Monday, April 30, 2007

Feeling Ripped Off?

Gold closes April 2007 at all-time monthly "closing" high?
http://www.jsmineset.com/cwsimages/Miscfiles/4603_Chart_for_4-30-2007.pdf

China Lifts Bank Reserves In Bid to Cool Growth
BEIJING -- For the seventh time in less than a year, China's central bank raised the share of deposits banks must keep on reserve as the government struggles to soak up capital and keep the country's economy from overheating.
http://setup1.wsj.com/article/SB117783255254786134.html

And China's economy has continued to grow at a double digit pace after each increase. Funny thing about China and it's economy. The geniuses in our illustrious Congress would like to pressure the Chinese into allowing their currency, the juan, to rise. Do they not understand that a rising juan will cause a falling US Dollar? LOL, as if the US Dollar needs any help falling...

For the month of April 2007 Gold was up 2%. For the month of April 2007 the US Dollar was down 1.7%. Why then, as a Precious Metals investor, do I feel like I was ripped off this month?

Oil... Oil refuses to go down. When oil cracks $67, $700 Gold will not be far behind.

Euro gold stayed under €500.

This whole scenario is getting ridiculous. Remain focused, maintain your convictions, be patient. Consolidation is a good thing. Think of it as massing the troops for an overwhelming assault on dem Rat Bastids.


Silver Resistance: 13.45 / 13.55 / 13.67

Silver Support: 13.39 / 13.33 / 13.20
____________________________________All prices SPOT

Gold Resistance: 681 / 686 / 691

Gold Support: 675 / 670 / 666


Must read!

Why The Price Of Silver Is Set To Soar
Precious metals remain the most undervalued of all the asset classes. Precious metals, and particularly silver, remain the most undervalued of all the commodities. Silver is even more undervalued than gold and is undervalued when compared to other strategic commodities such as oil and uranium.
http://www.moneyweek.com/file/28810/why-the-silver-price-is-set-to-soar.html

Sunday, April 29, 2007

Recipe For Stagflation




Growth rate down in first quarter; prices up
WASHINGTON — Economic growth slowed to a near crawl at a 1.3% annual rate in the first three months of 2007, the worst performance in four years. The main culprit: the housing slump.
http://www.usatoday.com/money/economy/2007-04-27-gdp_N.htm


Hey, isn't that the recipe for STAGFLATION?


DJ MARKET TALK: Comex Gold, Silver Up After Thursday Sell-Off1358 GMT [Dow Jones] - Comex gold and silver are higher as some traders usedThursday's profit-taking pullback as a buying opportunity, says Paul McLeod,vice president with Commerzbank. Much of the focus is also on the euro, whichhit a record high against the dollar. Overall, trading conditions have beenquiet, he says. "Both metals are still in their upward channels that havepretty much been in place since January," McLeod says. "Even though they soldoff fairly large yesterday, it hasn't really changed the trend established overthe last three months. The size of the correction yesterday has people thinkingit's a good time to be purchasing again."



As noted here and elsewhere on the Internet, Gold has held up remarkably well in the recent tsunami of Central Bank Gold sales. 75+ tonnes of Gold and counting have literally been dumped on the market in a effort to hold it in check below $700 and attempt to persuade the knuckleheads glued to their CNBC feed that "...the Fed has everything under control..." Yeah right. Gold is now the defacto barometer of inflation. Efforts to pull on it's reins and keep it in the barn are futile. The more the Fed, US Treasury, and European Central Banks try to stifle the rise in Gold, the harder they press on the inflation accelerator and the higher the price of Gold will ultimately go.




Bob Chapman, The International Forecaster :


The dishoarding continues, but all the bankers are doing is buying time and losing their most precious asset at ridiculously low prices. This is a terrible price to pay for confidence and illusion. They want us to believe their lie that their fiat currencies have value when they do not have value. Only gold has value. That is why government tries to shut us up. They do not want anyone to know the truth. This you see in their phony war on terrorism. In their pursuit of your liberty by naming you an enemy of the state if you disagree and expose them.http://news.goldseek.com/InternationalForecaster/1177858860.php


Just who has been buying all this Gold being foolishly dumped on the market. The obvious marks are the OPEC countries, most of Asia, wise investors, speculators, and the Russians. My sense though is that a lot of it is being bought via short covering. Producer dehedging is running ahead of forecasts so far for this year, and there is news that Goldman Sachs short position on the Japanese Tocom is at it's lowest level EVER. Perhaps a lot of the "smart" money is finally coming to the realization that the jig is up and that an explosion in Precious Metals prices is imminent. Now I don't mean to suggest that Gold is going to $1000 next month, but I do believe that in the next 6-8 weeks dem Rat Bastids are going to get an ass whuppin like no other yet. Facing extinction come late Spring, the Rodent Vermin will be given one FINAL opportunity to square their books and cover their shorts at losses that will allow them to keep their institutions afloat, but cost most of them their jobs. Sometime in August of 2007 the lid is going to blow off the Precious Metals and the trip to the Moon we have so patiently looked forward to will have lifted off.


I expect Silver to be the biggest beneficiary of Gold's move thru $700. In terms of "percent", silver's gains in the coming Mother Of all Short Squeezes will dwarf the gains of ALL other metals. Continuing to maintain a short position in Silver is a death sentence. Dem Rat Bastids will NEVER survive what is lurking just below the surface in this tiny market. Oh sure, there will be some "survivors". But..., they'll either walk with a limp, sign their name holding the pen in their mouth, or both. Bearing that in mind, let's take a look at The Big Picture of Silver:


Please click on the chart to enlarge.


This week's slump was just another buying opportunity for Silver. Silver held the 20 Day Moving Average as the Bollinger Bands continue to narrow. Narrowing Bollinger Bands usually proceed powerful moves in a market [up OR down]. Using the trend lines in blue, I have projected an intermediate high for the next leg up in Silver using Fibonacci Lines and the June 12, 2006 low of 9.55 as 0%. 14.04 is at 61% of the projected top at 16.80. I could blah-blah some more, but I'll let the picture do most of the talking.


I will throw in a note about the Gold/Silver Ratio here. As I have noted in past posts here, 45 on the Gold/Silver Ratio is HUGE resistance to advances in the Metals. A 16.80 high in Silver would equal $756 at 45 on the Gold/Silver ratio [16.80 X 45 = 756] Nothing goes straight up...if you have not accepted that yet, perhaps you should choose another hobby. There is always downside risk in any bull market. If we are unable to crack 45 on the next intermediate high in Silver be prepared to protect your profits. $750 Gold would be the "obvious" next area of resistance after taking out $700.


The run up in Silver off the June 12, 2006 low has contained 4 mini-legs. And each of these legs to date has been 6-8 weeks in length. 6-8 weeks from this past weeks low would take us to June 8 or 15th. Obviously this takes us thru and past the timing of the usual Spring Dump in metals...I'm just doing the math here. But that crappy GDP number Friday only strengthens my convictions...it's a BULL MARKET stoopid. Expect the unexpected...and expect dem Rat Bastids to cry uncle soon. Be patient.


Silver Resistance: 13.55 / 13.69 / 13.88


Silver Support: 13.39 / 13.30 / 13.20
_____________________________________All prices SPOT


Gold Resistance: 681 / 686 / 691


Gold Support: 675 / 670 / 666

Thursday, April 26, 2007

Deja Vu All Over Again

Nothing goes straight up. I've said that here more than once. What we saw today was nothing we haven't seen before. Dem Rat Bastids and da PPT pulling bids and running the stops below the market...how original. How desperate. Prudent investors/traders, in order to protect a portion of their profits, had their stop loss orders in as advised, and as they saw fit, below our lines of support at the 50 "day" moving average and 13.39. Yes, we have given up some ground. But the battle rages on. Always forward, never straight.

The Precious Metals Bulls had the wind knocked out of them today under the weight of that fetid gas bag Rosie O'Donnell. Her ghastly girth hurled at us in a last ditch effort by dem Rat Bastids to thwart our assault on $700 Gold and $14.50 Silver. Having the wind knocked out of you in ANY sport is minor injury. I consider today's Bear Raid by the PPT just that...a minor set back.

This morning we get the first look at the First Quarter GDP numbers. Estimates are for +1.8%. This dead cat bounce in the U S Dollar may not get very far off the ground...

Later today I will try and post a current look at "The Big Picture". Until that time, please consider the following from Blanchard and Company, Inc. posted this afternoon on goldseek.com:

ECB banks have sold over 76 tonnes of gold into the market over the past five weeks. This is in sharp contrast to the past 6 months when ECB banks had sold only 112 tonnes of gold into the market. We believe that we are still experiencing increased levels of sales this week, so we may yet revise the 76 tonne figure higher in the coming weeks. This huge influx of supply into the market has, in our opinion, been the one drag on the market, but it certainly has it's upside.

