Gold and silver have formed a perfect inverse head and shoulders. There is only one move left to complete the move, and that is the shadow, meaning the last down move. This move happens because there is downside pressure built, and the bears want one last raid. After this, when support holds, it proves the support level, and forces the pressure off. Then the rise starts. We are moments away from this now.
US GDP missed today but the market was up. What gives? Well, the policy makers don't want the US data blamed for sinking stocks, so next week look for weakness in Europe to be blamed for a falling euro, rising dollar, and down stocks. At the same time gold bears will be yelling at the top of their lungs that gold is not a safe trade while it's price falls. Same ol' same ol'.
I see gold and silver breaking down next week. I see gold touching $1610 and silver flirting with $28. This will move the dollar up slightly, and the DXY should touch 81. Stocks will slide, and I see DJ touching 12,800. The down move in precious metals should last about one week.
Support should hold at the above levels for many reasons: First and foremost fiat is the weakest link because there is so much of it in supply plus the demand is not strong when real inflation is high and investors demand growth or yield and thus will not breakout; this gives all assets a cushion, especially real goods like PMs. Second, there is massive support for PMs at these prices. Not only will buyers like me go and move my savings from cash to silver, but there will be institutional buyers doing it as well. Third, supply is decreasing. Industry demands silver, miners are producing less than in the past, and there is not much currently above ground. Finally, the actual price of precious metal is much lower than it should be due to naked short positions by JPM and others, and JPM will be forced to lift these positions due to the above reasons, and they never like to get blown out.
I do not use this blog as a political platform because I assume if you are reading this you know who I am and what I think, but I will say this: Now will be a great time to buy, and removing every once from the market will put pressure on JPM to stop shorting silver. So not only will we benefit from the purchase, we will continue to destabolize the Fiat Ponzi system. I had not bought silver since Christmas and I have built a cash position, but I bought this week, and I am looking at buying for the next 3-6 weeks. If the price goes to $28, I will go all in. If it doesn't I will dollar cost average until early June. Either way, the technicals and fundamentals say this is a great time to buy, and may be the last time to buy at these price levels ever.
Friday, April 27, 2012
Wednesday, April 25, 2012
My Coin Dealer
Today I visited my local coin dealer. He is Russian and grew up in Russia while it was communist, and has family who buried gold while waiting for the system to collapse. Funny thing, his grandfather who buried the gold died before the collapse and didn't tell anyone where he buried it, so his family has dug up their backyard but still have not found it. His time frame for the collapse of the economy is that it will happen in 2015, because, "That is how long it took Russia". It may not be perfect logic, but if history is any indicator....
He also likes to chart. An interesting fact about him is that he closed his MF Global account days before its bankrupcy. I know because I was at his shop the day before MF declared, and he told me he had already closed his account and had the funds wired. He is very savvy, and my conversations with him are very interesting. I am going to brief today's.
We went over charts, and he and I both agree gold and silver are forming inverse head and shoulder formations. He thinks that the shadow, the final down move of the shoulder before the upmove, will touch $27. I think it will be about $28, but potato potato. Gold he sees moving below $1600 on the final break, and I think it will be a hair above. Once again, very similar support. You know what I think as far as the next few months, so let me write what he told me. He says that once gold and silver finish their formations, the break will be quick to the upside. His thesis is that silver will break $33 with ease and will not stop until about $37-$38. This is interesting because I broke May and June into this one move, so he is more bullish than I.
Long term he thinks silver will get to $42 before the election and will get to $48 in nine months. He thinks gold will be at $1850 before the election and by February it will be around $2000. I am more bullish long term, where I see gold at $2200 and silver at $49 before the election. I think that the next couple months will be mitigated, and that long term there are so many problems that any slight up move in gold and silver will set a fire and the move will build on itself over time.
The most interesting part of the coversation was about the Comex. He says that if silver goes lower than $22, then there will be so many buyers in size that the Comex will default. He made a point to say they have only 30 million ounces many times throughout the conversation. He also said that the Comex could default at higher prices if anyone decided to move in. But he also noted that Comex likes to pay people in cash when they ask for delivery. He said this will continue. He also mentioned that Chavez had only received his first delivery from JPM, and still awaits the rest of the shipments.
