Readies Missile Launch as Fears of a Covert Cyberwar Grow
Egypt's Descent into Chaos
Six Years of Low Interest Rates in Search of Some Growth
Rehn: Big Bank Depositors Could Bear Cost of Bank Failure
Is Divorcing an Abusive Spouse Ever Too Expensive?
Helicopter QE Will Never Be Reversed
Contagion Starts Small
CHARTS THAT MAKE YOU GO HMMM...
WORDS THAT MAKE YOU GO HMMM...
AND FINALLY
Things That Make You Go Hmmm...

......read it all HERE

 

 



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Timing & trends

Weekly Key Reversals Speak Louder than Central Bankers


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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Personal Finance

10 Things You Need To Know Before The Opening Bell


Posted by Business Insider

on Tuesday, 09 April 2013 06:24

Screen shot 2013-04-09 at 6.13.29 AMGood morning. Here's what you need to know.

  • Asian markets were mixed in overnight trading with the Bombay Stock Exchange down 1.15 percent to a seven-month low. The BSE surged almost 128 points, before tumbling 211 points. Europe is rallying and U.S. futures are modestly higher.

......read the rest HERE



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Bonds & Interest Rates

"Sundown In America" & The Stockman Backlash


Posted by Peter Schiff: Euro Pacific Capital

on Monday, 08 April 2013 20:17

This week, while economists should have been closely considering the implications of the actual bankruptcy of Stockton, California, they instead heaped scorn on the perceived ideological bankruptcy of David Stockman. In other words, Stockman trumped Stockton.

soft sundownRonald Reagan’s former Budget Director contributed “Sundown in America” a multi-page opinion piece to the Sunday New York Times which loudly and eloquently described the illusions of our current economic system. While I don’t agree with everything Stockman believes, I think he is showing great wisdom and courage in making dire predictions and calling for extreme changes in our policy and politics.

What was perhaps more surprising than the Times’ uncharacteristic decision to run the piece in the first place was the vitriolic and largely ad hominem backlash against Stockman that quickly emerged from across the political spectrum. The attacks have focused primarily on his history and personality, and not on his arguments. One would be hard pressed to find any journalistic reaction that did not use the words “screed” “rant” or “unhinged.” I believe these responses reveal an acute sensitivity from mainstream economists that arises from defending contorted Keynesian logic.

It can’t be easy to take the position that debt doesn’t matter and that spending creates economic growth. To do so with any hope of success requires team unity, and Stockman has never really been a team player. His reputation as an apostate and a naysayer has made him an easy target.

Famously, Stockman left the Reagan White House in protest over the Gipper’s half-finished mandate. Yes, Reagan had cut taxes, but he never really cut spending. Stockman never bought into the easy idea, championed by Jack Kemp and Dick Cheney, that deficits don’t matter and that tax cuts pay for themselves. And although the Reagan revolution did clear the way for a return to better growth in the 80’s and 90’s, Stockman knew that the piper would call someday to collect the debt. Despite his foresight on that topic, his criticism of the Reagan legacy has earned him the derision of the Republican establishment for whom that particular hero worship is sacred.

This may have informed the attack issued by neo-conservative apologist and Iraq war cheerleader, David Frum, who offered a solely psychological assessment: “Stockman provides an insight into the gloomy mindset that overtakes us in older age, it’s a valuable warning to those of still middle-aged that once we lose our faith in the future, it’s time to stop talking about politics in public.” So much for respecting our elders.

Bloomberg’s Jeff Kearns, whose support of Fed policy has earned him regular taps at Ben Bernanke’s televised press conferences, provided the most common mainstream dismissal of Stockman: “His warning that the Federal Reserve’s quantitative easing is steering the world’s largest economy toward a crash is at odds with nine quarters of job growth, record stock prices and unprecedented corporate earnings.” This “he must be wrong because things look good now” position supposes that economics can’t be understood or predicted, only observed.  I received very similar treatment back in 2006 and 2007 when I tried to tell the mainstream that the real estate market was a house of cards. How could it be bad, they said, if it goes up every year?

Despite his misalignment with the Republican hierarchy, the Left has an even greater revulsion for Stockman. Since the crisis, he has become perhaps the most respected figure (with the possible exception of Alan Meltzer) to take the position that a system based on fiat currency is doomed. Those who most visibly argue these points, like Ron and Rand Paul, and myself, come from the libertarian movement. As a result, we can be easily dismissed as cranks. However, Stockman was once a card-carrying member of the power elite. His embrace of these principles is taken more seriously and is thus ripe for instant attack from liberal economists.

While the usual suspects of Jared Bernstein and Joe Wiesenthal weighed in with heaps of invective, the loudest heckles have come from, whom else, Paul Krugman. He began his multi-post campaign by questioning the “mystery” of why the New York Times would sully Krugman’s own gravitas by forcing him to share column inches with someone as “non serious” as Stockman. He then offers the back of his hand:

“I thought Stockman would offer some kind of real argument, some presentation, however tendentious, of evidence. Instead it’s just a series of gee-whiz, context- and model-free numbers embedded in a rant — and not even an interesting rant. It’s cranky old man stuff.” For the record, Stockman is only 66.

In actuality, Stockman’s NYT piece offers a litany of objectively dismal facts and cogent explanations of how we got here. While most are celebrating the nominal high of U.S. stocks (see my recent analysis of the current rally), he points out that in the five and half years it has taken for the S&P 500 to set a new high, “Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the ‘bottom’ 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled to 59 million, about one in five Americans.” But Krugman fails to find the currency of his stock and trade, the macro-economic statistical models that attempt to describe how an economy works. In truth, those academic ordeals only matter in getting tenure and impressing the global elite. The real economy is much easier to understand.

Case in point: Stockton, California, which on Monday became the largest U.S. city to file for bankruptcy protection. Stockton, a city of 300,000 and two hours from San Francisco, is following the path blazed by many smaller California municipalities that have been unable to support lavish spending, salary and pension guarantees. And although Stockton has tightened its belt over the last few years (unlike similarly bankrupt San Bernadino, which is not even trying), it lacks the capacity to close the gap. Despite its enormous advantages in geography, infrastructure and location, the city is too bloated with government and clogged with taxes and regulation to allow for robust growth. As a result, Stockton is looking to pin the losses on its creditors.

As Stockman makes clear, the United States has been plagued by the same problems that doomed Stockton. His critics argue that the Federal Reserve’s printing press provides a foolproof immunity to such pedestrian problems. But in the end, these paper protections will only exist on paper. We’re all Stocktonians now.

 

To order your copy of Peter Schiff's latest book, The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country, click here.

For in-depth analysis of this and other investment topics, subscribe to Peter Schiff's Global Investor newsletter. CLICK HERE for your free subscription.



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