So what's the upside?

History has shown that pressure is certainly applied on top of the market during each period of elevated CB sales. This can be no clearer illustration than what happened after the Bank of England and Gordon Brown announced they would sell over 400 tonnes of gold reserves, causing prices to hit 20-year lows in what most traders now refer to as the Brown Bottom. In the last decade, we have also seen the Bank of Canada sell off all of it's gold holdings, the Banks of Switzerland, Australia, Denmark, Spain, Portugal, Norway, Sweden, and France, amongst others, also sell off a major percentages of their gold holdings into the market. The one thing that has held true is that the gold price has continued to bounce back and head higher as these sales have concluded.

In the past, increased sale levels have had a significant impact on the market, most recently when 80 tonnes were sold into the market over 4 weeks in May of 2006, we saw prices fall from $730 per ounce and test the $575 level. To a lesser extent, we saw +50 tonnes of sales hit the market in September of 2006, sending prices from $605 to $565 per ounce. What we are seeing presently is that sales have increased considerably without the bottom falling out of the market as has been the case in the past. The market is experiencing some price weakness as it struggles to continue to digest these massive sales, but the price has continued to trend higher in the face of these increases. This is a watershed event for the market and investors need to understand what this means to them. The days of massive bank sale increases tanking the market are coming to a close for two reasons.

1. The market has finally demonstrated the ability to gobble up these sales and continue trending higher, even if the increased supply is keeping us from the major price increases we have been expecting.

2. Central banks have shown that they are simply running out of the gold they will part with via sales into the market. It is our belief that the Bank of France is the lone seller of any magnitude left out in the marketplace. Other ECB captive banks have completed their announced sales programs. The two others left with any sizeable gold reserves, Germany and Italy, have never sold gold of any significant amount under the CBGA agreements.
http://news.goldseek.com/GoldSeek/1177619058.php


Silver Resistance: 13.39 / 13.55 / 13.69

Silver Support: 13.20 / 13.03 / 12.92
___________________________________All prices SPOT

Gold Resistance: 675 / 681 / 686

Gold Support: 670 / 666 / 660

Wednesday, April 25, 2007

Sitting Still

Frustrated? You bet. Oil up, copper up, dollar DOWN...and Gold and Silver sitting still. I have no fear. Patience and conviction is what I have. Dem Rat Bastids at the PPT continue to throw everything they can get there hands on at us. Today they tossed that behemoth Rosie O'Donnell at us in an effort to hold down the Precious Metals. Folks, that is one overwhelming load of filth to find ourselves under. But even the weight of that fetid gas bag pressing down on our market will not be enough to prevent the inevitable. The more the PPT tries to suppress the price of Gold...the higher it is gonna go when it finally breaks their shackles of deceit.

This from Bob Chapman, The International Forecaster exposes the lies of the PPT:

Since 1997, gold has increased in value from $300 to $700 for a compound return of 8.7%, which covers inflation. Furthermore TIPS has returned an average annual return of 5.4%. Gold has returned an average annual compounded rate of return of 8.65% since 1971. That is since the gold window was closed on 8/15/71. Gold since that date went from $35.00 to $693.00 an ounce or 18.8 times and has been as high as $850.00 in 1980. If you go back over 20 years of Treasury yields, the average yield has been 6.21% as M3 increased 7.8%, which is very close to the rate of inflation. That is why as a rule of thumb inflation closely tracks the increase in money and credit, M3. That is how we can prove beyond any doubt that the CPI, the consumer price index, is completely bogus. TIPS and US Treasuries are not the real answer if M3 is growing at 8% or 11%. You are better off in Swiss franc government bonds that do not take that annual 10% currency loss and forget the yield, or be in gold and silver related assets, or both dependent on what is suitable for you.

The big subterfuge is the core inflation rate. It is misdirection and distraction. Media releases site full inflation once and then give all the space and debate on the core rate, which means absolutely nothing because it strips out food and energy. The trick by Washington and Wall Street is to obscure inflation in the 7.5% to 11% range. As you know the Fed doesn’t publish M3 anymore, but we are one of only a few that have taken the time to estimate it and it’s been over 10% for a long time. Politicians and Wall Street want to bury the real ok inflation number. They do not want you to know you are being screwed out of 10% of your wealth every year if you stay in Treasuries. Worse yet, you are taxed on losses. It’s the big lie technique pioneered by the corporate fascists in Germany in the 1930s and it still works because people are uneducated or just plain dumb. What they are doing is brazen and nothing is said about it. That is because government, the media, Wall Street and corporate America are all in on it. They have a vested interest in the system. That is why economists and analysts say nothing about the scam, because they will all lose their jobs. This is how it’s perpetuated. It’s a conspiracy of silence. How can our statistics on core be correct at +.01% for the month when the British pound hits a 26-year high against the dollar and as the euro is 100 bps away from its high? That is simply impossible. Our dollar has been in a process of destruction for 36 years and it is getting worse. Why do you think gold is going up? It’s because it is a true barometer of inflation. That is why the US Treasury and the central banks have a gold suppression cartel. They do not want anyone to know their assets are being stolen. Now you can better understand what this game is all about and why you have to have gold and silver related assets to protect yourself.


http://news.goldseek.com/InternationalForecaster/1177523342.php


Silver Resistance: 13.80 / 13.88 / 13.95

Silver Support: 13.75 / 13.67 / 13.60
________________________________________All prices SPOT

Gold Resistance: 686 / 691 / 693

Gold Support: 681 / 677 / 672

Tuesday, April 24, 2007

Sale Ends Soon


"To the surprise of the market, this morning's U.S. data was extremely ugly," said Kathy Lien, chief strategist at DailyFX. "Today's reports only reinforce the Federal Reserve's need to keep interest rates unchanged." "The problems that the U.S. economy is facing are not going away, and today's numbers provide a harsh reality check," she said.


LOL! Anybody "surprised" by today's U.S. Economic Data must have just crawled out from under a rock. The only thing remotely surprising today was the reaction of the Precious Metals to the data and the US Dollar's subsequent nose dive. Counter intuitive gets my vote for phrase of the day.


Why were the Precious Metals so upside-down today? Lets go to the headlines and look for some answers:


US gold futures end lower on options expiries, oil

NEW YORK, April 24 (Reuters) - Selling related to options expirations and a lower oil sent gold futures to a lower finish on Tuesday, and strong resistance on technical charts kept prices from breaching the $700 psychological level.



Oil Prices Fall on Profit-Taking

NEW YORK (AP) -- Oil prices fell sharply Tuesday as traders sold to lock in profits from a Monday rally.



LOL, "profit-taking". The universal code for "we have no real idea why prices dropped". But drop they did. Lower oil prices, coupled with increased volatility due to Wednesday's option expirations, and an off day in copper combined to riddle some Precious Metals traders with doubt.


The Precious Metals should have all been up today. I've just given you three reasons why they weren't. There were other headlines today that support the case for Gold and Silver:


Copper Imports Soar by 142%

China, the world's biggest consumer of copper, more than doubled imports of the metal in March as the peak demand period for the construction industry began.



Dollar Drops On Existing-home Sales, Consumer Confidence Reports

The dollar approached an all-time low against the euro Tuesday after reports showed sales of existing homes plunged at the fastest pace in 18 years last month while consumer confidence dropped more than forecast in April, fueling worries that the U.S. economy is decelerating.



...fueling worries that the U.S. economy is decelerating. ? Damn the truth hurts, but folks, the US economy IS going down the toilet. I think we're well past the "worried" stage and entering the "reality" stage.


Patience and conviction. Oil undercut the Precious Metals today. Buy or add to Precious Metals positions on the dips. You buy an extra box of Frosted Flakes when they're on sale don't you? The chart posted above (click to enlarge) is a picture of where we've been, where we are, and where we may be going soon in Silver. Today's dip was on very low volume and it closed Friday's Gap Up. This is not a picture of an overbought market. Dem Rat Bastid's have their backs against the wall. "Always Forward, Never Straight". 14.04 is proving to be quite the battleground. Penetration here could take us quickly to 14.43 ...which is the projected high of the Ascending Triangle breakout at 13.39. 15.08 would be the initial Fibonacci target should we slice thru da Vermin's fallback position at 14.43. Prudent traders should have stops to protect a portion of their profits below the 50 "Day" moving average.


The Blanchard Economic Research Note linked below sums up today's Precious Metals market in superb detail. I highly suggest reading it in it's entirety. I will quote portions of it as it is quite relevant:


The physical market in London has been inundated with sales out of ECB banks in the last 5 weeks. 76 tonnes to be exact... The gold market has been flooded with CB gold over the past 5 weeks from sales and lending and held up remarkably well, increasing nearly $50 per ounce... The truth is that CB's are simply running out of gold they can sell into the market. We think this past five weeks of drastic sales increases is akin to a 'last gasp' of selling the market will see for some time.