Finally, the most notable thing I took away was that production had peaked already. He said it peaked years ago, around 2009. I have long said that silver's price, and in fact the whole economic system, is waiting for silver to peak production. I guess that may have happened already, so as for now, paper, which as he pointed out is leveraged 100:1, is doing a great job suppressing the price.
Also to note, he does not like platinum, and he did not have much to say about it. What he said was it has never been considered money, so if people do move into silver and gold because of their history as money, platinum will be ignored. He said that platinum is merely industrial. I do not fully agree with his prediction, although his take on its history is accurate. Platinum was shaved off and thrown away in the same way natural gas was torched when crude was produced, only until recently. But platinum meets the definition of money in my book, so I think it will move with its sisters gold and silver price wise.
He also likes to chart. An interesting fact about him is that he closed his MF Global account days before its bankrupcy. I know because I was at his shop the day before MF declared, and he told me he had already closed his account and had the funds wired. He is very savvy, and my conversations with him are very interesting. I am going to brief today's.
We went over charts, and he and I both agree gold and silver are forming inverse head and shoulder formations. He thinks that the shadow, the final down move of the shoulder before the upmove, will touch $27. I think it will be about $28, but potato potato. Gold he sees moving below $1600 on the final break, and I think it will be a hair above. Once again, very similar support. You know what I think as far as the next few months, so let me write what he told me. He says that once gold and silver finish their formations, the break will be quick to the upside. His thesis is that silver will break $33 with ease and will not stop until about $37-$38. This is interesting because I broke May and June into this one move, so he is more bullish than I.
Long term he thinks silver will get to $42 before the election and will get to $48 in nine months. He thinks gold will be at $1850 before the election and by February it will be around $2000. I am more bullish long term, where I see gold at $2200 and silver at $49 before the election. I think that the next couple months will be mitigated, and that long term there are so many problems that any slight up move in gold and silver will set a fire and the move will build on itself over time.
The most interesting part of the coversation was about the Comex. He says that if silver goes lower than $22, then there will be so many buyers in size that the Comex will default. He made a point to say they have only 30 million ounces many times throughout the conversation. He also said that the Comex could default at higher prices if anyone decided to move in. But he also noted that Comex likes to pay people in cash when they ask for delivery. He said this will continue. He also mentioned that Chavez had only received his first delivery from JPM, and still awaits the rest of the shipments.
Finally, the most notable thing I took away was that production had peaked already. He said it peaked years ago, around 2009. I have long said that silver's price, and in fact the whole economic system, is waiting for silver to peak production. I guess that may have happened already, so as for now, paper, which as he pointed out is leveraged 100:1, is doing a great job suppressing the price.
Also to note, he does not like platinum, and he did not have much to say about it. What he said was it has never been considered money, so if people do move into silver and gold because of their history as money, platinum will be ignored. He said that platinum is merely industrial. I do not fully agree with his prediction, although his take on its history is accurate. Platinum was shaved off and thrown away in the same way natural gas was torched when crude was produced, only until recently. But platinum meets the definition of money in my book, so I think it will move with its sisters gold and silver price wise.
Monday, April 23, 2012
Only $430 Billion?
In a world where a group of Nation-States combine bailouts and only come up with $430 billion, there is a risk that the can kicking is nearing an endpoint. From a $800b TARP, a $800b STIMULUS, massive QE's and LTRO's (especially considering asset prices have nearly doubled since the Fall of '08), a $430b package is quite unimpressive, so what is the motive for even acting like this amount will mitagate the flow of funds and flow of credit risk?
It is either that the Central Banks think that the crisis is over, and they are merely shoring up their ship, or that the boat has hit an iceberg, and the $430b will give them enough time to make it to a life raft while the rest of the ship's crew listen to the band play. I think it is the latter, because with days like today, where Europe equity is down 3% across the board, and where Asia and the US markets fell, there is no way people can believe all is well. Afterall, Bernanke and Hu have both said the recovery is weak at best.
