The Straight Goods on Gold
Gold is so misunderstood.
My colleagues and I often joke about how gold is the “all-weather” investment. When the economy is good, pundits claim gold will rise because of inflation. When the economy turns bad, gold bugs claim it will soar on safe-haven buying. According to conventional wisdom, there is no losing scenario for the yellow metal.
We saw more mis-judgement on the gold market yesterday.
Gold, The Future and The Way Through
When younger, Alan Greenspan wondered if he could have prevented the Great Depression had he been Fed chairman during the 1920s. Fate, however, was to give Greenspan a far different future than he expected; instead of preventing a depression, he would cause one.
After the scare of the 1970s, central bankers, i.e. Greenspan et. al., focused on containing inflation and came to believe they had successfully done so, not realizing that monetary expansion had instead morphed into asset bubbles, e.g. stocks, property, and bonds, not general price inflation as in the past.
The Gold & Silver Play Has Gone To Greed?
The past few months it seems the gold and silver play has been getting a little crowded with everyone wanting to own gold. While I am a firm believer that these precious metals are a great hedge/investment long term, I can’t help but notice the price action and volume for both metals which looks to me like they are getting exhausted.
SP500 & Gold At Crucial Pivot Points
Wednesday was a big session with better than expected manufacturing surging the market 3%. In this article I will do a quick technical take on the current situation for the SP500 and gold as they are both trading at a key resistance level. also its important to know what type of price action we will get in the next 1-2 days so you can have your profit targets or protective stops in place depending on which side of the market you are currently playing.
SPY – SP500 Exchange Traded Fund – 60 Minute Chart
Paper Gold Expiry Blues
With all that’s going on in the world these days, ranging from the continued politicization of the oil spill (catastrophe) in the Gulf of Mexico to the possibility of war in the Persian Gulf, it should be no wonder gold is rising and hitting new highs. And that’s exactly what gold was doing up until yesterday, hitting new highs, and is set to continue in this regard moving forward after a correction. The big question is just how significant is this correction to be the first wave of what is likely Primary Degree Wave C (minimally) needing to be corrected at some point. We will do our best to answer this question for you below, an explanation rooted in paper gold technicals and the plight of the dollar. As you can see in the attached the dollar turned higher yesterday with swooning stocks, which is a deflation signal in that such a move signifies deleveraging. And please, make no mistake about it, another round of severe deleveraging is coming this fall, however the dollar is likely not finished a corrective a – b – c sequence lower first, a sequence that should take us into July before is all over. This means that at a minimum gold should put in a double top before the larger degree correction discussed above unfolds. (See Figure 1 below.)
Gold, Silver, Oil & SP500 Are Popping & Dropping?
We are at the tail of another light volume choppy options expiry week and a big move is brewing… So I thought I would do a mid-week update on what I think is about to unfold in the coming days.
First off I will touch on gold. Everyone is in love with this shiny metal. But as I mentioned last week I think we are nearing a sharp correction. Previously I pointed out that we needed gold to make a new high to the $1275- 1285 area before everyone piles in and gets married to it, only then will the market reverse… Remember the market is out to take money from the masses and the gold trade is getting a little crowded in my opinion.
Dollar Continues to Control Gold, Oil & Equities
Over the past few months it seems as though everything has been tied to the dollar. Simple inter-market analysis makes it obvious that almost everything in the financial market eventually has an affect on stocks and commodities in some way. But recently trading has really been all about the dollar. If you watch the SP500 and gold prices you will notice at times virtually every tick the dollar makes directly affects the price and direction of gold and the SP500 index.
Let’s take a look at some charts to see the underlying trends and what they are telling us…
Heaven Knows
Heaven knows there are a myriad of good reasons for Western stock markets and other equity prices to be falling, and of course for the most part they are in real terms when measured against gold as the ultimate benchmark. We have Europe under increasing fiscal stress and rioting because of this (coming soon to a theatre near you); Chinese stocks looking very toppy; along with what looks to be a trend change from top to bottom in the debt markets that promises to turn into a global contagion likely sooner than later with all the money printing going on today. Of course all the problems listed above can be attributed to the global fiat currency economy that has been running loose since Nixon officially went off the gold standard back in 1971, where now fully matured, we are witnessing it’s death spiral, and what will probably amount to an end to the Fed within the full measure of process. (i.e. this is the ultimate reason you want physical gold and silver.)
Gold, Oil, SP500 & Dollar At Key Pivot Points
Last week was exciting as investments rocketed higher or tank… We saw Gold and the US Dollar pop while oil and equities dropped sharply with heavy volume.
Just to recap, Wednesday the market went into freefall mode sending traders and investors running for the door. This was obvious from looking at the large percent drop coupled with heavy selling. That day the NYSE showed panic selling with 37 shares sold for every 1 share purchased meaning pure panic. In my Wednesday night report “How to Take Advantage of Panic Selling for SP500 and Gold ” I explained how to read these extreme market conditions and what to expect the following sessions.
Palladium: Is It A Buy?
We’ve had a lot of news about gold and silver the last few weeks.
But the biggest coming story in precious metals may be palladium.
Global platinum group metal leader Norilsk Nickel said on Friday it expects Russian government stockpiles of palladium to run out next year. Speaking at a company briefing, deputy CEO for sales and distribution Viktor Sprogis said, “This year will be the last year when any substantial quantity from this [government] stock has any chance to enter the market.”
If true, this is big news for palladium. Russian government sales have been a significant dampener on the market for the past decade.