Silver Resistance: 13.80 / 13.88 / 13.95


Silver Support: 13.75 / 13.67 / 13.60

__________________________________All prices SPOT


Gold Resistance: 686 / 691 / 693


Gold Support: 681 / 677 / 672

Monday, April 23, 2007

Silver/Oil Ratio and $20 Silver


Silver's next move higher may hinge on Oil's next move higher.


Last Thursday April 19, Oil was down almost $2, Silver got rocked, and Gold was little changed. Much blame was placed on the Chinese GDP numbers and World Stock market reaction to those numbers. Today, Monday April 23, Oil was up almost $2, and Silver lead all Precious Metals on the day. Could Silver and Oil be having an affair behind Gold's back?


For an very insightful discussion of Silver and Oil's historical relationship please read Adam Hamilton's excellent Silver/Oil Ratio Extremes: http://www.zealllc.com/2005/sorpf.htm .


Oil has been consolidating it's recent gains from mid-January's low around it's 50 Week Moving Average AND the 38% Fibonacci Retracement of it's bull run that began in mid-April 2004. The Fibonacci lines of that bull run can be seen on the chart above.


Please click on the chart to enlarge.


The Fibonacci Retracements on that chart are spectacular in how accurately Oil has retraced them. The current five week consolidation in Oil (green circle) not only revolves around the 50 Week moving Average and the 38% Retracement line, but the neckline of a textbook Reverse Head and Shoulders pattern as well. The bullish potential for Oil at this juncture in time is spectacular. And a move above 67 in Oil could potentially be hugely explosive for Gold and Silver. This may just be the catalyst we need to send dem Rat Bastid's running down Wall Street naked with their shorts on fire.


According to Adam Hamilton, on "average", the Silver/Oil ration is 0.26 . If oil were to return to $80 with a coincidental move in the Silver/Oil ratio to 0.26 (currently at 0.21), Silver would be trading at $20.80 an ounce. Imagine that... And judging by the above charts internal indicators RSI and MACD, Oil is far from an interim peak at this point in time. A break of the RSI downtrend in red could signal an imminent breakout in oil. And just what the doctor ordered to push Gold thru $700 and Silver thru $14.50.


______________________________________________

Silver Resistance: 14.o4 / 14.12 / 14.30
Silver Support: 13.95 /13.88 / 13.75
___________________________________All prices SPOT

Gold Resistance: 691 / 693 / 699
Gold Support: 688 / 686 / 681

Sunday, April 22, 2007

The Big Picture: Time Will Tell...




SILVER
If you're looking for excitement, the Silver market is certainly the place to be. From no volatility to begin the week, to violent volatility to close the week, Silver is not for the feint of heart. But if you've got the stomach for this roller coaster, the potential for profits is huge. Patience and conviction are absolute must have tools to possess in your psychological arsenal.

Let's go to The Big Picture for a dose of fortitude.

Please click on the chart above to enlarge. (14.03 should be 14.04)

14.04 has been and remains dem Rat Bastids first line of defense since we sprung our Rat Traps at 13.03 and 13.39. With Silver's bounce off it's 50 "Day" moving average on Thursday's dip we gained a new ally in our assault on the Vermin. The 50 "Day" moving average / 13.39 / 13.03 all now individually "support" our position, and help to defend the ground we have taken back from dem Rat Bastids. Silver has now tried for two weeks in a row to crack 14.04. Thursday's dip has added some strength to our push and the weekly MACD has turned bullish for the first time in this current rally leg up in Silver. The stage has been set, and we may soon get the command to "go for throttle up". It is never a mistake to protect profits. It may be prudent at this time to protect a portion of your profits to date in this leg up with stops of your choosing below any of our lines of support.

Looking ahead as we push forward, a weekly close above 14.04 could potentially devastate the cumulative and "concentrated" short position dem Rat Bastards have devised over the years to suppress the price of Silver.

(to read more see Ted Butler's latest missive on the subject here:

The Vermin, I can assure you, will not go quietly and without a balls to the wall fight. The fray in the Silver Market we witnessed Thursday and Friday is a tiny example of the zany volatility we can expect in the future.

Now should we close above 14.04, expect dem Rat Bastids to make every last ditch effort to defend the late February high at 14.53. If you recall this was the highest "closing" price for Silver since the highs in 1980. 14.43 will be "the last chance" for the Wall Street Sewer Scum to keep a lid on the price of Silver. I suspect a breach of, and close above, 700 Gold should throw some high octane gasoline on the fire already lit under Silver and burn dem rat Bastids en masse.

In the event of an ensuing rocket ride up and thru $15 Silver, pay very close attention to the Gold to Silver Ratio ( G/S ). Remember, 45 on that ratio has repeatedly stopped Precious Metals rallies in their tracks. Time is beginning to work against us now because we are fast approaching Precious Metals "Annual Spring Top". Late May/early June have been historically unkind to Silver and Gold. I know I haven't forgotten last Spring...and neither should have you. Past performance is never a guarantee of future performance...but it's always worth bearing in mind as we project our targets and set profit goals. Though time may be short, let's not forget that between April 11, 2006 and May 12, 2006 Gold rose $137. A LOT could happen in the next 3-4 weeks.

Fibonacci projections I have done of a Silver breakout at 14.03 project to 16.80. Coincidentally, if you follow Jim Sinclair http://www.jsmineset.com/home.asp you know his next target for Gold is $761; A Gold/Silver ratio of 45 with Gold at 761 would equal Silver at 16.91. Hey, it could happen. Will it? Time will tell...



GOLD
Gold closed at 692 on Friday. $1 above dem Rat Bastids line of defense at 691 spot. Gold has remained resilient in the face of all efforts by da Vermin to avoid self-destruction. A strong push by the Bulls this week could collapse all defenses of the Rat Bastid Defense Force. Their last ditch effort will be at 729 spot.

Our Rat Trap at 655.50 launched our assault on the Wall Street Sewer Scum. Smashing their defenses at 666 sent the Vermin to the hills to regroup at 691 to defend their existence at 700. Breaching 700 could be potentially devastating for dem Rat Bastids. The flood gates will have opened, and a tsunami of Gold Bricks will lay waste to their noggins. What little of the rabble is left will try and regroup to save their Family Names at spot Gold 729.

It may be prudent following a close above 700 to put in stops to protect a portion of our profits at what would now be our lines of support at 691 / 666/ 655. It is NEVER a mistake to protect profits in the event that dem Rat Bastids pull a fast one on us.

The Spring PM Window officially opened with the close of the markets on Friday The 13th...Gold 685. Add one month and $137 and you could project gold to 822. Yes, I know, it sounds far fetched. But Gold DID run $137 in 4 weeks last Spring...could it again this spring? Time will tell...
________________________________________________________
Silver Resistance: 13.95 / 14.o4 / 14.12
Silver Support: 13.88 / 13.75 / 13.67
_______________________________All prices SPOT
Gold Resistance: 693 / 699 / 714
Gold Support: 691 / 686 / 681

Thursday, April 19, 2007

The World Economy: Made In China

NOISE! China's GDP growth is nothing new. China has been growing by leaps and bounds for the better part of this decade. The rest of the world should be afraid of China. The 21st Century is China's for the taking. And western economies are going to be steamrolled by the Chinese. Hank Paulson and the Dumbasses in Congress want a stronger Chinese currency. Well, they're about to get one. And at the expense of the US Dollar, they're going to be sorry for what they wished for.

LONDON (Thomson Financial) - Oil fell by nearly 2 usd in New York on worries global growth could be slowed if Chinese authorities try to rein in inflation.
http://www.forbes.com/business/feeds/afx/2007/04/19/afx3631177.html

NEW YORK, April 19 (Reuters) - U.S. gold and silver futures fell sharply early on Thursday, hurt by a host of factors including worries that a possible rate hike in China could cool off the global economy, a stronger dollar and technical selling.
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070419:MTFH20503_2007-04-19_14-41-52_N19382007&type=comktNews&rpc=44

SAN FRANCISCO (MarketWatch) -- Gold futures dropped $5 an ounce Thursday to close at their lowest level in a week, as news of faster-than-expected growth in China in the first quarter triggered worries that the government will have to take measures to slow down its economy, reducing demand for metals.
http://www.marketwatch.com/news/story/gold-ends-one-week-low-china/story.aspx?guid=%7B69B2AA5F%2DE39C%2D4A18%2DA04B%2DA20057C31FC9%7D&dist=MostReadHome

There's a world of Dumbasses out there: "global growth could be slowed", "a possible rate hike in China", "triggered worries" ...these are the words of Dumbasses. Look up Economist in the dictionary, and I'm certain there will be a picture of a Dumbass next to the definition. When was the last time the Chinese listened to a "suggestion", or followed advice, from any Western Economic Dumbasses?

