The Precious Metals appear again today to "be at rest' awaiting the next catalyst to drive them ever higher. The inability of these markets to follow through higher on their opening gaps in Asia Sunday night would seem to indicate that uncertainty is the prevailing sentiment at this time.
With dip buyers in abundance, and shorts below the markets happy to get out at less of a loss on the dips resulting from this bout of uncertainty, the Precious metals look content to consolidate their recent gains here. This of course would be preferable to the bulls in the market instead of a "correction" in price.
It should be noted, regarding a "correction", that the "relative prices" of Gold and Silver are very low at this time, and do NOT warrant a significant correction at this time. Relative prices reference correcelations between their 50 and 200 day moving averages. For instance, Silver usually "corrects" in price when it's 50 day moving average is 25% or more above its 200 day moving average. Today, Silver's 50 day moving average is just 5% above its 200 day moving average. Gold's is only 2%.
Adam Hamilton has done a great deal of research on this measurement metric. You can learn a lot by reading his past essay's on the subject. You can start by reading this essay posted by him one year ago: Relativity Trading
At this hour the US Dollar is probing 15 year lows vs the Yen. The Chinese Yuan is down on news that the banks are determined to fight inflation. This must thrill Little Timmy Geithner and his cronies in Congress desperate to see China raise the value of the Yuan. Of course, as the Fed prints more money, they export inflation around the globe. The Chinese are within their rights to fight it, and give the US Treasury the finger in the process.
China raises bank reserve ratio for some banks
SHANGHAI — China's central bank has ordered six lenders to temporarily increase the amount of money they must keep in reserve to rein in lending and combat rising inflation, state media said Tuesday.
The People's Bank of China on Monday hiked the reserve requirement ratio for the six lenders by 50 basis points to 17.5 percent for two months, the China Securities Journal said, citing unnamed sources.
The six banks include the four major state-owned lenders -- Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China, the report said.
The other two lenders are China Merchants Bank and China Minsheng Banking Corp, it said.
It is the fourth time this year that China has raised banks' reserve requirement ratio and comes after new lending in September "significantly exceeded regulators' expectation", an unnamed source was quoted as saying.
The move is also in response to rising inflation, the source said, which rose at the fastest pace in nearly two years in August, as severe floods and unusually hot weather destroyed crops, driving up food prices.
http://www.google.com/hostednews/afp/article/ALeqM5hF4tGBIAquWyleR39nZI-F85oHow?docId=CNG.3af003c84a71aeca2db44ba857bb01cc.431
Finance leaders fail to resolve currency dispute
By MARTIN CRUTSINGER and HARRY DUNPHY
WASHINGTON – Global finance leaders failed Saturday to resolve deep differences that threaten the outbreak of a full-blown currency war.
Various nations are seeking to devalue their currencies as a way to boost exports and jobs during hard economic times. The concern is that such efforts could trigger a repeat of the trade wars that contributed to the Great Depression of the 1930s as country after country raises projectionist barriers to imported goods.
The International Monetary Fund wrapped up two days of talks with a communique that pledged to "deepen" its work in the area of currency movements, including conducting studies on the issue.
World Bank President Robert Zoellick said the rising economic tensions reflected a weak global recovery.
"A lack of growth accompanied by high unemployment is having consequences," Zoellick told reporters at a news conference concluding the IMF-World Bank meetings. "There is a danger that countries will turn inward and, as a result, international cooperation falters. This could be dangerous."
The communique essentially papered-over sharp differences on currency policies between China and the United States.
http://news.yahoo.com/s/ap/20101009/ap_on_bi_ge/us_global_finance;_ylt=AprgaCy05DhVdF5d624R0QKs0NUE;_ylu=X3oDMTNoMDJtNDBqBGFzc2V0A2FwLzIwMTAxMDA5L3VzX2dsb2JhbF9maW5hbmNlBGNjb2RlA21vc3Rwb3B1bGFyBGNwb3MDMgRwb3MDNwRwdANob21lX2Nva2UEc2VjA3luX3RvcF9zdG9yeQRzbGsDZmluYW5jZWxlYWRl
IMF Fails, Gold Shines as Currency Wars to Continue
Eric King, KingWorldNews.com
The IMF was unable to stem the tide of competitive currency devaluations over the weekend. As a result, governments and central banks around the world still have the green light to continue with their money printing orgy. Some of the citizens of these various regions and countries have recently been acting as their own central banks by purchasing gold as insurance against the currency wars. As fears escalate, the question now becomes, when will the people of this world once again have a stable system of currency?
Here is a new piece exclusively for the King World News blog from Ben Davies, CEO of Hinde Capital which sums up the situation nicely:
October 10, 2010
IMF At The Epicenter Of Currency Earthquake
By Ben Davies, CEO of Hinde Capital
October 10 (King World News) - Henry Hazlitt was the modern literary agent of libertarianism. At the advent of Bretton Woods he stood alone in his New York Times editorials condemning the monstrosity, as he termed it, that was the IMF. He considered this entity no different to the Federal Reserve Bank. Another organization espousing the values of economic growth and price stability. In reality, they were both merely agents for the propagation of money to aid and abet the continuation of the flawed policies and practices of a country. In the case of the IMF they called on loans from member countries to 'bail out' bankrupt nations globally. The IMF prolonged the inevitable misery and didn't address the issues that got the country into difficulties in the first place.
Emergent nations once patronized by IMF bailouts and inappropriate 'conditional love' have put two fingers up. I can almost hear the BRIC nations silent mutterings, "Why should we 'flex' our currencies to assist the developing nations who so highmindedly leered over us in troubled times passed and revelled in our misery."
Bretton Woods was possible due to the economic strength of US. The Plaza Accord was permitted because it was in the best interest of the US. The Louvre Accord which tried to arrest the efforts of the Plaza Accord of two years earlier, ironically, was permitted because it was in the best interest of the US.
The US and developed nations no longer wield power anymore. " IMF who? " the BRIC’s cry. Right now the emergent nations are more content to say "our currency, your problem". Unfortunately the West, particularly the US have returned the favour, "our bonds, your problem" and so the stalemate will prevail.
Unfortunately as each day passes, the friction of the global monetary fault lines grow stronger. These fault lines will release their energy in the largest world monetary earthquake known to man, as we witness the inevitable demise of the fiat currency system - as all such systems have failed before, leaving not one survivor.
As currency wars escalate, it is wise for individuals to have a presence outside of the system by owning gold.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/10_IMF_Fails,_Gold_Shines_as_Currency_Wars_to_Continue.html
Currency wars are necessary if all else fails
By Ambrose Evans-Pritchard
The overwhelming fact of the global currency system is that America needs a much weaker dollar to bring its economy back into kilter and avoid slow ruin, yet the rest of the world cannot easily handle the consequences of such a wrenching adjustment. There is not enough demand to go around.
Each country is doing so for understandable reasons: Japan to avoid a deflationary crisis, China to hold together a political order that is more fragile than it looks. In both these cases they are trapped because they clung too long to a mercantilist export strategy, failing to wean themselves off American demand when the going was good.
Yet this is an intolerable situation for the US. It should be no surprise that Washington has begun to retaliate in earnest, and not just by passing the Reform for Fair Trade Act in the House (not yet the Senate), clearing the way for punitive tariffs against currency manipulators.
The atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8054066/Currency-wars-are-necessary-if-all-else-fails.html
Currency Rift With China Exposes Shifting Clout
WASHINGTON — At a private dinner on Friday at the Canadian Embassy, finance officials from seven world economic powers focused on the most vexing international economic problem facing the Obama administration.
Over seared scallops and beef tenderloin, Treasury Secretary Timothy F. Geithner urged his counterparts from Europe, Canada and Japan to help persuade China to let its currency, the renminbi, rise in value — a crucial element in redressing the trade imbalances that are threatening recovery around the world.
But the next afternoon, the annual meetings of the International Monetary Fund ended with a tepid statement that made only fleeting and indirect references to the simmering currency tensions.
The divergence between the mounting anxieties over Chinese policy and the cautious official response was a striking display of the difficulty of securing international economic cooperation, two years after the financial crisis began.
Above all, officials say, the crisis has shifted influence from the richest powers toward Asia and Latin America, whose economies have weathered the recession much better than those of the United States, Europe and Japan.
“We have come to the end of a model where seven advanced economies can make decisions for the world without the emerging countries,” said one European official involved in the weekend talks. “Like it or not, we simply have to accept it.”
http://www.nytimes.com/2010/10/11/business/economy/11currency.html?_r=1
The demise of the dollar
By Robert Fisk
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
Tuesday, October 12, 2010
Thursday, October 7, 2010
Fasten Your Seatbealts
"Attention passengers. Please remain in your seats and keep you seatbealts fastened. We have encountered some turbulance, and air pockets along our flight path."