What will the $430b do? Well, judging from recent history, it can give the system pause for a month, maybe two. What then? More bailouts will be needed, likely from the Fed, since most other CBs have done their fair share of late. This will lead to more inflation of the asset prices for necessary goods like foodstuffs, oil and metals (especially PMs, because the CBs will continue to leverage them).The housing market will provide a cushion for hyperinflation, as houses continue to deflate. But after this $430b the system will need a large cannon if the can should continue to be kicked, an amount of $1T due to Europe's coming massive July debtroll; this should be in late June, early July, and do not be surprised if it sets fiat on fire.
It is either that the Central Banks think that the crisis is over, and they are merely shoring up their ship, or that the boat has hit an iceberg, and the $430b will give them enough time to make it to a life raft while the rest of the ship's crew listen to the band play. I think it is the latter, because with days like today, where Europe equity is down 3% across the board, and where Asia and the US markets fell, there is no way people can believe all is well. Afterall, Bernanke and Hu have both said the recovery is weak at best.
What will the $430b do? Well, judging from recent history, it can give the system pause for a month, maybe two. What then? More bailouts will be needed, likely from the Fed, since most other CBs have done their fair share of late. This will lead to more inflation of the asset prices for necessary goods like foodstuffs, oil and metals (especially PMs, because the CBs will continue to leverage them).The housing market will provide a cushion for hyperinflation, as houses continue to deflate. But after this $430b the system will need a large cannon if the can should continue to be kicked, an amount of $1T due to Europe's coming massive July debtroll; this should be in late June, early July, and do not be surprised if it sets fiat on fire.
A Long May
I had an article in the start of this month titled, "A Long April" in respect to precious metal prices not surging even though the world's Central Banks continue to keep rates low, and currencie flying out of the presses. One thing about watching trends is that it is important to readjust one's views as to where the trend is going in the future. Since that is the case, I am going to readjust my projections for May and June, and I am going to really slow the roll of precious metals, until a big move up, which I now see happening in July.
In "A Long April" I thought gold would get to $1735 by the end of the month and silver would be at $35. Not only do I not think these two will get there in May, it will take June to reach these numbers. May should finish at $1680, and silver at $33. I think this because I see stocks having a bad May, and I don't think there will be much investment made into anything; I think all markets will stay in somewhet of a holding pattern as I think that trading is pretty much dead. I don't think people will move to cash in this environment, as people want something for their investment, but I do think stocks will move down (DJ to 12,225), so maybe cash drips into bonds.
During May, I think JPM et al will continue to suppress the metals. The PTB have a fresh $430B thanks to LaGarde to maintain "stability", yet this really isn't much,and should only kick the can about two months. It appears that suppressing PMs is one of the most important things for the PTB. Maybe because they want to shake out the weak hands so they can accumulate as much as possible. Maybe there are other reasons. Who knows what is in the minds of these mad men.
As for July, I think we break this range we have been trapped in for nearly a year, but we will have to see when we get there. I still see all CBs printing, but even if they don't gold is the best hedge, for if rates rise, what will be the best investment? Not bonds; why hold cash? Stocks? Gold is going to continue to be the best investment for the foreseeable future, as it has for the last decade.
In "A Long April" I thought gold would get to $1735 by the end of the month and silver would be at $35. Not only do I not think these two will get there in May, it will take June to reach these numbers. May should finish at $1680, and silver at $33. I think this because I see stocks having a bad May, and I don't think there will be much investment made into anything; I think all markets will stay in somewhet of a holding pattern as I think that trading is pretty much dead. I don't think people will move to cash in this environment, as people want something for their investment, but I do think stocks will move down (DJ to 12,225), so maybe cash drips into bonds.
During May, I think JPM et al will continue to suppress the metals. The PTB have a fresh $430B thanks to LaGarde to maintain "stability", yet this really isn't much,and should only kick the can about two months. It appears that suppressing PMs is one of the most important things for the PTB. Maybe because they want to shake out the weak hands so they can accumulate as much as possible. Maybe there are other reasons. Who knows what is in the minds of these mad men.