Chuck Butler of Everbank and The Daily Phennig sums up today's "shocking" economic news out of China:

Well... Overnight China posted their first quarter GDP... I'm chuckling right now, because once again the economists and market observers got China all wrong! They collectively said that China's economy would slow down, and that's what really led to the mid-term pause by the commodities last year... China slows down, their demand for commodities/raw materials dries up, and so do their prices.

But... Something funny happened on the way to the forum... These economists and market observers got it all wrong! China's first-quarter GDP grew even faster! HAHAHAHA... That's right... China's economy grew at 11.1% vs. the previous year... (the previous quarter's growth was 10.4%) How's that for your Sunday picnic? It's like I always say... These people don't know what's going on in China... Oh, they go there, and they think they know it all... But we all know that they know about as much as Bullwinkle! Did anyone that forecasts GDP for China even come close to that 11.1% gain? No sirree, Bob!

So... Anyway, I'll get off my soapbox now and just talk about China for a minute... Investment in China continues to be off the charts... And now something that I've warned about for sometime now is beginning to take shape... Inflation in China has accelerated to 3.3%. The Chinese Central Bank does have a ceiling target on inflation of 3%... So, obviously this exceeds that ceiling... I wonder what the Chinese will do about this?

Well, you know my solution... It's the same one that I've had for as long as I've been warning about the surging inflation in China... And that would be to allow the currency to strengthen... A strong currency goes a long way toward keeping inflation in line... Look what it did for the U.S. in the late '90s and into the new millennium... The U.S. economy was rock and rolling, and the dollar was strong... Inflation wasn't the problem it is today, with the dollar much weaker, eh?

When it all adds up, the amazing 11.1% growth in China is going to throw gasoline on the fire that's already lit under commodities...
http://www.kitcocasey.com/displayArticle.php?id=1337

Silver held it's 50 Day Moving Average today. It is bullish when the 50 day Moving Average asserts itself as support in a rising market. Silver was hammered mainly because of the dump in oil today IMO. The dump in oil today was amusing...again look for a quick rebound. The brave that stepped up to the plate today and bought the dip in Silver should be commended. If you sold today and turned tail and ran...don't come back.

Gold moved down less than 1% today and painted a nice tail on today's candle keeping this current rally leg alive. The US Dollar remained weak the entire day, and as I type this it is sitting at 81.41 on the US Dollar Index. Today's China GDP number is great for all Commodities and Precious Metals...despite what the Dumbasses say.

Silver Resistance: 13.69 / 13.77 / 13.82

Silver Support: 13.52 / 13.39 / 13.23
_______________________________All Prices Spot

Gold Resistance: 686 / 691 / 699

Gold Support: 681 / 677 / 672

4-19-07 Morning Update: China GDP

Some economic data we may have all over looked (heck it's a world away) is today's Chinese GDP data. By now we should all understand that the world economy no longer revolves around the USA (despite what the talking heads on CNBC would have you believe) it now revolves, and will continue to revolve around China. I think the late February "Dump Felt Around The World" on the mere suggestion that China may "tighten" lending rules is proof that the baton of world economic leadership has officially passed to China.

That being said, China's GDP came in a little bit ahead of estimates, +11.1% vs. +10.3% year over year. Quarter over Quarter it appears China GDP fell from +10.7% to +10.2%. We're sure to see headlines all day warning of China's "surging" or "Hot" economy. Yes, it is. And it should be the envy of the entire world economy. The Western Economies may actually fear a "surging" Chinese Economy, but that economy is what the Chinese want and need. For the Chinese Economy to mature and truly become the world's leader they NEED alot of domestic consumption to lift more of their population into their growing middle class. It appears they are succeding:

"GDP growth is faster than what the government has targeted, but I think it's quite normal, because consumption has picked up, which is good," said Lim Songli, analyst with Guosen Securities in Beijing. http://money.cnn.com/2007/04/19/news/international/china_gdp.reut/?postversion=2007041907

Volitility is sure to pick up on this data today. Be on your toes. Dips are buying opportunities. The US Dollar remains weak this morning trading down at 8:30 Am at 81.37 with the Euro over 1.36.



Forex - Yen rises as carry trades slow on strong China GDP growthForbes, NY - 3 hours agoChina's GDP grew 11.1 pct year-on-year in the first quarter, beating the People's Bank (nasdaq: PBCT - news - people ) of China's projected growth of 10.2 ...

Yen Finally Finds a Bid As China's GDP Exceeds 11 PercentDaily FX, NY - 2 hours agoThe release of the GDP numbers was delayed until after the equity market close, but trader’s concerns were well founded as Chinese GDP printed at 11.1% well ...

Shanghai copper eases, may rally on China GDPReuters South Africa, South Africa - 5 hours agoThe median forecast of 12 economists polled by Reuters is for China's GDP to have grown 11 percent year-on-year for the first three months of 2007. ...Metals - Copper drifts on concerns China might raise rates to cool ... Forbes

Wednesday, April 18, 2007

The Battle Rages On

YESTERDAY:
April 17 (Bloomberg) -- Gold in New York fell from an 11-month high on speculation that a six-week rally was overdone. Silver also declined.

TODAY:
April 18 (Bloomberg) -- Gold prices rose on demand for a hedge against further declines in the dollar, which slid to a two-year low against the euro. Spot silver also climbed.

Reminds me of Dr. Doolittle's Pushmi-pullyu. The pushmi-pullyu (pronounced "push-me-pull-you") is a fictional creature in the Doctor Dolittle stories. It is an antelope which has two heads at opposite ends of the body. When it tries to move, both heads try to go in opposite directions.

The consolidation of recent gains in Gold and Silver continues... On April 8th I identified spot 691 Gold and 14.04 Silver as the next lines of defense by dem Rat Bastids. Da Vermin have now held us in check for the past four trading days at these levels. Volatility up here has been relatively low. I sense a reluctance on the part of the bulls to sell...there has been little reason too.

Quick Fact: April 11, 2006: Gold $593 oz. --- May 12, 2006: Gold $730 oz.
Gold up $137 in one month

Dem Rat Bastids have been hard at work rounding up as much metal as they can to dump on the market to stop its ascent. They're throwing almost everything they've got at us here and now. I dodged a raggedy old Cabbage Patch Doll and a Chia Pet this morning surfing the Internet. The kitchen sink and the baby with the bath water can't be far behind.

"...the level of Commercial shorts increased substantially last week and is now at a relatively high level. So it looks like the price is going to fail again at the major resistance above $690 and turn tail and retreat..."
http://news.goldseek.com/CliveMaund/1176912127.php

A valid point is raised here by Clive, but I don't believe that a dump in Gold is imminent. I have a hunch dem Rat Bastids at COT are going to need a substantially bigger short position to stop the Bull this time...and even that may not be enough. We should know by the second or third Friday in May. Shorting Gold at COT, central banks dumping Gold to the tune of 60 tonnes the past month...neither have deterred Gold from rising. Breaking through $700 Gold and $15 silver will increase "investment demand" for the metals by a substantial amount. And it is just that increased "investment demand" that may finally overwhelm dem Rat Bastids. Have Gold Investors finally caught on to dem Rat Bastids manipulative games? Is that Rat Bastid ass I smell burning? Is the Mother of All Short Squeezes about to be unleashed on the fetid vermin that have stymied Gold and Silver's ascention to the top of the currency heap? The Battle Rages On.

Meanwhile: April 18 (Bloomberg) -- Banks began foreclosure proceedings against 47 percent more U.S. homeowners last month compared with a year ago as falling housing prices made it more difficult for borrowers to refinance mortgages. http://www.bloomberg.com/apps/news?pid=20601103&sid=aHdKteUy0C1g&refer=us

People, the housing meltdown in the USA has only just begun. Change the channel or turn the page every time you hear or read ANYBODY telling you that housing is at or near a bottom.

The Fed ain’t messing around.
Enough is enough!
In an all out effort to pre-empt a rout in the housing market, the Fed has opened the money spigots WIDE open! The yield curve has duly steepened making monetary conditions even easier (is that possible?) and the Bank of Japan is doing a good job of managing the Yen lower to keep the $800Bn Yen Carry Trade on even keel. The flood gates have been released and what was once a raging river of Liquidity is now a tidal wave of Debt funded Cash inflating all asset classes in its wake.
http://news.goldseek.com/GoldSeek/1176908520.php

Isn't it amazing that the Dow keeps rising in the face of all this economic carnage? It hit an all-time high today. Amazing. Could inflation have something to do with it? Easy credit?

I was stunned to hear about the latest figures on the amount of margin debt carried by U.S. investors. For New York Stock Exchange shares alone, the figure hit a record $285.6 billion in January.