Trichet Says `Strong Dollar' Helps U.S., Opposes Exchange-Rate Volatility
John Fraher and Simone Meier
European Central Bank President Jean- Claude Trichet said he supports a “strong dollar” and opposes “disorderly” shifts in global exchange rates.
“I share the view of the U.S. authorities when they reiterate that a strong dollar is in the interest of the United States of America,” he said at a press conference in Frankfurt today.
Asked whether he’s concerned about the euro’s recent appreciation against the dollar, Trichet said: “I would only say that, more than ever, exchange rates should reflect economic fundamentals.”
“Excess volatility and disorderly moves have adverse implications for economic and financial stability.”
http://finance.yahoo.com/news/Trichet-Says-Strong-Dollar-bloomberg-2574081908.html?x=0&sec=topStories&pos=3&asset=&ccode
Talking down the Euro, talking up the Dollar. Coincidentally the Euro was at 1.40, Gold had cleared $1350, and Silver had cleared $23 as Trichet spoke.
Consumers cut credit card borrowing for 24th month- AP
Alasdair Macleod: The noose tightens for gold bears
Submitted by cpowell on Thu, 2010-10-07 02:34.
Dear Friend of GATA and Gold:
Economist and former banker Alasdair Macleod writes tonight that gold and silver are going parabolic as physical demand is causing shortages on the eve of currency devaluations. Macleod's commentary is headlined "The Noose Tightens for Gold Bears" and you can find it at his Internet site, Finance and Economics, here:
http://www.financeandeconomics.org/Articles%20archive/2010.10.07%20Noose...
Eric King: Massive physical orders just below today's futures prices
Submitted by cpowell on Thu, 2010-10-07 18:44.
Dear Friend of GATA and Gold (and Silver):
Eric King of King World News reports from London precious metals market sources that there are "massive" orders for physical metal not far below today's futures contract prices. King's commentary is headlined "Massive Physical Gold Buyers Just Below These Levels" and you can find it at the King World News blog here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/7_Ma...
J.S. Kim: Gold and silver -- This time it IS different
Submitted by cpowell on Thu, 2010-10-07 03:00.
Dear Friend of GATA and Gold:
J.S. Kim, proprietor of the SmartKnowledgeU investment advisory service, writes tonight that the current breakout in gold and silver prices will be different from past breakouts that were smashed down by Western central bankers, because they have much less metal to deploy against rising prices and because central banks and people elsewhere in the world have started to take delivery of the real stuff rather than accept paper claims to it. Kim's commentary is headlined "Gold and Silver: This Time It IS Different" and you can find it at his Internet site, The Underground Investor, here:
http://www.theundergroundinvestor.com/2010/10/1709/
Smaller dips in gold being bought, Turk tells CNBC Europe
Submitted by cpowell on Wed, 2010-10-06 22:07.
Dear Friend of GATA and Gold (and Silver):
GoldMoney founder James Turk today was sure ready for his closeup, Mister DeMille. In addition to being interviewed by Reuters and King World News, Turk went on CNBC Europe from London for six minutes, remarking that smaller dips in gold are being bought and that gold has a long way to go to catch up with monetary debasement. You can watch the interview at the CNBC Internet site here:
http://www.cnbc.com/id/15840232?video=1608656320&play=1
CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.
Non-Farm Payroll numbers will be released Friday morning. According to the The Three Bears, the numbers could be hot, cold, or just right (consensus).
If the number is "just right" the Precious Metals markets should proceed with their march higher after resting here.
If the number comes in too "hot", [better than expected], it will turn the QE debate on it's head, put a bid under the Dollar, and push the Precious Metals down hard.
If the number comes in too "cold", [worse than expected], QE-2 becomes a certainty, and we are off to the races again.
Silver is testing support at 22.34 here now as I type this, and appears likely to break lower towards support at 22.15 and then 21.50.
Gold is testing support at 1326 as I type this, and also appears likely to break lower towards key support at 1315 and the 1296.
Air pockets in the markets are much more manageable when you expect them...
Trichet Says `Strong Dollar' Helps U.S., Opposes Exchange-Rate Volatility
John Fraher and Simone Meier
European Central Bank President Jean- Claude Trichet said he supports a “strong dollar” and opposes “disorderly” shifts in global exchange rates.
“I share the view of the U.S. authorities when they reiterate that a strong dollar is in the interest of the United States of America,” he said at a press conference in Frankfurt today.
Asked whether he’s concerned about the euro’s recent appreciation against the dollar, Trichet said: “I would only say that, more than ever, exchange rates should reflect economic fundamentals.”
“Excess volatility and disorderly moves have adverse implications for economic and financial stability.”
http://finance.yahoo.com/news/Trichet-Says-Strong-Dollar-bloomberg-2574081908.html?x=0&sec=topStories&pos=3&asset=&ccode
Talking down the Euro, talking up the Dollar. Coincidentally the Euro was at 1.40, Gold had cleared $1350, and Silver had cleared $23 as Trichet spoke.
Consumers cut credit card borrowing for 24th month- AP
Alasdair Macleod: The noose tightens for gold bears
Submitted by cpowell on Thu, 2010-10-07 02:34.
Dear Friend of GATA and Gold:
Economist and former banker Alasdair Macleod writes tonight that gold and silver are going parabolic as physical demand is causing shortages on the eve of currency devaluations. Macleod's commentary is headlined "The Noose Tightens for Gold Bears" and you can find it at his Internet site, Finance and Economics, here:
http://www.financeandeconomics.org/Articles%20archive/2010.10.07%20Noose...
Eric King: Massive physical orders just below today's futures prices
Submitted by cpowell on Thu, 2010-10-07 18:44.
Dear Friend of GATA and Gold (and Silver):
Eric King of King World News reports from London precious metals market sources that there are "massive" orders for physical metal not far below today's futures contract prices. King's commentary is headlined "Massive Physical Gold Buyers Just Below These Levels" and you can find it at the King World News blog here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/7_Ma...
J.S. Kim: Gold and silver -- This time it IS different
Submitted by cpowell on Thu, 2010-10-07 03:00.
Dear Friend of GATA and Gold:
J.S. Kim, proprietor of the SmartKnowledgeU investment advisory service, writes tonight that the current breakout in gold and silver prices will be different from past breakouts that were smashed down by Western central bankers, because they have much less metal to deploy against rising prices and because central banks and people elsewhere in the world have started to take delivery of the real stuff rather than accept paper claims to it. Kim's commentary is headlined "Gold and Silver: This Time It IS Different" and you can find it at his Internet site, The Underground Investor, here:
http://www.theundergroundinvestor.com/2010/10/1709/
Smaller dips in gold being bought, Turk tells CNBC Europe
Submitted by cpowell on Wed, 2010-10-06 22:07.
Dear Friend of GATA and Gold (and Silver):
GoldMoney founder James Turk today was sure ready for his closeup, Mister DeMille. In addition to being interviewed by Reuters and King World News, Turk went on CNBC Europe from London for six minutes, remarking that smaller dips in gold are being bought and that gold has a long way to go to catch up with monetary debasement. You can watch the interview at the CNBC Internet site here:
http://www.cnbc.com/id/15840232?video=1608656320&play=1
CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.
Non-Farm Payroll numbers will be released Friday morning. According to the The Three Bears, the numbers could be hot, cold, or just right (consensus).
If the number is "just right" the Precious Metals markets should proceed with their march higher after resting here.
If the number comes in too "hot", [better than expected], it will turn the QE debate on it's head, put a bid under the Dollar, and push the Precious Metals down hard.
If the number comes in too "cold", [worse than expected], QE-2 becomes a certainty, and we are off to the races again.
Silver is testing support at 22.34 here now as I type this, and appears likely to break lower towards support at 22.15 and then 21.50.
Gold is testing support at 1326 as I type this, and also appears likely to break lower towards key support at 1315 and the 1296.
Air pockets in the markets are much more manageable when you expect them...
Wednesday, October 6, 2010
The Sky's The Limit
Well son of a beeeee-atch! If this is what a "tired" Precious Metals Market looks like, imagine what could happen once it catches its wind... This is crazy! This is what we have been anticipating for months, but it sure is confounding the chart technicians...myself included. And I as you know, am a diehard Precious Metals Bull.
I'll shut my trap for today though, and post up some excellent material I've been perusing the past 24 hours. I hope everybody finds it helpful in understanding what's driving these markets higher right now. Clearly the fundamentals of the Precious Metals are now beginning to assert themselves, and big money is now entering the setor.
I will note first that the Euro, at 1.39, just reached a 61% retracement of it plunge this spring. This is typically a stalling point before a market rolls back over. ... just a note. This occured with Gold just shy of $1350, and Silver just shy of $23.