As for July, I think we break this range we have been trapped in for nearly a year, but we will have to see when we get there. I still see all CBs printing, but even if they don't gold is the best hedge, for if rates rise, what will be the best investment? Not bonds; why hold cash? Stocks? Gold is going to continue to be the best investment for the foreseeable future, as it has for the last decade.
Saturday, April 14, 2012
The Fed's Loans
This week was a very telling week, literally. Bernanke gave two press conferences where he discussed the Federal Reserve's ability to make loans. The first time he mentioned it he cited a rule in the Fed Charter, 13-3 I think I heard, that allows the Fed to make loans to sovereign states without Congressional approval, even considering the new regulations of the Dodd-Frank Act and the Volker Rule. The other speech he made various points that if there is any more systemic risk, the Fed can make loans to mitigate the problems. This is telling because we know they Fed makes loans to States such as Libya and corporations such as Caterpillar, but from what he said this week we should expect more of it.
What does the Fed loan? They make currencie swaps, and this loan gives them a 1:1 loan with interest. This cash is loaned from their reserves, but cash is not the only reserves the Fed has. In congressional testimony a month ago Bernanke was asked if he owns gold. After acting like he did not know we remarked that he did have gold, on reserve, in the form of "gold certificates", on loan from the Treasurie. This gold is loaned, and will be loaned. When it is loaned the currencie that comes from the loan can be fractionally reserved, and the loan is magnified. This and gold not only maintains value, its price apreciates compared to fiat (which is depreciating ad infenum due to inflation). This is why gold is still the crux of the financial system: it is the loan of first recourse, it is the proprietray trade for banks, central and private, because it has a maximum leverage.
Demand is high for these loans, too, as other Central Banks want to and are trying to hedge and diversify from dollars. The loan makes sense for the PBoC and other CBs because they buy the loan at $1650 (if the loan was made today) and the hope is that when the loan comes due the price is higher, and the PBoC will get paid that amount. This interestingly makes gold manipulation very profitable of the Fed's side.
If the Fed has a large amount of gold loans coming due, they can orchestrate bearish news on the economy, and have their proxie banking houses (JPM et al) flush the precious metal complex at the same time, making the Fed have to pay the loanee a lower amount than the loan was made for. Add on a premium and interest, and the Fed's gold loans can turn a hefty profit.
What does the Fed loan? They make currencie swaps, and this loan gives them a 1:1 loan with interest. This cash is loaned from their reserves, but cash is not the only reserves the Fed has. In congressional testimony a month ago Bernanke was asked if he owns gold. After acting like he did not know we remarked that he did have gold, on reserve, in the form of "gold certificates", on loan from the Treasurie. This gold is loaned, and will be loaned. When it is loaned the currencie that comes from the loan can be fractionally reserved, and the loan is magnified. This and gold not only maintains value, its price apreciates compared to fiat (which is depreciating ad infenum due to inflation). This is why gold is still the crux of the financial system: it is the loan of first recourse, it is the proprietray trade for banks, central and private, because it has a maximum leverage.
Demand is high for these loans, too, as other Central Banks want to and are trying to hedge and diversify from dollars. The loan makes sense for the PBoC and other CBs because they buy the loan at $1650 (if the loan was made today) and the hope is that when the loan comes due the price is higher, and the PBoC will get paid that amount. This interestingly makes gold manipulation very profitable of the Fed's side.
If the Fed has a large amount of gold loans coming due, they can orchestrate bearish news on the economy, and have their proxie banking houses (JPM et al) flush the precious metal complex at the same time, making the Fed have to pay the loanee a lower amount than the loan was made for. Add on a premium and interest, and the Fed's gold loans can turn a hefty profit.
Wednesday, April 11, 2012
Gold's Ominous Move
Yesterday was a special day. Yesterday we once again saw a glimpse into the inside of the financial system, where current economic policy is dying a slow death, where people such as Ben Bernanke catch their books on fire after dragging them through the gates of Hell.