To put that in perspective, the previous peak, occurring at the March 2000 market top, was $278.5 billion.

http://www.thestreet.com/_googlen/funds/toponepercent/10350195.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

I suspect the Mother of All Double Tops is 1-2% from being set in stone for the Dow. Any rally in the US Dollar should not only stop the Dow in its tracks, but the Precious Metals as well. But I just don't see the catalyst...other than a dead cat bounce at 80 before she goes belly up and sinks like a stone in the ocean.

Silver Resistance: 14.04 / 14.12 / 14.30

Silver Support: 13.95 / 13.85 / 13.67
__________________________________ All Prices are SPOT

Gold Resistance: 688 / 691 / 699

Gold Support: 686 / 681 / 677

Tuesday, April 17, 2007

A Little Or A Lot, It's STILL INFLATION


Lower Clothing Prices Keep Core CPI In Check

WASHINGTON (Dow Jones)--A sharp drop in apparel prices and soft gains in housing and medical costs kept underlying inflation in check last month, a government report showed, though overall inflation accelerated on the back of higher energy prices.



Somebody please pinch me, I can't stop laughing. Lower clothing prices? Lower clothing prices can mean only one thing...Sales. Sales as in discounts...and lots of them. If there is one rule when it comes to buying clothes..."never pay retail". Interesting to note that second to the +3.1% increase in gasoline sales last month was clothing sales +2.4%. I guess folks were buying a lot of cheap clothes last month. I'm not sure. I hate shopping for clothes.


Oh my, look. The US Dollar was down again today. 8PM est and the US Dollar Index stands on crutches at 81.63. Not even the expected spin on the numbers could put a bid under this sick puppy: "The Federal Reserve has been forecasting that inflation would move back into its comfort zone on its own," without the need to tighten monetary policy, says Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh. "It's not yet in their comfort zone, but its getting close to that." Sure today's +0.6% CPI number was inline with forecasts, but folks it was higher than February's +0.4%. Inflation is rising no matter how you try to spin it.


And no matter how poorly you report the numbers, inflation is rising as well. From thestreet.com: The Labor Department says the core rate of inflation, which excludes volatile food and energy components, fell to 0.1% in March from 0.2% in February. Um, not exactly.

Consumer prices were 2.8% higher than a year earlier, according to Tuesday's report, while core prices advanced 2.5% from a year ago, down from last year's peak of 2.9%. Over the last three months, the core CPI has risen at a 2.3% annualized rate. The Fed wants inflation at 1.5% to 2%.


The Fed tends to focus on core inflation when assessing price risks, but there's a danger that higher food and energy-driven price gains could filter through to underlying inflation by pushing expectations higher. Indeed, the Reuters/University of Michigan one-year inflation expectations reading for mid-April, released last Friday, rose sharply to 3.3% from 3.0% in March. Energy prices last month increased by 5.9%, according to Tuesday's report. Gasoline prices jumped 10.6%. Natural gas prices advanced 3%, while electricity prices rose 0.5%. Food prices, meanwhile, increased 0.3%.


It is getting ridiculous the number of people in and out of the government who try to "tell us" that inflation is under control. It isn't...and it isn't going to be anytime soon. The bottom line is this: INFLATION IS BAD, BAD, BAD for the US Dollar. And that in turn is good for Precious Metals.


April 17 (Bloomberg) -- Gold in New York fell from an 11-month high on speculation that a six-week rally was overdone. Silver also declined. This is absolutely irresponsible commentary/reporting. Simply put, whoever wrote this couldn't figure out the metals mettle today. Gold and Silver are merely consolidating their most recent gains and taking in all of this weeks data. I believe options expiration is Thursday, is it not?


Click on the chart above to enlarge. This is a daily chart of the US Dollar Index for the past three months. The dollar has become dangerous now. It's at the bottom of it's downtrend channel and technically it is beginning to look oversold as well. The falling dollar is getting a lot of press lately, and when the bet becomes too "one-way" a reversal could be imminent. There's little out there right now to put a any wind in the US Dollars sails, but we don't call 'em RAT BASTIDS for nothing. The balance of the month will be light on economic data, and sentiment is negative on the US Dollar. Technically we may be setting up for a little bounce before the dump to 80 on the Index. Beware the PPT.



Silver Resistance: 14.04 / 14.12 / 14.30


Silver Support: 13.95 / 13.85 / 13.67

__________________________________ All Prices are SPOT


Gold Resistance: 688 / 691 / 699


Gold Support: 686 / 681 / 677



The Devil Is In The Details

Economic Data = Market Noise. When the market gets noisy, the ride gets bumpy. Dem stinkin Rat Bastids are going to throw everything they've got at us to try and keep Gold below 700 and Silver below 15. Their short positions in both are giving them more bad gas than an entire box of Pepcid AC could neutralize. The US Dollar got ZERO help from the weekend's G7 meeting and continues to hang by a thread. Suggestions, once again, that the IMF sell its gold, only speaks to the desperation of dem Rat Bastids. Dem Rat Bastids are quite close now to being caught with their pants down with a pack of hungry pit bulls staring them down from a block away.

Let's briefly look at yesterdays Economic Data points:

US Mar Retail Sales Exceed Expectations
+0.7 vs. +0.4

Details: March gasoline station sales surged 3.1% last month, probably reflecting higher prices at the pump. Gas sales increased 1.5% in February. Stripping away sales at gas stations, demand at all other retailers rose 0.4% in March.

LOL! Obviously, with gasoline prices up about 38% this year, consumers are forced to spend more and more of their hard earned income on gasoline for their proud fleet of gas guzzling SUVs. Absent gasoline costs, retail sales were as flat as a pancake.

US Empire state manufacturing index rises 1.95 points in April to 3.80
3.8 vs 7.5

Details: The details of the survey showed that while new orders held steady, the shipments index fell to its lowest level since mid-2005 and the index for unfilled orders slipped further into negative territory, it said.

This was another bad number for the manufacturing sector...'nuff said.

US Feb net portfolio flows rise to 94.5 bln usd in Feb
94.5 vs 80.8

Details: Net foreign acquisition of U.S. securities was $43.2 billion in February, down 51.6% from $83.7 billion in January. Net buying of long term securities totaled $58.1 billion in February, down 58.8% from $98.8 billion in January.

A double negative? Little positive can be derived from that, though the headline number looks good.

The Devil Is In The Details. I can't find anything in yesterdays economic data that lends any support to the US Dollar. As each day passes the global investment community distrusts it ever more. Now the US Dollar is not going to zero next week, or next month for that matter. It probably is not going to zero at all (well, ...), but it is and remains weak. It will have flashes of support, but they will be fleeting. We may see one this morning if the CPI data is horrible and the "FED's gonna raise rates" crowd throws the US Dollar a bid. I think we all know by now that that blah blah is just that...BLAH BLAH. The US Dollar is going down, over time, a lot further. And Gold and Silver, over time, are going a lot higher.

And, it's wise to not over analyze. It too often leads to trading mistakes. We continue to sit in a potentially powerful position in Precious Metals here. Let's let the noise come and go this week. The markets, much like a plane ride through the clouds, may get bumpy when it hits a little turbulence. But once we pass through...it's smooth sailing once again.

The sun is up and the wind is blowing again here in North Carolina...I think I'll go fly a kite.

Silver Resistance: 14.04 / 14.12 / 14.30
Silver Support: 13.95 / 13.85 / 13.67
__________________________________ All Prices are SPOT
Gold Resistance: 686 / 691 / 699
Gold Support: 681 / 677 / 672

Sunday, April 15, 2007

The Big Picture: Powerful Potential











Friday The 13th has come and gone. The economic data spewed forth by the illustrious number crunchers in Washington was not quite as deliciously depressing as we had hoped, but it certainly lit a fire under our PM positions. And the pressure continues building on dem Rat Bastids now as our Rat Traps squeeze [pun intended] dare little heads until dare beady little rat eyes burst under the weight of a ton of gold bricks. KaRaaaaang!


OK, fine. But let's not allow ourselves to get complacent here. Dem Rat Bastids are at their most dangerous as their backs are pressed against the wall. We haven't taken the high ground yet. And until we do we must show some respect for the nasty vermin.


We are in a potentially very powerful position as we open the week. A trailer load of economic data on tap this week. All of it with the potential to bomb the US Dollar. Retail Sales, CPI and The Treasury International Capital Report (TIC flows), and Housing starts are the big ones to keep an eye on.


Click on the charts from StockCharts.com to enlarge. This week I'll let the pictures do most of the talking. The big "event" on Friday The 13th was the breakout of The HUI Index at 360. Gold bugs have waited for, and anticipated this move for months. Historically Gold Stocks lead the metal higher, so some follow thru this week of the breakout in the HUI could prove pivotal to the intermediate future of Gold and Silver.


Should Gold surpass 691 spot, and Silver surpass 14.43, this week it may be wise to consider protecting a portion of your profits with stops below these significant milestones.