Gold and Silver Prices Jump; Buyers and Sellers Start To Get a Little Crazy
By Patrick A. Heller
There are several threads having an impact on prices so far this week. Yesterday, US President Obama admitted that the US government is in an “untenable fiscal situation.” In doing so, he is basically admitting that the US dollar is overvalued.
About midnight Eastern time this morning, the government of Japan announced a plan to devalue the yen. At first, the yen dropped against the US dollar, but ended up in US markets actually appreciating against the dollar! The best interpretation of this result is that investors believe that the US federal government will be even more successful at driving down the value of the dollar in the near term than the Japanese will accomplish with the yen.
Then there were three major articles that appeared. A report on Reuters yesterday described how the super-rich are aggressively purchasing gold, including physical forms. Then today, Max Keiser posted an interview with gold analyst James Turk where Turk speculates that the German central bank has already disposed of at least half of its stated gold reserves and possibly almost all of it! The last article by Alix Steel and posted today on thestreet.com was a major discussion as to whether the gold and silver exchange traded funds (ETFs) have sufficient physical metals to meet their investor obligations. Although Steel did not flat out say they did not, she pointed out how the operations of these ETFs allow for multiple ownership claims on the same physical metal.
Of lesser importance was a statement September 30 by John Kanas, the chief executive officer of BankUnited at the Bloomberg Dealmakers Summit in New York. When considering that the Federal Deposit Insurance Corporation is currently insuring deposits at 7,830 financial institutions, Kanas said, “Most of us in the business think we probably need 5,000 and think we are on our way to 5,000 as this cycle, if this is a cycle, unfolds. We simply chartered too many banks.” Kanas apparently did not state how many of the allegedly surplus 2,830 banks would simply fail.
http://news.coinupdate.com/gold-and-silver-prices-jump-buyers-and-sellers-start-to-get-a-little-crazy-0486/
Could Foreclosure Fraud Cause Another Banking Meltdown?
By Greg Hunter, USAWatchdog.com
Please take a moment and grasp the enormity of this problem for the banks. There are 60 million homes which banks loaned money on, and now they might not be able to legally get the property back if the homeowner defaults! Another colossal problem for the banks is the trillions of dollars in mortgages bundled into securities. Remember, the banks were giving anyone who could fog a mirror a mortgage which allowed them to create and sell lucrative mortgage backed securities. So, there are trillions of dollars in mortgage backed securities that now could have NO backing! Would you like to be the pension fund manager who bought that security? Do you think this just might cause an accounting problem for the banks? Do you think this could push some of the big banks into bankruptcy? Will there be another financial meltdown and government rescue?
http://usawatchdog.com/could-foreclosure-fraud-cause-another-banking-meltdown/
Norcini, Sinclair - Financial Hurricane To Collapse the System
By Eric King, KingWorldNews.com
The primary drivers in gold and silver today had to do with concerns over currency devaluation as well as securitized debt problems and the implications associated with it. Here is what Jim Sinclair had to say:
Jim Sinclair: “Each time that happens an item of collateral on the securitized debt publicly dies. That is why this is dynamite that people will realize very soon. This is one reason gold is up hard today.”
Norcini continues:
“That collateralized debt obligation is now effectively worthless because the collateral behind the debt can no longer be collected. The banks cannot go and get it.
Let’s say you have 10 mortgages at $1 million a piece, the sum total of those mortgages are $10 million. So, the banks took the 10 mortgages and bundled them together into a collateralized debt obligation or CDO with a face value of $10 million.
They then sold that new entity that they created to an investment group of some sort, a pension fund, hedge fund, etc. promising them a yield of let’s say 7%. The sales pitch would emphasize the fact that this CDO was backed by real collateral. In the event of loan defaults by the borrowers, the banks would tell the buyer of the CDO that the collateral behind the loan could be sold to recapture any potential losses on the part of the purchaser.
Everything seemed to work fine until the defaults began and the foreclosure process kicked into high gear. The foreclosure process has exposed fatal flaws in the system and the flaw is that the banks cannot prove clear ownership of the mortgage.
Consequently, they are then barred from foreclosing on the property. Because they can no longer foreclose on the properties, the CDO is now effectively worthless.
The hedge funds and the pension funds cannot now sell these CDO’s on the open market, so how are they going to recover their original investment? Perhaps you may say that won’t be a problem because these instruments were insured. The problem is now the credit default swap or the insurance policy that was purchased to protect against default assumes that the insurer has the financial wherewithal or resources to make good on the claim.
If there were only a small number of these problem CDO’s this would not be an issue. But as the number of the foreclosures continue to skyrocket, and more and more banks are prohibited from seizing the collateral behind the property, the sheer magnitude of the number of claims presented to the insurer will overwhelm their balance sheet.
In effect what you have is an insurance company which doesn’t have enough money to pay off the claims. Compounding the problem is the fact that the CDO’s and credit default swaps related to these claims form a mass network of interdependence. This then ripples through the entire system and creates a domino effect which can cause the failure of entities creating the next financial crisis.
Ultimately the Federal Reserve will be asked to step in and buy up the now worthless CDO’s and put those on its balance sheet. In order to do this the Federal Reserve will have to engage in massive quantitative easing, taking onto its balance sheet the worthless CDO’s in exchange for newly issued treasuries.
This of course will have a horrific effect on the US Dollar which is why gold and silver are heading much higher.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/6_Norcini,_Sinclair_-_Financial_Hurricane_To_Collapse_the_System.html
Global Central Bank Action May Follow BOJ Moves on Rates
By Simon Kennedy
The Bank of Japan may have acted first in a round of central bank action to prop up the global economy as recoveries in industrial nations falter.
The unexpected decision by the Japanese central bank yesterday to drop its interest rate to “virtually zero” and expand its balance sheet follows the U.S. Federal Reserve’s move toward more unconventional easing. Bank of England officials will consider further stimulus tomorrow, while the central banks of Australia, Canada and New Zealand are among those now holding fire on further interest-rate increases.
The renewed push for easier monetary policy comes as the International Monetary Fund warns that growth in advanced economies is falling short of its forecasts ahead of its annual meetings in Washington this week. The dilemma for policy makers is that their actions may do little to revive growth and end up roiling currency markets.
“The Bank of Japan is at the head of the pack,” said Stewart Robertson, an economist at Aviva Investors in London, which manages about $370 billion in assets. “It looks like a lot of others will follow. Whether it’s right or not is another matter.”
Group of Seven ministers will gather Oct. 8 in Washington on the sidelines of the IMF meeting. Currency issues will be discussed, Canadian Finance Minister Jim Flaherty, who will chair the meeting, said this week. Japanese Finance Minister Yoshihiko Noda said he’s ready to explain his country’s actions at that meeting.
http://www.bloomberg.com/news/2010-10-05/central-banks-may-follow-boj-in-new-bond-purchase-round-as-growth-falters.html
IMF warns against currency war
By Steven C. Johnson
(Reuters) - Global policymakers clashed over currency policies on Wednesday as Western leaders warned China and other emerging markets that widespread efforts to weaken exchange rates threatens to derail economic recovery.
U.S. Treasury Secretary Timothy Geithner said countries with large trade surpluses must let their currencies rise lest they trigger a devastating round of competitive devaluations.
"When large economies with undervalued exchange rates act to keep the currency from appreciating, that encourages other countries to do the same," Geithner said in a speech ahead of this weekend's semi-annual international Monetary Fund meeting.
Officials around the world fear such a race to the bottom may trigger trade tariffs and other measures that could damage global economic growth.
Using exchange rates "as a policy weapon" to undercut other economies and boost a country's own exporters "would represent a very serious risk to the global recovery," IMF Managing Director Dominique Strauss-Kahn was quoted as saying in Wednesday's edition of the Financial Times.
http://www.reuters.com/article/idUSTRE69520P20101006
James Turk interviewed about metals breakout at King World News
GoldMoney founder and GATA consultant James Turk has given a quick audio interview to Eric King of King World News about the breakout in gold and silver and the prospects for mining shares. You can find it at the King World News Internet site here:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/6_James_Turk.html
Competitive Devaluation and Gold, or Gold and the Bond-Bubble(s)[MUST READ]
by Jeff Nielson
As I read article after article about Western debtor-nations (and Japan, the surrogate “Westerner”), there is a common theme in the writing of all these commentators (at least by all the competent ones). In very nearly all of these economies, there is an enormously strong case to be made that the bond-markets of each/every one of these nations represent a massive bubble, on the verge of bursting.
What should be terrifying here to any/every person idiotic enough to hold any sovereign debt of the Western-debtors is that the argument being made about these bond-bubbles (and their imminent collapse) is 100% independent of the effect I just described: that destroying currencies must destroy all-banker paper.