In the midst if this recent downturn we once again see a flat dollar - the dollar, the reserve currencie, the end all liquidity crutch of the Fiat Ponzi - we saw the continuation of a bond market propped up by the Fed buying Treasurie debt from Private Dealers (in the form of another multi billion dollar auction), and we saw stocks lose their luster around the world. Yet the kicker was that gold's price shut up like water from a whale's spout in the middle of it all, just as it did right before the US had its debt downgraded last summer. Right before a grand equity collapse; gold seems strong once again.
If gold relishes in these moments, what is the true safe haven play? What does really store wealth? These questions are easily answered when considering golds half life of hundreds of thousands of years, as well as its price action during recent times of financial turmoil, as well as during the last decade in general, due to supply constraints.
Gold is the safe haven for cash to move now, and it stands along side only the other precious metals silver and platinum. This because these three items define the term monie, and it is money that is needed in this time of economic uncertainty.
In the midst if this recent downturn we once again see a flat dollar - the dollar, the reserve currencie, the end all liquidity crutch of the Fiat Ponzi - we saw the continuation of a bond market propped up by the Fed buying Treasurie debt from Private Dealers (in the form of another multi billion dollar auction), and we saw stocks lose their luster around the world. Yet the kicker was that gold's price shut up like water from a whale's spout in the middle of it all, just as it did right before the US had its debt downgraded last summer. Right before a grand equity collapse; gold seems strong once again.
If gold relishes in these moments, what is the true safe haven play? What does really store wealth? These questions are easily answered when considering golds half life of hundreds of thousands of years, as well as its price action during recent times of financial turmoil, as well as during the last decade in general, due to supply constraints.
Gold is the safe haven for cash to move now, and it stands along side only the other precious metals silver and platinum. This because these three items define the term monie, and it is money that is needed in this time of economic uncertainty.
Monday, April 9, 2012
Production and Demand
The Trinity complex (PMs) move together in the long run, yet in the short term they don't move in lockstep. Recent trends have shown platinum to be the more bullish of the three. I do think platinum will be above $2000 next year, as it has a beta more similar to silver's, higher than gold, yet is more rare than silver and already past its peak of production (it peaked in 2009).
Silver has yet to peak its production, and it could be a few years until it does so, but from what we have seen from past production peaks, the peak happens suddenly and swiftly. Once silver does peak its production, it will be the the last of the PM complex to do so, also joining oil and steel. Silver's production peak is very important, for then no PM will come cheaply.
Supply is a very important piece of finance, especially as demand increases. A rise in demand, which there is for PM not only to store wealth but also industrially, will increase price. If supply can rise with demand, then price keeps equilibrium, but if supply stays flat or decreases, then the equilibrium moves to find a rise in price.
Since PM, other metals, and oil have seen a rise in price due to the value of fiat alone, their demand has increased, and this has led to supply being mitigated. Now with oil higher in price, drillers are going after oil that is not just low hanging fruit, and this is the same for everything. The supply increase will only last so long, and it will increase the sharpness of the downturn. So when the downturn does happen, it will happen quickly and sharply.
Silver has yet to peak its production, and it could be a few years until it does so, but from what we have seen from past production peaks, the peak happens suddenly and swiftly. Once silver does peak its production, it will be the the last of the PM complex to do so, also joining oil and steel. Silver's production peak is very important, for then no PM will come cheaply.
Supply is a very important piece of finance, especially as demand increases. A rise in demand, which there is for PM not only to store wealth but also industrially, will increase price. If supply can rise with demand, then price keeps equilibrium, but if supply stays flat or decreases, then the equilibrium moves to find a rise in price.
Since PM, other metals, and oil have seen a rise in price due to the value of fiat alone, their demand has increased, and this has led to supply being mitigated. Now with oil higher in price, drillers are going after oil that is not just low hanging fruit, and this is the same for everything. The supply increase will only last so long, and it will increase the sharpness of the downturn. So when the downturn does happen, it will happen quickly and sharply.
Wednesday, April 4, 2012
A Long April
I have been writing that precious metals will have a long April. Well, it has started that way. First, I will give new end of the month targets: Gold at $1735 and silver at $35. Those are big moves percentage wise, but the volatility has been and will be big both ways.