Silver Resistance: 14.04 / 14.12 / 14.30


Silver Support: 13.95 / 13.85 / 13.67

__________________________________ All Prices are SPOT


Gold Resistance: 686 / 691 / 699


Gold Support: 681 / 677 / 672


Insightful reading here:


US Dollar Perched Precariously on a Precipice


The Dollar Continues To Get Creamed …




Friday, April 13, 2007

The Numbers Are In

Friday The 13th
The numbers are in. They ain't pretty, but they ain't as ugly as we'd anticipated either. They can dice em and slice em any way they want in the financial media. These numbers are bad for the US Dollar. The dollar was getting taken to to the woodshed overnight in Europe following European Central Bank president Jean-Claude Trichet yesterday signaling that ECB would be rising in the near future.

Mysteriously, the US Trade Balance did not com in over estimate -58.44 vs -60.50 consensus. The rising price of oil last month alone should have pushed that number well above consensus. They probably booked some airplane sales to some foreign nationals to keep that number in line...an infamous trick of the government data crunchers. Yet it would be a huge stretch to intimate that this trade number is a positive. In fact, in the big picture, it's hugely negative. "Today's February US trade deficit, in combination with last Wednesdays release of a wider-than-expected fiscal shortfall ... in March will remind investors that the 'US twin deficit' problem will come back as the US economy weakens, undermining tax revenues," BNP Paribas analysts said. The key quote there, ...undermining tax revenues.

The PPI numbers 1% vs. .6% consensus, prove inflation is picking up steam, and that it's root cause is rising food and energy prices. Core PPI, ex food and energy came in at zero. I find that somewhat astonishing, "zero", but those are the numbers. Inflation IS a lot worse than the Fed wants you to believe, because they are mandated to control it AND because they are the root cause of it.

At the end of the day this new economic data should prove to be US Dollar negative and very good for the Precious Metals. If you're not on the bus already, start running now or you may may be left behind waving. There may be a couple more stops before we hit the highway. This bus is heading for Cape Kennedy and a moon launch. Intersections at (spot) 14.43 Silver and 691 Gold may be your last chance to get on board.


Silver Resistance: 13.95 / 14.04 / 14.12

Silver Support: 13.85 / 13.78 / 13.67
_____________________________________________

Gold Resistance: 681 / 686 / 691

Gold Support: 677 / 674 / 670

Wednesday, April 11, 2007

Shining Silver Tails


As I said in my post March 28th, Arrested For Driving While Blind , The ONLY thing we can be certain of right here and now, is that our Skipper is uncertain. Our Skipper Bernanke is up the creek without a paddle.


WASHINGTON (MarketWatch) -- U.S. Federal Reserve members were very uncertain about the economic outlook and changed their policy statement to gain more flexibility to respond to the incoming data, according to the minutes of the March 20-21 meeting released Wednesday.



And you think this country has a debt problem now, where in the hell are they going to get the money for this STOOPID idea?


WASHINGTON (AP) -- Amid new signs that the housing slump is worsening, key Senate Democrats said Wednesday that hundreds of millions of dollars of new federal aid may be needed to assist homeowners at risk of foreclosure. http://biz.yahoo.com/ap/070411/housing_woes.html?.v=4


Gold and Silver remain solid. Today's dip in Silver was very welcome and IMO only strengthens the current leg up off the March 5th low. Folks were buying the dip today as they often have in the past. Please click on the chart above to enlarge.


Wednesday may have ended up essentially flat, but a lot of fuel was added to the fire. Dem Rat Bastids better buy some stock in Aloe Vera cause day about to get burned.



Silver Resistance: 13.88 / 14.04 / 14.12


Silver Support: 13.78 / 13.67 / 13.60

____________________________________ All Prices are Spot


Gold Resistance: 677 / 681.10 / 685.50


Gold Support: 674.50 / 670.30 / 666


Tuesday, April 10, 2007

A Watchful Eye

So far, so good...Gold and Silver's impressive response to the potential for pressure presented by the hokey Nonfarm Payrolls numbers has been telling. Technicals and fundamentals involving both are beginning to trump all economic "data" and the efforts of dem Rat Bastids with the PPT. We have the vermin on the run now...yet it remains to be seen how far into the hills we can drive them before they can muster a counter-attack.

The US Dollar remains weak, Euro Gold is back over 500 Euro, Gold Stocks relative to Gold Bullion are on the verge of a major breakout, inflation is hot, the economy is cold, corporate profits are teetering, and China is pissed at the USA. Just a few good reasons to own Gold and Silver, eh?

Occasionally, it is wise to step aside and watch events unfold...over analysis can and often does lead to trading mistakes. For now, let's sit on our hands and wait for Friday The 13th. Always be prepared to react if dem Rat Bastids should try and pull a fast one on us. Any pressured reaction in the PMs should be swift and fleeting in the environment we find ourselves this week. My single overriding concern right now is that the run in Copper may be getting a bit tired here, and may need to pause some to catch it's breath. Copper support at 334.50. http://stockcharts.com/h-sc/ui?s=%24copper


Silver Resistance: 13.88 / 14.04 / 14.12

Silver Support: 13.78 / 13.67 / 13.60
____________________________________ All Prices are Spot

Gold Resistance: 677 / 681.10 / 685.50

Gold Support: 674.50 / 670.30 / 666

Monday, April 9, 2007

It's Called STAGFLATION

I'd be lying if I said I was surprised by Monday's Precious Metals [PM] response to Friday's Nonfarm Payrolls numbers. It is never a mistake to expect the worst when anticipating a reaction to economic data. It forces us to prepare to take action if, and or, when our PM position reacts negatively to data. Today's PM performance tells me that their markets judge the jobs number benign. Which is what we believed the jobs report to "truly" be...irrelevant.

Today's PM reaction to the jobs number only reinforces the distrust the global investment community now has for the US Dollar...As of 11PM EST the Dollar has already rolled over and given up it's gains initiated by the irrelevant jobs number. It also sends a clear message that things may be a lot worse than we already suspect they are in our economy.

The Fed has already gone on record with their "uncertainty" about which direction the US Economy is heading. It's clear they are stuck between a rock and a hard place when it comes to any break up or down in the "pace" of the economy...too fast, raise rates -- too slow, cut rates. The PMs today are sitting in the cat birds seat as the Fed faces an economic future of Stagflation.

This word has begun to pop up more and more in commentary and analysis of the US Economy. What is Stagflation? Wikipedia describes Stagflation:

Stagflation, a portmanteau of the words stagnation and inflation, is a term in macroeconomics used to describe a period of high price inflation combined with slow output growth, high unemployment, or recession. The term Stagflation was first used by Dr Peter Beter, ex-general counsel for the Export-Import Bank of the United States--Originally incorporated as the Export-Import Bank of Washington in 1934. "Stag" refers to a sluggish economy, while "flation" signifies rapidly rising consumer prices.
Stagflation is a problem because most tools for directing the economy, that is
fiscal policy and monetary policy can trade off growth for inflation. Either they slow growth to reduce inflationary pressures, or they allow general increases in price to occur while generating output growth. Stagflation creates a policy bind in which efforts to correct one problem can worsen the other. The dilemma in monetary policy is instructive. The central bank can make one of two choices, each with negative outcomes. First, the bank can choose to stimulate the economy and create jobs by increasing the money supply (by purchasing government debt), but this risks boosting the pace of inflation. The other choice is to pursue a tight monetary policy (reducting government debt purchases in order to raise interest rates) to reduce inflation, at the risk of higher unemployment and slower output growth.

To read more about Stagflation click here: http://en.wikipedia.org/wiki/Stagflation

Stagflation will be very good for Gold and Silver Assets. It will be very bad for consumers. Protect and enhance your wealth. Buy Gold and Silver on the dips and always maintain a core position in your metal(s) of choice.

Did you see the move in Copper today? http://stockcharts.com/h-sc/ui?s=%24copper

This dip in oil will be brief: http://stockcharts.com/h-sc/ui?s=%24wtic


Silver Resistance: 13.80 / 13.88 / 14.04

Silver Support: 13.67 / 13.60 / 13.54
_____________________________________________________

Gold Resistance: 674.50 / 677 / 684.30

Gold Support: 670.30 / 666 / 657.50

Sunday, April 8, 2007

Buy The Dips




U.S. Gas Prices Jump 18 Cents in 2 Weeks So what... The Labor Department reports that 180,000 "new" jobs in the month of March. There's no need to fear those prices at the pump...those 180,000 McJobs are gonna fix everything. Or so you will be lead to believe by the talking heads when you flip on CNBC Monday morning. OK, that's the last I'm going to flog that dead horse. For more on my thoughts on Friday's Nonfarm Payrolls report please see my Saturday, April 7 post here Perspective Is Everything . I'd rather look at Gold and Silver this evening.