Bond-holders can crow all they want about the “fabulous prices” these bonds currently fetch. Presumably bond-holders still retain enough of a vestige of intellect to understand what those nominal bond prices really mean – once converted into worthless currency. Yet even when totally ignoring the monetary argument which concludes that all Western bonds must go to zero, we have analyst after analyst arguing that on pure, domestic fundamentals alone, these markets already represent ridiculous bubbles – ripe for spectacular implosions.
While I write mostly about the U.S. bond-market (the largest and most-ridiculous of all these bond-bubbles), the general fundamentals are common to all:
1) These nations are simultaneously all dumping the most “supply” onto the market in history.
2) Since bond-prices are the inverse of interest rates, and all Western interest rates are near-zero, the bond-market is beginning this massive-dump with prices already near their absolute maximum.
3) All global bond-buyers either want to “diversify” away from sovereign bonds (in the case of Asian surplus-nations), or, they have nothing with which to buy bonds, except the latest funny-money, hot off of their printing presses.
Anyone who has ever cracked-open an Economics 101 text-book can tell you that when you increase supply that price goes down, and when you reduce demand price goes down. And you don’t even have to know how to spell “economics” to know that when the price of something is already at its maximum that the price must go down.
In a world of lemming-investors, bond-holders have the dubious distinction of being the largest herd, running the fastest, toward the largest cliff. As just mentioned, the only way in which Western governments (and Japan) can even temporarily prop-up the world’s largest, most-obvious bubbles is to print-up new “money” at an even faster rate – in order to buy-up their own bonds, or to continue the current bond-market game of “musical chairs”.
For those who still haven’t clued-in to what is happening already in bond-markets, we have these morally/intellectually/economically bankrupt Western nations pretending that there is still “demand” for their bonds, by printing-up more and more fiat-paper for the sole purpose of buying each other’s bonds. Such an exercise usually goes by the name “Ponzi-scheme”.
Simply, the only way to prop-up these doomed bubbles day-by-day is through accelerating money-printing, and thus accelerating the speed with which all banker-paper (including bonds) goes to zero (irrespective of nominal prices).
http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=15807:competitive-devaluation-and-gold-or-gold-and-the-bond-bubbles&catid=48:gold-commentary&Itemid=131
THE FEDERAL RESERVE is SELLING PAPER GOLD and BUYING PHYSICAL GOLD
[MUST READ]
By Rob Kirby
A couple of weeks ago, I pitched an idea to some associates of mine who are involved in SERIOUS [tonnage] PRECIOUS METALS procurement – physical metal only – let’s just say HUGE money. I asked them if they would be interested in purchasing an “option” – cash up front - for the exclusive rights [first right of refusal on off-take] of a gold producer [miner] for a set number of ounces for 3 – 5 years “at the market” – using LBMA pricing [a.m. / p.m. fixes] in the future. The answer I got back from my associates was “show us a terms sheet, we definitely have interest”.
So, I spoke to a friend who is very close to an intermediate producer who is in the mode of raising money right now. I had them ask the producer if they would have interest – the producer said, “YES, we are interested - but just to let you know – J.P. Morgan has been asking us if we would sell them the same option”. So, while gold producers have shuttered their “gold hedge books” – the Bullion Banks are ‘synthetically’ trying to keep physical output captive – I would suggest FOR THE EXPRESSED REASON THAT THEY SELL EVERY PHYSICAL OUNCE AT LEAST 100 TIMES OVER.
Gold is going to get EXTREMELY scarce in the future folks. Big money interests are now cutting off [or bidding for / gaining exclusive access to] the traditional bullion supply chain “at the pit”.
The shorts of ‘paper gold’ at J.P. Morgan [the Fed in drag] are selling the daylights out of the paper market and simultaneously buying exclusive rights to producers’ future production so they can try to fudge their way through an unmitigated fraud and settle a big enough chunk of their bad bets to keep this ‘systemically ruinous’ precious metals ponzi-scheme alive.
http://news.goldseek.com/GoldSeek/1286223866.php
Markets Soaring "But the World Is Worse Off," Jimmy Rogers Says
"When you print a lot of money, the people who get the money are better off -- there's no question about it. But the country, the world is worse off," Rogers says. "Sure some of us feel much better, especially people in the financial markets but...the world is not getting better. The world is getting worse."
"Central banks and governments are going to print money until we run out of trees. It's outrageous," he says. "Printing money is not the right thing to do, but they don't know that. Eventually, they'll run out of trees."
The dollar is a "terribly flawed currency" and is "going to have big problems in the next decade," he says. "But that doesn't mean it won't go up. Everyone is very pessimistic [on the dollar], including me. I wouldn't sell it right now."
http://finance.yahoo.com/tech-ticker/markets-soaring-%22but-the-world-is-worse-off%22-jimmy-rogers-says-535479.html?tickers=%5EDJI,SLV,GLD,UUP,TLT,DBA,MOO
Super-rich investors buy gold by ton
By Laura MacInnis
(Reuters) - The world's wealthiest people have responded to economic worries by buying gold by the bar -- and sometimes by the ton -- and by moving assets out of the financial system, bankers catering to the very rich said on Monday.
Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.
"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.
http://www.reuters.com/article/idUSTRE6932NR20101004
I'll shut my trap for today though, and post up some excellent material I've been perusing the past 24 hours. I hope everybody finds it helpful in understanding what's driving these markets higher right now. Clearly the fundamentals of the Precious Metals are now beginning to assert themselves, and big money is now entering the setor.
I will note first that the Euro, at 1.39, just reached a 61% retracement of it plunge this spring. This is typically a stalling point before a market rolls back over. ... just a note. This occured with Gold just shy of $1350, and Silver just shy of $23.
Gold and Silver Prices Jump; Buyers and Sellers Start To Get a Little Crazy
By Patrick A. Heller
There are several threads having an impact on prices so far this week. Yesterday, US President Obama admitted that the US government is in an “untenable fiscal situation.” In doing so, he is basically admitting that the US dollar is overvalued.
About midnight Eastern time this morning, the government of Japan announced a plan to devalue the yen. At first, the yen dropped against the US dollar, but ended up in US markets actually appreciating against the dollar! The best interpretation of this result is that investors believe that the US federal government will be even more successful at driving down the value of the dollar in the near term than the Japanese will accomplish with the yen.
Then there were three major articles that appeared. A report on Reuters yesterday described how the super-rich are aggressively purchasing gold, including physical forms. Then today, Max Keiser posted an interview with gold analyst James Turk where Turk speculates that the German central bank has already disposed of at least half of its stated gold reserves and possibly almost all of it! The last article by Alix Steel and posted today on thestreet.com was a major discussion as to whether the gold and silver exchange traded funds (ETFs) have sufficient physical metals to meet their investor obligations. Although Steel did not flat out say they did not, she pointed out how the operations of these ETFs allow for multiple ownership claims on the same physical metal.
Of lesser importance was a statement September 30 by John Kanas, the chief executive officer of BankUnited at the Bloomberg Dealmakers Summit in New York. When considering that the Federal Deposit Insurance Corporation is currently insuring deposits at 7,830 financial institutions, Kanas said, “Most of us in the business think we probably need 5,000 and think we are on our way to 5,000 as this cycle, if this is a cycle, unfolds. We simply chartered too many banks.” Kanas apparently did not state how many of the allegedly surplus 2,830 banks would simply fail.
http://news.coinupdate.com/gold-and-silver-prices-jump-buyers-and-sellers-start-to-get-a-little-crazy-0486/
Could Foreclosure Fraud Cause Another Banking Meltdown?
By Greg Hunter, USAWatchdog.com
Please take a moment and grasp the enormity of this problem for the banks. There are 60 million homes which banks loaned money on, and now they might not be able to legally get the property back if the homeowner defaults! Another colossal problem for the banks is the trillions of dollars in mortgages bundled into securities. Remember, the banks were giving anyone who could fog a mirror a mortgage which allowed them to create and sell lucrative mortgage backed securities. So, there are trillions of dollars in mortgage backed securities that now could have NO backing! Would you like to be the pension fund manager who bought that security? Do you think this just might cause an accounting problem for the banks? Do you think this could push some of the big banks into bankruptcy? Will there be another financial meltdown and government rescue?
http://usawatchdog.com/could-foreclosure-fraud-cause-another-banking-meltdown/
Norcini, Sinclair - Financial Hurricane To Collapse the System
By Eric King, KingWorldNews.com
The primary drivers in gold and silver today had to do with concerns over currency devaluation as well as securitized debt problems and the implications associated with it. Here is what Jim Sinclair had to say:
Jim Sinclair: “Each time that happens an item of collateral on the securitized debt publicly dies. That is why this is dynamite that people will realize very soon. This is one reason gold is up hard today.”
