Thursday, July 7, 2011

Charting vs. Fundamentals

Charting PMs, it looks like prices are going higher, and since PMs lead all assets, then US equities should rise, and the dollar should fall.  Yet, the fundamentals are saying that there should be a pullback.  There is QE Light, but this should hardly mean the usual exasperation that the dollar has felt this year.  So which one will win out, the charts, or the fundamentals?

There has been no significant selloff in gold over the last few days, and silver has shown very bullish tendencies.  Silver has tested daily support over and over again.  Oil has broken out.  Yet, still, the fundamentals are bearish.  The dollar has a little room to maneuver on a technical basis, especially considering the Yen and Euro are weak, too.

But technicals have been the superior to fundamentals for years now, so will we see the sharp rise in US equities now instead of this Fall, like I have supposed?  The bet is on gold, and her sisters Trinity.  Oil will also dictate the terms.  Precious metals lead all assets, and this is the stone cold truth.  Watch them to know the next move.


  1. "I think by winter they will have about doubled. "

    $3,000 GOLD BY YR END??

    CMON.Get real dude.

  2. I respect all that you write because it is insightful and logical. The doubling of gold to $3000 by December 2011 is hard to imagine but again, nowadays, nothing surprises me. If you think gold will go that far, would you expect silver and platinum to double by then as well?



  3. Is it really so difficultr to perceive? Silver tripled last year. There are some equities that will double. Why not gold?

    I think silver will be between $80-$100 per ounce.

    I am not as bullish on platinum. She has been lagging lately, and that will likely continue for the short and medium term, but long term platinum will track along with her sister metals.

  4. What happened with your bullishness on platinum?

  5. Some info from a platinum company. Largely opinions but who better:

    My view is that the threat of strikes is very real. Unions are asking for between 14% and 20% wage increases, in a country with less than 5% inflation. I imagine the companies would be willing to settle at around 10%, but no higher, so strikes are inevitable. Aquarius usually settles wage negotiations after the majors, so that is still coming.

    The Eskom strike is still a threat, and I believe is in fact likely to happen imminently – within the next few weeks. They have declared a dispute which is being assessed by the Commission for Conciliation, Mediation and Arbitration. This is the last step before strike action can occur.

    Malema is the only person advocating nationalisation, and more and more people are coming out against it in public. It is not ANC policy and I think the chances of it happening are remote. That said, the Youth League represents a very large and growing demographic (18-25 year-olds) who have the highest unemployment and illiteracy rates of any group in the country. They are unfortunately economically ignorant, and listen only to Malema. So the threat of nationalisation is remote but the government cannot afford to marginalise Malema and his voters – hence the continuing noise. I think the noise will continue for some time to come.

    I then asked this: "With the potential mining and Eskom strike, do you expect lost production in platinum mining in South Africa?"

    To which he answered: "Almost definitely."