Based on Friday's jobs number we should expect the US Dollar to be strong out of the box Monday, Precious Metals to be pressured, and the stock markets to be cowering in fear of an interest rate hike by the Fed. Nobody should be surprised by anything that transpires in the markets Monday. There is little economic data this week until Friday's PPI and Trade Balance numbers are released at 8:30AM EST. The US Dollar will in turn more than likely pick up a bid thru the middle of the week. Do not dispair. Use this opportunity to buy or add to your Precious Metals positions. In a bull market buy the dips. In a bear market sell the rallys. The US Dollar IS in a bear market. Rest assured, those traders looking to unload some US Dollars or add to their shorts, will take this opportunity to do so. I'm pretty confident that Friday The 13th will be a dark day for the US Dollar.


Of course, the Precious Metals could completely ignore the revered jobs number and continue their ascent. Let's review where we've been, and take a look at where we may be going this month.


SILVER
With our Rat Trap at 13.03 we drew a line in the sand and put dem Rat Bastids on notice and put a six-pack of Kick Ass on ice. Unable to steal the bait at 13.03, dem Rat Bastids retreated to the 50 day moving average, and established a line of defense in the hopes of derailing our advance. Their "line of resistance", though admirable, proved inadequate as the truth about the sub-prime debacle began to be accepted by even the ignorant. And now that we finally have dem stinkin' Rat Bastids on da run, they sneak in a "surprising" jobs number on a market holiday. We don't call dem Rat Bastids for nothing... We got 'em right where we want 'em...desperate.


As we breached their defenses at the 50 day moving average, we established a new line in the sand. Old resistance, becomes new support. That support is at 13.39 and helps us set a new Rat Trap on top of the old one. We'll call it a compound Rat Trap. As you can see on the chart of SLV above...we've moved to the top of the current uptrend channel with our break through at the 50 day moving average. This "technical" development will probably have more to do with any pause in silver this week than the jobs number will. A retest now of support at 13.39 would be good for our cause, and offer a nice opportunity to buy or add to our positions in Silver.


Do not panic IF our defenses bend at 13.39, the bottom of the uptrend channel should offer powerful support. It would not surprise me if Silver banged around between 13.70 and 13.39 until Friday morning. If the bottom falls out of the US Dollar Friday, expect dem Rat Bastids to put up their next line of defense at 14.04. If that line should fail them there, look for them to circle their wagons tight at 14.43. It's too early to call, but I expect this leg up in Silver to reach 14.90 - 15.06 before dem Rat Bastids have enough ammo to set a trap of their own.


GOLD
666 may be the number of the beast, but for the past two months it's looked more like dem Rat Bastids idea of a bad joke. For several weeks in mid-February, and again in late-March dem Rat Bastids taunted our bull with a red flag there. The green circles surrounding the congestion at 666 on the Gold chart above show the battle waged between the bulls and dem Rat Bastids. In February, we failed to see the trap they had set for us there. Yes, we broke their defenses at 666 spot in February, but did so low on ammo having spent most of it fighting our way off the low in January. After taking our lumps, we regrouped at a "higher low" and set a little trap of our own in the futures pits at 655.50 [650 spot].


On March 23 dem Rat Bastids tried to rattle our Rat Trap and failed miserably. In so doing, they handed us the 50 day moving average. With the 50 day moving average now on our side, and a new uptrend established, we reloaded our guns with one bad economic number after another and went hunting for bear. Dem Rat Bastids regrouped and reestablished their defense of 666.


Technically, we are in a much more powerful position today to take out 666 and make it our own. Once again, old resistance, becomes new support. With 666 as not only horizontal support, but uptrendline support as well, we should be in a powerful position to defend any tricks Friday's jobs number may present this week. A retest of support of 666 will be very good for our cause and offer an excellent opportunity to buy Gold or add to positions.


Don't panic if our defenses should bend at 666 spot. We still have the 50 day moving average on our side and it should offer powerful support. Looking forward to Friday The 13th, should the US Dollar fall out of bed that morning on the PPI and Trade Balance numbers, we have plenty of ammo now to put dem Rat Bastids on da run. Expect them to next defend 696 in the futures pit [691 spot]. And expect them to wage war at 734 in the futures pit [729 spot].



Silver Resistance: 13.67 / 13.80 / 14.04

Silver Support: 13.54 / 13.43 / 13.30
__________________________________________________________

Gold Resistance: 674.50 / 679 / 684.30

Gold Support: 670.30 / 668.50 / 664.70








Saturday, April 7, 2007

Perspective Is Everything


Indeed, perspective is everything. That is why it is so important to have the right perspective. Once you have an accurate perspective on the economy, you can more confidently withstand the noise that is constantly created in the market. -- Emanuel Balarie


Bad news is good news. Good news is bad news.


Tuesday, April 4:

US Factory orders way below expectations. ISM Purchasing Managers Index below expectations. Market consensus: Slowing economy (bad news) = Fed rate cut (good news).


Friday, April 6:

Nonfarm Payrolls rise by 180k, beats market expectation of 135k. Unemployment drops from 4.6% to 4.4%. Market consensus: Growing economy (good news) = Fed rate increase (bad news).


People, WAKE UP! The toast is burning and the coffee is cold. Quit speculating as to what the Fed is gonna do with interest rates and FOCUS on the fact that the global investment industry has a growing distrust of the US Dollar. As 2007 unfolds, and we move ever closer to the darkening economic horizon on the road to nowhere, investors are increasingly questioning the value of money. The basis-point profits the global investment community can siphon selling Yen to buy US Dollars, or make selling US Dollars to buy stocks only makes sense when you trust the money it pays.


I fail to see how 180k McJobs are going to stave off the sub-prime mortgage meltdown. The meltdown there has only just begun. The bottom in the housing market is far off in the distance. The true scope and effect this sub-prime debacle is going to have on the economy won't be felt or witnessed for months... But there are fools that would have you believe otherwise: "The report is a nail in the coffin of doomsayers who predicted the economy was going down for the count. It knocks out analysts who were predicting recession," said Stuart Hoffman, chief economist for PNC Financial Services in Pittsburgh.


Recessions don't happen overnight, they develop over time. The fuse has been lit. I hope you don't have any of your assets invested with Mr. Hoffman. Are 180k "new" jobs "created" in March, along with 4.4% unemployment, going to slow or reverse the effects rising energy prices, food prices, and government debt are having and going to have on the economy? Are they going to improve The Big Picture in any way, shape or form? Not in the least. The monthly Nonfarm Payrolls numbers are inaccurate at best, misleading at worst, and despite the attention they are given every month, the nonfarm payroll numbers are essentially irrelevant.


Builders added 56,000 jobs after shedding 61,000 the prior month. The snap back is probably due to the return of more seasonable temperatures after cold weather played a role in the February drop, the Labor Department said. No matter how you spin it, that equals a net loss of 5,000 construction jobs. And since no "real" construction jobs were "created"...construction workers going from "unemployed" to "employed" is hardly "job creation"... one could surmise that there were only 124k "new" jobs created in March (180k - 56k = 124k). And that would mean that March Nonfarm Payrolls actually came in 11k short of the 135k expected.


Nevertheless, Friday's Nonfarm Payrolls number will be hailed Monday as economic salvation by the talking heads on CNBC and in countless "headlines". The payrolls number will be positive for the dollar, negative for Precious Metals, and just plain bad for stocks. All based from the "perspective" that this ridiculous single number ensures a growing economy and an imminent Fed rate increase. And with little economic data to begin the week, the jobs data will most likely give the dollar "happy feet" through the better part of the week. That little party should come to a crashing halt at around 8:30AM EST Friday, April 13. Friday The 13th. March PPI and US Trade Balance numbers will be released at that time. I suspect those party hats being worn by those at the US Dollar end of the Forex Pits will be quickly changed to black hoods and calls to 911. Friday The 13th may well be remembered in history as "The Day The US Dollar Died".


Bottom line: As we have pointed out before, the Fed cannot afford to raise OR lower interest rates. And with that continuing to be the case, the Fed will probably, for the balance of 2007, do absolutely nothing to interest rates. And even if the were to change rates, it's win-win for Gold Bugs. Raise rates to fight inflation...economy tanks and gold goes up. Lower rates to save the economy...inflation takes off and gold goes up. From my "perspective", gold is going up despite any efforts to prevent it. The past six years should prove that. The more the PPT fights rising gold prices, the higher they are going to go.
Please click on the chart to enlarge. Intermediate Head and Shoulders Top for the US Dollar. The picture speaks for itself. Gold and Silver analysis to follow.




Wednesday, April 4, 2007

Boom!

Iran to Release 15 Britons Seized at Sea in March

And you thought the Oil and Precious Metals would tank as a result... Surprise, Surprise...they did NOT. Why not? In a nut shell...it's the fundamentals stupid. Oil traders are beginning to focus on the supply/demand fundamentals. Gold and Silver traders are focusing less now on the "safe haven" tag so often hung around their Precious Metals necks, and beginning to understand these metals "investment demand" as the economic horizon in front of us grows ever darker.