Norcini continues:
“That collateralized debt obligation is now effectively worthless because the collateral behind the debt can no longer be collected. The banks cannot go and get it.
Let’s say you have 10 mortgages at $1 million a piece, the sum total of those mortgages are $10 million. So, the banks took the 10 mortgages and bundled them together into a collateralized debt obligation or CDO with a face value of $10 million.
They then sold that new entity that they created to an investment group of some sort, a pension fund, hedge fund, etc. promising them a yield of let’s say 7%. The sales pitch would emphasize the fact that this CDO was backed by real collateral. In the event of loan defaults by the borrowers, the banks would tell the buyer of the CDO that the collateral behind the loan could be sold to recapture any potential losses on the part of the purchaser.
Everything seemed to work fine until the defaults began and the foreclosure process kicked into high gear. The foreclosure process has exposed fatal flaws in the system and the flaw is that the banks cannot prove clear ownership of the mortgage.
Consequently, they are then barred from foreclosing on the property. Because they can no longer foreclose on the properties, the CDO is now effectively worthless.
The hedge funds and the pension funds cannot now sell these CDO’s on the open market, so how are they going to recover their original investment? Perhaps you may say that won’t be a problem because these instruments were insured. The problem is now the credit default swap or the insurance policy that was purchased to protect against default assumes that the insurer has the financial wherewithal or resources to make good on the claim.
If there were only a small number of these problem CDO’s this would not be an issue. But as the number of the foreclosures continue to skyrocket, and more and more banks are prohibited from seizing the collateral behind the property, the sheer magnitude of the number of claims presented to the insurer will overwhelm their balance sheet.
In effect what you have is an insurance company which doesn’t have enough money to pay off the claims. Compounding the problem is the fact that the CDO’s and credit default swaps related to these claims form a mass network of interdependence. This then ripples through the entire system and creates a domino effect which can cause the failure of entities creating the next financial crisis.
Ultimately the Federal Reserve will be asked to step in and buy up the now worthless CDO’s and put those on its balance sheet. In order to do this the Federal Reserve will have to engage in massive quantitative easing, taking onto its balance sheet the worthless CDO’s in exchange for newly issued treasuries.
This of course will have a horrific effect on the US Dollar which is why gold and silver are heading much higher.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/6_Norcini,_Sinclair_-_Financial_Hurricane_To_Collapse_the_System.html
Global Central Bank Action May Follow BOJ Moves on Rates
By Simon Kennedy
The Bank of Japan may have acted first in a round of central bank action to prop up the global economy as recoveries in industrial nations falter.
The unexpected decision by the Japanese central bank yesterday to drop its interest rate to “virtually zero” and expand its balance sheet follows the U.S. Federal Reserve’s move toward more unconventional easing. Bank of England officials will consider further stimulus tomorrow, while the central banks of Australia, Canada and New Zealand are among those now holding fire on further interest-rate increases.
The renewed push for easier monetary policy comes as the International Monetary Fund warns that growth in advanced economies is falling short of its forecasts ahead of its annual meetings in Washington this week. The dilemma for policy makers is that their actions may do little to revive growth and end up roiling currency markets.
“The Bank of Japan is at the head of the pack,” said Stewart Robertson, an economist at Aviva Investors in London, which manages about $370 billion in assets. “It looks like a lot of others will follow. Whether it’s right or not is another matter.”
Group of Seven ministers will gather Oct. 8 in Washington on the sidelines of the IMF meeting. Currency issues will be discussed, Canadian Finance Minister Jim Flaherty, who will chair the meeting, said this week. Japanese Finance Minister Yoshihiko Noda said he’s ready to explain his country’s actions at that meeting.
http://www.bloomberg.com/news/2010-10-05/central-banks-may-follow-boj-in-new-bond-purchase-round-as-growth-falters.html
IMF warns against currency war
By Steven C. Johnson
(Reuters) - Global policymakers clashed over currency policies on Wednesday as Western leaders warned China and other emerging markets that widespread efforts to weaken exchange rates threatens to derail economic recovery.
U.S. Treasury Secretary Timothy Geithner said countries with large trade surpluses must let their currencies rise lest they trigger a devastating round of competitive devaluations.
"When large economies with undervalued exchange rates act to keep the currency from appreciating, that encourages other countries to do the same," Geithner said in a speech ahead of this weekend's semi-annual international Monetary Fund meeting.
Officials around the world fear such a race to the bottom may trigger trade tariffs and other measures that could damage global economic growth.
Using exchange rates "as a policy weapon" to undercut other economies and boost a country's own exporters "would represent a very serious risk to the global recovery," IMF Managing Director Dominique Strauss-Kahn was quoted as saying in Wednesday's edition of the Financial Times.
http://www.reuters.com/article/idUSTRE69520P20101006
James Turk interviewed about metals breakout at King World News
GoldMoney founder and GATA consultant James Turk has given a quick audio interview to Eric King of King World News about the breakout in gold and silver and the prospects for mining shares. You can find it at the King World News Internet site here:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/6_James_Turk.html
Competitive Devaluation and Gold, or Gold and the Bond-Bubble(s)[MUST READ]
by Jeff Nielson
As I read article after article about Western debtor-nations (and Japan, the surrogate “Westerner”), there is a common theme in the writing of all these commentators (at least by all the competent ones). In very nearly all of these economies, there is an enormously strong case to be made that the bond-markets of each/every one of these nations represent a massive bubble, on the verge of bursting.
What should be terrifying here to any/every person idiotic enough to hold any sovereign debt of the Western-debtors is that the argument being made about these bond-bubbles (and their imminent collapse) is 100% independent of the effect I just described: that destroying currencies must destroy all-banker paper.
Bond-holders can crow all they want about the “fabulous prices” these bonds currently fetch. Presumably bond-holders still retain enough of a vestige of intellect to understand what those nominal bond prices really mean – once converted into worthless currency. Yet even when totally ignoring the monetary argument which concludes that all Western bonds must go to zero, we have analyst after analyst arguing that on pure, domestic fundamentals alone, these markets already represent ridiculous bubbles – ripe for spectacular implosions.
While I write mostly about the U.S. bond-market (the largest and most-ridiculous of all these bond-bubbles), the general fundamentals are common to all:
1) These nations are simultaneously all dumping the most “supply” onto the market in history.
2) Since bond-prices are the inverse of interest rates, and all Western interest rates are near-zero, the bond-market is beginning this massive-dump with prices already near their absolute maximum.
3) All global bond-buyers either want to “diversify” away from sovereign bonds (in the case of Asian surplus-nations), or, they have nothing with which to buy bonds, except the latest funny-money, hot off of their printing presses.
Anyone who has ever cracked-open an Economics 101 text-book can tell you that when you increase supply that price goes down, and when you reduce demand price goes down. And you don’t even have to know how to spell “economics” to know that when the price of something is already at its maximum that the price must go down.
In a world of lemming-investors, bond-holders have the dubious distinction of being the largest herd, running the fastest, toward the largest cliff. As just mentioned, the only way in which Western governments (and Japan) can even temporarily prop-up the world’s largest, most-obvious bubbles is to print-up new “money” at an even faster rate – in order to buy-up their own bonds, or to continue the current bond-market game of “musical chairs”.
For those who still haven’t clued-in to what is happening already in bond-markets, we have these morally/intellectually/economically bankrupt Western nations pretending that there is still “demand” for their bonds, by printing-up more and more fiat-paper for the sole purpose of buying each other’s bonds. Such an exercise usually goes by the name “Ponzi-scheme”.
Simply, the only way to prop-up these doomed bubbles day-by-day is through accelerating money-printing, and thus accelerating the speed with which all banker-paper (including bonds) goes to zero (irrespective of nominal prices).
http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=15807:competitive-devaluation-and-gold-or-gold-and-the-bond-bubbles&catid=48:gold-commentary&Itemid=131
THE FEDERAL RESERVE is SELLING PAPER GOLD and BUYING PHYSICAL GOLD
[MUST READ]
By Rob Kirby
A couple of weeks ago, I pitched an idea to some associates of mine who are involved in SERIOUS [tonnage] PRECIOUS METALS procurement – physical metal only – let’s just say HUGE money. I asked them if they would be interested in purchasing an “option” – cash up front - for the exclusive rights [first right of refusal on off-take] of a gold producer [miner] for a set number of ounces for 3 – 5 years “at the market” – using LBMA pricing [a.m. / p.m. fixes] in the future. The answer I got back from my associates was “show us a terms sheet, we definitely have interest”.
