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.
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