I cannot comment any better on today's metals action other than to suggest reading the following that I found perusing the following three articles on GoldSeek.com.


Gold Jumps As Peace Breaks Out!
So what did drive gold higher at the US open? Oil dropped 1.3% on the news from Iran. Spot gold prices, on the other hand, leapt as the US Commerce Dept. and Institute for Supply Management both reported much weaker than expected economic data.

US factory orders for Feb. came in way below expectations. Wall Street was looking for 1.9% growth versus the 1.0% we got. And outside manufacturing, the ISM purchasing managers index also disappointed, coming in at 52.4 for March versus 54.3 expected.

http://news.goldseek.com/GoldSeek/1175707407.php

Gold Seeker Closing Report: Gold & Silver Rise Over 1%
The gold market proved with its action that the market is focused on the prospect of ongoing physical and investment demand instead of on flight to quality demand. Certainly a slightly lower US Dollar provided some buying incentive but it is also possible that soaring copper prices and an economic exhale in the wake of the hostage release provided the bull camp with a new bullish angle on gold prices. While crude oil prices were weaker because of the resolution of the hostage crisis and an increase in weekly crude oil inventories, the gasoline market saw another significant decline in stocks and that in general propelled a number of energy markets higher. In the end, we suspect that the gold market was indirectly lifted by the gains in unleaded but also because of massive gains in the copper market.

With all the metals rising in sync and some metals managing extremely stellar gains in the face of slumping US economic information and a downshift in the level of geopolitical anxiety it would seem like the true focus of the silver market was measured on Wednesday. In other words long interest in the silver market is mostly being derived from good old fashioned physical and investment demand prospects and the whole hostage situation was apparently seen as an unnecessary impediment to global economic growth. Certainly the silver trade has been emboldened by the massive gains in copper as that indirectly hints at strong Asian demand for a host of commodities.”

http://news.goldseek.com/GoldSeeker/1175745630.php

International Forecaster
We are moving into the strongest period for physical gold demand with the start of the monsoon-wedding season later in the month. This is what the central banks will face when they try again to manipulate gold downward. We will bet on the brides and against the criminals. Gold is headed higher.
http://news.goldseek.com/InternationalForecaster/1175709760.php


Copper has been on a tear. It's influence on Gold and especially Silver, should not be underestimated. Copper took out it's 50 week moving average this week at 3.20. A pause here in copper could put the breaks on the Gold and Silver breakouts witnessed today. Both metals cleared significant hurdles today. Gold closed over $670. Silver closed significantly above it's 50 day moving average at 13.43 and finally closed the top of the March gap down at 13.54.

Tuesday's Reversal Day in both Gold and Silver is proving that much more significant with today's powerful moves forward. Our Rat Traps have got dem Rat Bastids on the defensive now. They tried vigorously to steal our Precious Metals from us, but we held firm. We must remain vigilant. Never forget NO market goes straight up. Any dips now should be used to add to your positions. Tomorrow I hope to discuss short and medium term targets for "profit taking" should today's breakout result in a new rally leg up.


Silver Resistance: 13.67 / 13.80 / 14.04

Silver Support: 13.54 / 13.43 / 13.30
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Gold Resistance: 674.50 / 677.20 / 682

Gold Support: 670.30 / 668.50 / 664.70


An interesting side note:

...what is even more remarkable in gold's capacity to breakout once more is the fact that once again central banks have been hammering the metal.

Blanchard & Co report that last week again saw heavy selling from European banks - some 17.5 tonnes to be precise - bringing the three week total to 45.5 tonnes.

When central banks sold 50 tonnes into the market in September 2006, the gold price fell nearly US$30/oz. When 75 tonnes were sold in May 2006, the price fell more than US$100/oz.

Blanchard suspects France is the major seller, given Germany has indicated it will not sell and Spain and Portugal have shut up shop following massive sales last year. If so, France will be coming close to fulfilling its sales allotment for the year (ending September) under the Washington Agreement. With that obstacle removed, market observers believe there will be little holding back the gold price given Washington Agreement sales are expected to fall short of the 2007 total as they did in 2006.

Blanchard further notes we are heading into another peak demand season for the metal.
http://www.fnarena.com:80/index2.cfm?type=dsp_newsitem&n=BEEBCDAE-17A4-1130-F5476509B9BDDA14

Pictures Never Lie









Just five of the countless headlines yesterday claiming that the price of Oil was down because Iran and the UK may kiss and make-up. "Headlines" seldom tell the whole story...in fact, the story seldom tells the whole story, or the real story for that matter. The news media is less about reporting the news these days, than they are about manipulating it.


For what I believe is the real story in Oil, let's go to the Big Picture. Pictures can't lie, and the Big Picture always tells it like it is.


Please click on the chart to enlarge.


Oil has been on quite a roll through the first quarter of this year. From the week of January 16 thru March 3o Oil is up 30% ! 30% in any commodity in ONE quarter is absolutely huge. The Big Picture is a weekly chart of Oil. Just a quick glance at this picture and one can see that the "dip" in oil yesterday was much less about Iran and the UK settling their differences in the sandbox, and more about the relevant technical points on the chart. Oil has has come up from below it's 50 week moving average from below. That moving average is at 65.23. A market rising from below it's 50 period moving average often pauses there as it represents resistance. The resistance can be thick or thin depending on the slope of the average. In this chart, Oil's 50 week moving average is sloping down...resistance at this point was "to be expected".


Strengthening the resistance at the moving average we find that oil has found it's 50% Fibonacci retracement of last July's top at 65.44. Fibonacci numbers offer resistance to a rising market, and support to a falling market. Obviously then, because of it's 50 week moving average and 50% Fibonacci retracement, Oil has found solid resistance around 65. Oil was going to pause here no matter what the Iranians and the UK have to say to one and other.


"Headlines" are often like a magician's magic act...they're designed to make you look the other way. How many times have you seen the words "Profit Taking" in a headline about Precious Metals? Those words aren't there because the news is that profits are being taken. Those words are there because the stooge writing the headline can not explain why the price of the metals are falling. Taking profits is part of the metals markets, it's never "news". If Profits are "news", how come we never see headlines like this: "Metals Rising As Traders Look For Profits"? Yes, real "news" can and will effect the directions of markets...just beware that often there is more to the news than what you see in the headlines. Or like my father always used to tell me, "Don't believe everything you read." Always look at the Big Picture. Pictures never lie.



Silver Resistance: 13.41 / 13.54 / 13.67


Silver Support: 13.33 / 13.25 / 13.16 [13.03]

__________________________________________


Gold Resistance: 668.50 / 670.30 / 674.50


Gold Support: 664.70 / 662.10 / 658.30 [655.50]

Tuesday, April 3, 2007

Nice Bounce!

I find it highly "suspect" that yesterday's bounce in the Precious Metals was solely the result of a minor news story out of the US State Department. As a matter of fact, to even suggest that the reason for the bounce was this "news" is a ridiculous crock of s#*!

April 2, 2007 — An American citizen is missing in Iran, the State Department said today.

State spokesman Sean McCormack said that the United States had been monitoring this case for several weeks and today had sent a message to Iran through diplomatic channels for more information on his whereabouts.

Obviously the State Department has known about this missing "individual" for weeks and hasn't mentioned it once...why then, do they suddenly feel the need to announce it today?

Sources tell ABC News that the missing American was a former FBI agent, although they stressed that he was now a private citizen and that his trip to Iran was on "private business" and not associated with official U.S. matters.

IMO, the guy's in Special Ops, has been caught by the Iranians, the State Department knows it, and are now trying to "explain" this "American's" presence in Iran. It's called "an attempt at a cover up"...The State Department is trying to "explain away" the obvious. It's all so James Bondish...too bad Jack Bauer is busy beating up Arabs in L.A. to deal with this.

So I doubt this "news" was the reason for the sharp bounce in Gold and Silver yesterday...but hey, I sell produce for a living, what do I know. I know that Gold bounced yesterday at 656 and Silver at 13. Perhaps it was just a coincidence, perhaps not. But aren't our Rat Traps set at 655.50 Gold and 13.03 Silver? The Traps have been tested yet again and dem Rat Bastids have failed once again to steal da bait from us. Each test and bounce off these numbers winds the Traps tighter...their support of our positions becomes stronger. I commend those brave comrades that stepped to the plate and bought during yesterday's sale prices.


Silver Resistance: 13.25 / 13.30 / 13.41

Silver Support: 13.20 / 13.10 / 13.03
_________________________________________________

Gold Resistance: 662.10 / 664.40 / 668.50

Gold Support: 660 / 658.30 / 655.50