So, I spoke to a friend who is very close to an intermediate producer who is in the mode of raising money right now. I had them ask the producer if they would have interest – the producer said, “YES, we are interested - but just to let you know – J.P. Morgan has been asking us if we would sell them the same option”. So, while gold producers have shuttered their “gold hedge books” – the Bullion Banks are ‘synthetically’ trying to keep physical output captive – I would suggest FOR THE EXPRESSED REASON THAT THEY SELL EVERY PHYSICAL OUNCE AT LEAST 100 TIMES OVER.
Gold is going to get EXTREMELY scarce in the future folks. Big money interests are now cutting off [or bidding for / gaining exclusive access to] the traditional bullion supply chain “at the pit”.
The shorts of ‘paper gold’ at J.P. Morgan [the Fed in drag] are selling the daylights out of the paper market and simultaneously buying exclusive rights to producers’ future production so they can try to fudge their way through an unmitigated fraud and settle a big enough chunk of their bad bets to keep this ‘systemically ruinous’ precious metals ponzi-scheme alive.
http://news.goldseek.com/GoldSeek/1286223866.php
Markets Soaring "But the World Is Worse Off," Jimmy Rogers Says
"When you print a lot of money, the people who get the money are better off -- there's no question about it. But the country, the world is worse off," Rogers says. "Sure some of us feel much better, especially people in the financial markets but...the world is not getting better. The world is getting worse."
"Central banks and governments are going to print money until we run out of trees. It's outrageous," he says. "Printing money is not the right thing to do, but they don't know that. Eventually, they'll run out of trees."
The dollar is a "terribly flawed currency" and is "going to have big problems in the next decade," he says. "But that doesn't mean it won't go up. Everyone is very pessimistic [on the dollar], including me. I wouldn't sell it right now."
http://finance.yahoo.com/tech-ticker/markets-soaring-%22but-the-world-is-worse-off%22-jimmy-rogers-says-535479.html?tickers=%5EDJI,SLV,GLD,UUP,TLT,DBA,MOO
Super-rich investors buy gold by ton
By Laura MacInnis
(Reuters) - The world's wealthiest people have responded to economic worries by buying gold by the bar -- and sometimes by the ton -- and by moving assets out of the financial system, bankers catering to the very rich said on Monday.
Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.
"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.
http://www.reuters.com/article/idUSTRE6932NR20101004
Tuesday, October 5, 2010
A Currency Demolition Derby
I must look like the little boy that cried wolf. LOL! When an ardent Precious Metals Bull like myself sees the markets as "tired", and they continue to roar upwards, then we must be in one helluva short squeeze.
I am not the only one who senses these markets are tired. Technically they are. Traders see this and want to step infront of the "downside potential" by going short. But more "news" hits the markets that is bullish, and these "early" shorts must quickly cover their shorts [read: asses] to limit their losses, and the market jumps higher.
Precious Metals Bulls are not rushing in to buy these markets up here. They are either in already, or looking to get in at a discount [on a substantial dip in price]. In a short squeeze, markets can stay "overbought" for much longer than can be believed.
The RSI indicator on the charts is an excellent indicator of internal momentum in a market. If a market is making new highs in price, and the RSI is making new highs as well, the bull market is strong. If a market is making new highs, and the RSI is not and is trending lower, the bull market is losing steam.
Buying moves markets higher. Shorts must "buy" to cover their short sales. If the majority of the buying is coming from the short side, the market is actually weaker than it appears because their are no "real" buyers underneath it to support it.
We know that the Gold and Silver markets are swamped with shorts. But it is not the big commercial shorts that we bitch about all the time, the Rat Bastids at the CRIMEX, that are getting there balls squeezed like lemons up here. These are the little guys, the small "speculators" that are getting chewed up. The Rat Bastids are in the hole by BILLIONS with their shorts, but they have no care about their losses as they work at the behest of the US Government. They'll get theirs eventually. They know their is an "air pocket" just up ahead. It's only a matter of time. Precious Metals Bulls would be wise to keep their guard up here to protect their profits when that air pocket pops up on their charts. Once the air pocket comes and goes, the charts will reset, and the chase higher in the Precious Metals will begin again.
The overnight short squeeze that has pushed Gold to another new all-time high, and Silver to yet another 30 year high began when Bumbling Ben opened his mouth yesterday evening in a speech he gave. More asset purchase by the Fed with "money out of thin air" can only signal higher Precious Metals prices...and a short squeeze.
Bernanke says more Fed asset purchases could help
PROVIDENCE, R.I. (Reuters) - The Federal Reserve'sasset purchases lowered borrowing costs and helped the economy,and more buying could further ease financial conditions,Federal Reserve Chairman Ben Bernanke said on Monday.
"I don't have a number to give you, but I do think that theadditional purchases, although we don't have precise numbers,have the ability to ease financial conditions," Bernanke said.
The Fed bought $1.7 trillion of mortgage-related andTreasury bonds after cutting benchmark interest rates to nearzero to combat the financial crisis and help the economy pullout of a severe recession.
Financial markets expect the Fed to embark upon anotherround of asset buying to bolster a sluggish recovery as earlyas its November meeting, but policy-makers remain divided aboutthe effectiveness of further purchases.
Earlier on Monday, the head of the New York Fed's marketsgroup, Brian Sack, said arguments that further purchases won'taffect the economy were "overstated."
Bernanke said he was convinced that the Fed's purchases hadlowered borrowing costs, which in turn spurred the recovery.
The purchase program "increased the willingness ofinvestors to take a reasonable amount of risk and create somesupport for the economy," he said. "I think it was an effectiveprogram."
In September, the Fed said it was ready to take furthersteps if needed to help the U.S. recovery and lift inflation.
http://www.foxbusiness.com/markets/2010/10/04/bernanke-says-fed-asset-purchases-help/
Late last night the Bank of Japan steps up to the currency debasement plate and drops a bomb on the Japanese Yen. This should have weakened the Yen and sparked a Dollar rally similar to last months intervention in the currency markets by the Bank of Japan. To no ones surprise, this currency bomb was a dud...and a short squeeze ensued as the US Dollar fell further in conjunction with Bumbling Ben's suggestion that creating more money will fix everything.
Bank of Japan Cuts Rates to as Low as Zero Percent
By HIROKO TABUCHI
TOKYO — In a surprise move Tuesday, the Japanese central bank lowered its benchmark interest rate to a range of 0 percent to 0.1 percent, a tiny change from its previous target of 0.1 percent but a symbolic shift back into an age of zero interest rates.
The Bank of Japan also said it would set up a fund of ¥5 trillion, or $60 billion, to buy Japanese government bonds, commercial paper and other asset-backed securities amid concerns about weakening growth in the economy, the world’s third largest, after those of the United States and China. The bank also kept its credit facility for banks at ¥30 trillion.
With the interest rate cut, a bid to bolster lending in the moribund Japanese economy, the central bank effectively reintroduces a policy of a zero interest rate for the first time since July 2006. The decision underscores concerns that a strong yen and persistent deflation threaten Japan’s economic recovery.
In a statement, the bank confirmed that it would maintain its “virtually zero interest rate policy” until it achieved “medium- to long-term price stability”— or an end to deflation.
Hirokata Kusaba, an economist at the Mizuho Research Institute in Tokyo, said in a note to clients that the bank’s action had gone beyond market expectations. “The latest move gives off a much more powerful impression than past, incremental measures, which had sparked market disillusionment,” he said.
“Though there will be debate over the effects of the monetary loosening, I believe the Bank of Japan has done all it can at this time,” he said. But that also meant that the bank “had now depleted most of its policy options.”
The yen initially fell against the dollar after the announcement, but it later rebounded to ¥83.40 to the dollar, stronger than before the rate change. Ten-year government bond yields rallied on the news, while the Nikkei stock average rose 1.5 percent, its biggest gain in almost three weeks.
“The central outlook for the economy, and prices, have worsened more than had initially been predicted,” said Masaaki Shirakawa, the governor of the Bank of Japan. He called the measures taken Tuesday “comprehensive easing.”
He also said he would consider expanding the ¥5 trillion asset-buying program, depending on its effectiveness.
http://www.nytimes.com/2010/10/06/business/global/06yen.html?_r=1&src=mv
Moody's warns of Irish downgrade as recovery falters
By Paul Hoskins
DUBLIN (Reuters) - Moody's warned on Tuesday it may cut Ireland's credit rating again, saying additional austerity measures are needed given a huge bill for cleaning up its banks, a weak economic recovery and rising borrowing costs.
Ireland's deeply unpopular government says it could cost up to 50 billion euros ($68.5 billion) to unravel banks' property losses, driving the cost of Dublin's borrowing to almost three times that of Germany and prompting renewed jitters about debt elsewhere in the euro zone.
http://finance.yahoo.com/news/Moodys-warns-of-Irish-rb-986451241.html?x=0&sec=topStories&pos=2&asset=&ccode=
This had no effect on the Euro this morning. Somebody will just print some money and paper over the problem...not to worry.