The volatility makes the upside more bullish, because it shows the desperation of the "M"oney "M"asters and also their desperation shows the important role PMs play in the system, but the move will not happen all at once. It will be a volatile month with big upside and downside moves. We have seen the moves start. The reason there will be a cap on price appreciation is because Europe is under pressure. Monetary policy does not have the affect it once did, and the Trinity will be suppressed at all costs so the secret is not know to the world until the Fiat Ponzi crumbles. The secret is that precious metal is monie, and nothing else is.
The Fed will let markets pull back to scare people into accepting more debt, if that debt is outright QE, or debt swaps and FX swaps. I think the market will drop to DJ 12650 by late April, and Bernanke will usher the next round in then. By that time, Europe will give up all its recent gains and the world economy will be in jeopardy of falling into depression again, like it had ever been saved.
I think PMs take off this summer due to the continuation of lax monetary policy, but I think this will be a long month. Big moves usually have opposing big moves ahead of them. This happens so the market can get the best price available. When I write the "market" I mean "m"arket "m"akers, because there is no market, and hasn't been one in a long time.
The volatility makes the upside more bullish, because it shows the desperation of the "M"oney "M"asters and also their desperation shows the important role PMs play in the system, but the move will not happen all at once. It will be a volatile month with big upside and downside moves. We have seen the moves start. The reason there will be a cap on price appreciation is because Europe is under pressure. Monetary policy does not have the affect it once did, and the Trinity will be suppressed at all costs so the secret is not know to the world until the Fiat Ponzi crumbles. The secret is that precious metal is monie, and nothing else is.
The Fed will let markets pull back to scare people into accepting more debt, if that debt is outright QE, or debt swaps and FX swaps. I think the market will drop to DJ 12650 by late April, and Bernanke will usher the next round in then. By that time, Europe will give up all its recent gains and the world economy will be in jeopardy of falling into depression again, like it had ever been saved.
I think PMs take off this summer due to the continuation of lax monetary policy, but I think this will be a long month. Big moves usually have opposing big moves ahead of them. This happens so the market can get the best price available. When I write the "market" I mean "m"arket "m"akers, because there is no market, and hasn't been one in a long time.
Tuesday, April 3, 2012
March Fed Minutes
The Fed minutes from the last meeting were released today, and there was little surprise in the text. However the market "reacted", or that is what people are led to believe. The market was sold off, but was the minutes release only a front for the selloff? And what are the implications?
First, technically there is usually a break before a large move. Precious metals were moving up, the dollar was moving down, but the trends reversed dramatically. Does this mean that there will be a trend reversal, or is this a break that is a last move before the recent trend continues?
As PMs have been in a ten year upward trend, and the dollar has been losing to inflation for its whole existence, I do not see a trend reversal. The breakdown today allows the market to use this break and reinvest. What I mean is, right now, the dollar can be used to buy precious metals. And this is what will be done sooner than later.
The readjustment will be slow. I think PMs will experience a long April. I do see the PM complex moving up, gold finishing the month off at $1750 and silver at $36.
In conclusion, the market did not react to the Fed minutes the way people think. The minutes were not news; everyone knew that the minutes did not implement another new QE. What happened was that all trends are in line, nothing happened, but the market players wanted to refresh their positions.
First, technically there is usually a break before a large move. Precious metals were moving up, the dollar was moving down, but the trends reversed dramatically. Does this mean that there will be a trend reversal, or is this a break that is a last move before the recent trend continues?
As PMs have been in a ten year upward trend, and the dollar has been losing to inflation for its whole existence, I do not see a trend reversal. The breakdown today allows the market to use this break and reinvest. What I mean is, right now, the dollar can be used to buy precious metals. And this is what will be done sooner than later.
The readjustment will be slow. I think PMs will experience a long April. I do see the PM complex moving up, gold finishing the month off at $1750 and silver at $36.
In conclusion, the market did not react to the Fed minutes the way people think. The minutes were not news; everyone knew that the minutes did not implement another new QE. What happened was that all trends are in line, nothing happened, but the market players wanted to refresh their positions.
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