It's official then: Japan, the US, the UK, and the Eurozone have effectively turned the money spigots on full throttle. The race to the bottom of the currency barrel is now a free for all, a demolition derby. Their may be no looking back for the Precious Metals markets now. Their will be "air pockets" along the way as Clive Maund decribes below, but they will be swift, and unlikely to be very deep. The short players in these markets may soon be an endangered species.
Gold Market Update
By: Clive Maund
So, we have a situation where gold is in position to accelerate away to the upside, but is at the same time critically overbought on various short-term indicators, but is nowhere near so overbought on intermediate indicators. What are we to make of this? The probable scenario here is that now gold has broken out above the resistance at the top return line of the Wedge, as described, it accelerates away to the upside, the advance being punctuated by brief "air pocket" reactions that could be increasingly violent. The current critically overbought state makes such a reaction likely either immediately or very soon. These reactions may be deeply unsettling for those long, but if the reason for them is known in advance and they expected, they can be used by traders to pyramid positions at better prices. The MINIMUM target for this advance is the lower parallel return line shown, which is currently in the $1500 - $1600 area, which is Jim Sinclair's long-standing target that looks not just easily achievable but actually quite modest - our upper parallel return line gives a MUCH higher target.
http://news.goldseek.com/CliveMaund/1286172540.php
Silver Market Update
By: Clive Maund
On its 4-year chart we can see how silver has made a clear breakout to new highs this past week. This is an IMPORTANT BULLISH DEVELOPMENT that is believed to mark the start of a major uptrend in silver. However, the latest gains came at the cost of driving silver deep into critically overbought territory making consolidation/reaction very probable soon. This is evident from the RSI indicator at the top of the chart. Thus we have a situation where a major new intermediate uptrend has been signalled but where further short-term potential is limited by the extremely overbought condition. What we should therefore look for is consolidation/reaction soon to alleviate this overbought condition somewhat and restore upside potential. The current gap between the price and the 200-day moving average is about $4, but early in 2008 this gap widened to $7 which gives some idea of the medium-term potential for silver, and there is nothing to say that this gap cannot be wider. While the short-term overbought condition clearly needs to moderate, we should note that silver will be expected to maintain a generally overbought condition for weeks and possibly for months as it continues to climb.
The shorter-term 6-month chart shows that silver has been in a remarkably tidy, if steep, uptrend since it broke out of its Triangle in August. On account of its now being deep into critically overbought territory on its RSI indicator, failure of the steep uptrend can be expected to lead to a rapid convulsion as short-term traders suddenly hit the exits. However, any such sudden weakness can be bought into, as the medium-term trend, which is up, can be expected to suddenly reassert itself once the sudden correction has done its work of easing the overbought condition. We can expect numerous "air pockets" of this type as the price ascends, mostly minor and lasting perhaps a few days, with a few larger ones thrown in to keep traders on their toes. Any such sharp drops can be bought into aggressively. The now large gap with the 50-day moving average is making a "short sharp shock" increasingly likely.
It is obvious that the steep advance of the past few weeks has been fuelled in part by a short squeeze, but with regard to this it is thought likely that some shorts have held out up to now, in order not to book massive losses for the third quarter. Now that we are into October they may finally decide to "take their lumps" and their buying in coming days could force the price even higher, resulting in an even more overbought extreme.
http://news.silverseek.com/CliveMaund/1286161346.php
I am not the only one who senses these markets are tired. Technically they are. Traders see this and want to step infront of the "downside potential" by going short. But more "news" hits the markets that is bullish, and these "early" shorts must quickly cover their shorts [read: asses] to limit their losses, and the market jumps higher.
Precious Metals Bulls are not rushing in to buy these markets up here. They are either in already, or looking to get in at a discount [on a substantial dip in price]. In a short squeeze, markets can stay "overbought" for much longer than can be believed.
The RSI indicator on the charts is an excellent indicator of internal momentum in a market. If a market is making new highs in price, and the RSI is making new highs as well, the bull market is strong. If a market is making new highs, and the RSI is not and is trending lower, the bull market is losing steam.
Buying moves markets higher. Shorts must "buy" to cover their short sales. If the majority of the buying is coming from the short side, the market is actually weaker than it appears because their are no "real" buyers underneath it to support it.
We know that the Gold and Silver markets are swamped with shorts. But it is not the big commercial shorts that we bitch about all the time, the Rat Bastids at the CRIMEX, that are getting there balls squeezed like lemons up here. These are the little guys, the small "speculators" that are getting chewed up. The Rat Bastids are in the hole by BILLIONS with their shorts, but they have no care about their losses as they work at the behest of the US Government. They'll get theirs eventually. They know their is an "air pocket" just up ahead. It's only a matter of time. Precious Metals Bulls would be wise to keep their guard up here to protect their profits when that air pocket pops up on their charts. Once the air pocket comes and goes, the charts will reset, and the chase higher in the Precious Metals will begin again.
The overnight short squeeze that has pushed Gold to another new all-time high, and Silver to yet another 30 year high began when Bumbling Ben opened his mouth yesterday evening in a speech he gave. More asset purchase by the Fed with "money out of thin air" can only signal higher Precious Metals prices...and a short squeeze.
Bernanke says more Fed asset purchases could help
PROVIDENCE, R.I. (Reuters) - The Federal Reserve'sasset purchases lowered borrowing costs and helped the economy,and more buying could further ease financial conditions,Federal Reserve Chairman Ben Bernanke said on Monday.
"I don't have a number to give you, but I do think that theadditional purchases, although we don't have precise numbers,have the ability to ease financial conditions," Bernanke said.
The Fed bought $1.7 trillion of mortgage-related andTreasury bonds after cutting benchmark interest rates to nearzero to combat the financial crisis and help the economy pullout of a severe recession.
Financial markets expect the Fed to embark upon anotherround of asset buying to bolster a sluggish recovery as earlyas its November meeting, but policy-makers remain divided aboutthe effectiveness of further purchases.
Earlier on Monday, the head of the New York Fed's marketsgroup, Brian Sack, said arguments that further purchases won'taffect the economy were "overstated."
Bernanke said he was convinced that the Fed's purchases hadlowered borrowing costs, which in turn spurred the recovery.
The purchase program "increased the willingness ofinvestors to take a reasonable amount of risk and create somesupport for the economy," he said. "I think it was an effectiveprogram."
In September, the Fed said it was ready to take furthersteps if needed to help the U.S. recovery and lift inflation.
http://www.foxbusiness.com/markets/2010/10/04/bernanke-says-fed-asset-purchases-help/
Late last night the Bank of Japan steps up to the currency debasement plate and drops a bomb on the Japanese Yen. This should have weakened the Yen and sparked a Dollar rally similar to last months intervention in the currency markets by the Bank of Japan. To no ones surprise, this currency bomb was a dud...and a short squeeze ensued as the US Dollar fell further in conjunction with Bumbling Ben's suggestion that creating more money will fix everything.
Bank of Japan Cuts Rates to as Low as Zero Percent
By HIROKO TABUCHI
TOKYO — In a surprise move Tuesday, the Japanese central bank lowered its benchmark interest rate to a range of 0 percent to 0.1 percent, a tiny change from its previous target of 0.1 percent but a symbolic shift back into an age of zero interest rates.
The Bank of Japan also said it would set up a fund of ¥5 trillion, or $60 billion, to buy Japanese government bonds, commercial paper and other asset-backed securities amid concerns about weakening growth in the economy, the world’s third largest, after those of the United States and China. The bank also kept its credit facility for banks at ¥30 trillion.
With the interest rate cut, a bid to bolster lending in the moribund Japanese economy, the central bank effectively reintroduces a policy of a zero interest rate for the first time since July 2006. The decision underscores concerns that a strong yen and persistent deflation threaten Japan’s economic recovery.
In a statement, the bank confirmed that it would maintain its “virtually zero interest rate policy” until it achieved “medium- to long-term price stability”— or an end to deflation.
Hirokata Kusaba, an economist at the Mizuho Research Institute in Tokyo, said in a note to clients that the bank’s action had gone beyond market expectations. “The latest move gives off a much more powerful impression than past, incremental measures, which had sparked market disillusionment,” he said.
“Though there will be debate over the effects of the monetary loosening, I believe the Bank of Japan has done all it can at this time,” he said. But that also meant that the bank “had now depleted most of its policy options.”
The yen initially fell against the dollar after the announcement, but it later rebounded to ¥83.40 to the dollar, stronger than before the rate change. Ten-year government bond yields rallied on the news, while the Nikkei stock average rose 1.5 percent, its biggest gain in almost three weeks.
“The central outlook for the economy, and prices, have worsened more than had initially been predicted,” said Masaaki Shirakawa, the governor of the Bank of Japan. He called the measures taken Tuesday “comprehensive easing.”
He also said he would consider expanding the ¥5 trillion asset-buying program, depending on its effectiveness.
http://www.nytimes.com/2010/10/06/business/global/06yen.html?_r=1&src=mv
Moody's warns of Irish downgrade as recovery falters
By Paul Hoskins
DUBLIN (Reuters) - Moody's warned on Tuesday it may cut Ireland's credit rating again, saying additional austerity measures are needed given a huge bill for cleaning up its banks, a weak economic recovery and rising borrowing costs.
Ireland's deeply unpopular government says it could cost up to 50 billion euros ($68.5 billion) to unravel banks' property losses, driving the cost of Dublin's borrowing to almost three times that of Germany and prompting renewed jitters about debt elsewhere in the euro zone.
http://finance.yahoo.com/news/Moodys-warns-of-Irish-rb-986451241.html?x=0&sec=topStories&pos=2&asset=&ccode=
This had no effect on the Euro this morning. Somebody will just print some money and paper over the problem...not to worry.
It's official then: Japan, the US, the UK, and the Eurozone have effectively turned the money spigots on full throttle. The race to the bottom of the currency barrel is now a free for all, a demolition derby. Their may be no looking back for the Precious Metals markets now. Their will be "air pockets" along the way as Clive Maund decribes below, but they will be swift, and unlikely to be very deep. The short players in these markets may soon be an endangered species.
Gold Market Update
By: Clive Maund
So, we have a situation where gold is in position to accelerate away to the upside, but is at the same time critically overbought on various short-term indicators, but is nowhere near so overbought on intermediate indicators. What are we to make of this? The probable scenario here is that now gold has broken out above the resistance at the top return line of the Wedge, as described, it accelerates away to the upside, the advance being punctuated by brief "air pocket" reactions that could be increasingly violent. The current critically overbought state makes such a reaction likely either immediately or very soon. These reactions may be deeply unsettling for those long, but if the reason for them is known in advance and they expected, they can be used by traders to pyramid positions at better prices. The MINIMUM target for this advance is the lower parallel return line shown, which is currently in the $1500 - $1600 area, which is Jim Sinclair's long-standing target that looks not just easily achievable but actually quite modest - our upper parallel return line gives a MUCH higher target.
http://news.goldseek.com/CliveMaund/1286172540.php
Silver Market Update
By: Clive Maund
On its 4-year chart we can see how silver has made a clear breakout to new highs this past week. This is an IMPORTANT BULLISH DEVELOPMENT that is believed to mark the start of a major uptrend in silver. However, the latest gains came at the cost of driving silver deep into critically overbought territory making consolidation/reaction very probable soon. This is evident from the RSI indicator at the top of the chart. Thus we have a situation where a major new intermediate uptrend has been signalled but where further short-term potential is limited by the extremely overbought condition. What we should therefore look for is consolidation/reaction soon to alleviate this overbought condition somewhat and restore upside potential. The current gap between the price and the 200-day moving average is about $4, but early in 2008 this gap widened to $7 which gives some idea of the medium-term potential for silver, and there is nothing to say that this gap cannot be wider. While the short-term overbought condition clearly needs to moderate, we should note that silver will be expected to maintain a generally overbought condition for weeks and possibly for months as it continues to climb.
The shorter-term 6-month chart shows that silver has been in a remarkably tidy, if steep, uptrend since it broke out of its Triangle in August. On account of its now being deep into critically overbought territory on its RSI indicator, failure of the steep uptrend can be expected to lead to a rapid convulsion as short-term traders suddenly hit the exits. However, any such sudden weakness can be bought into, as the medium-term trend, which is up, can be expected to suddenly reassert itself once the sudden correction has done its work of easing the overbought condition. We can expect numerous "air pockets" of this type as the price ascends, mostly minor and lasting perhaps a few days, with a few larger ones thrown in to keep traders on their toes. Any such sharp drops can be bought into aggressively. The now large gap with the 50-day moving average is making a "short sharp shock" increasingly likely.
It is obvious that the steep advance of the past few weeks has been fuelled in part by a short squeeze, but with regard to this it is thought likely that some shorts have held out up to now, in order not to book massive losses for the third quarter. Now that we are into October they may finally decide to "take their lumps" and their buying in coming days could force the price even higher, resulting in an even more overbought extreme.
http://news.silverseek.com/CliveMaund/1286161346.php
Monday, October 4, 2010
Caution Is Again Advised
I remain cautious regarding moves higher in Precious Metals prices from here, despite Friday's extension of September gains in these markets. Both Silver and Gold were squeezed higher upon the release of news Friday regarding the continued strength in Chinese manufacturing.
China's Manufacturing Growing
By AARON BACK
BEIJING—China's manufacturing activity expanded in September and accelerated from the previous month, an official gauge showed Friday, adding to evidence that Chinese growth remains robust and that its slowdown from extraordinary growth rates earlier this year will be mild.
China's Purchasing Managers Index rose to 53.8 in September from 51.7 in August, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement.
A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction.
"The continuing rise in the September PMI indicates that the process of economic growth adjusting downward from a high level has already moderated," said CFLP analyst Zhang Liqun in a note. "Economic growth will shift from being supported by stimulus policies to being supported by market forces."
http://online.wsj.com/article/SB10001424052748704483004575524830497577638.html?mod=googlenews_wsj
The Chinese economy continues to confound the Western financial market pundits. This news will no doubt add fuel to the US Congress' push to punish China for keeping it's currency weak, and supposedly stealing jobs from America because of it.
When will these clowns in the US Congress come to the realization that American jobs left the country because of their endless government regulations and rising taxes? American business are in business to make money, not fund the US Treasury.
It is not the responsibility of the US Government to create jobs. that is the job of the PRIVATE business man. This is the foundation of capitalism. The US Government has worked overtime to destroy the private sector base of our economy, and has decide to blame the Chinese for it's own mistakes instead of getting off American business' back.
The Precious Metals have not followed thru higher on Friday's squeeze in prices, and I suspect this head fake could signal the end of this tired leg up in these markets. The Precious Metals are NOWHERE NEAR A TOP, and "the bubble" is not about to burst. No markets go straight up, and a rest here in Silver and Gold would not only be welcome, but constructive to prices moving forward this Fall. Whether we see a correction in prices, and a retest of recent breakouts, or a consolidation in prices remains to be seen. Either scenario should NOT shake you off this Precious Metals Bull, but could offer some excellent trading opportunities over the next few weeks.
Investors, as always, be right and sit tight...or add to your positions at support.
Gold Report 9-30-2010
By Ira Epstein
A rally in the Dollar could initially bring with it a down draft in gold prices over the short term. Longer term, I view price breaks as buying opportunities.
What bothers me is that practically everywhere I turn I see recommendations from trade advisors to get into gold, for investors to have a portion of their portfolio in gold and so on. While the advice is good, seeing so much of it take place at new all time highs has me concerned.
It’s important to remember that markets can and do correct. Few go in straight lines, gold included.
A popular seasonal play I mentioned in past reports was to go long in early to mid September and be out on October 1st. That idea worked out nicely, given where prices are as I write this report.
Below is a Seasonal Chart of Gold prices produced and provided by Moore Research Center, Inc, (www.mrci.com). In my last report I wrote about gold’s tendency to see prices turn up in mid to late August and run up in the fall. Last week I mentioned that September 10th began another seasonal time frame for a run up in prices.
Gold has followed its historical pattern.
Now gold may be ready to correct before beginning another up leg, late this year.
I welcome a price break as I think it offers those not involved yet in gold, a possible entry point at lower prices.
http://www.kitco.com/ind/Epstein/sep302010.html
On the WEEKLY charts both Gold and Silver remain strong in their respective accents to higher prices. It would take major corrections in both to negate the current bullish posture in the markets. However, on the daily charts, and with respect to the seasonal charts in both Gold and Silver, a rest for the bull is warranted. The month of October is annually a weak one for both metals. However, with respect to the ongoing global financial fiasco, seasonal patterns may not be as reliable an indicator of strength or weakness in these markets. BUT, they must be respected. Particularly when the daily chart technicals warn of a pending change in the "daily" trend.
In today's economic news we get more of the same: deceitful headlines.
Top Stories
Pending Home Sales Rise 4.3 Percent in August- AP
The number of people who signed contracts to buy homes rose in August for the second straight month but remained far below last year's pace. The weak economy and fears that prices will fall are keeping many consumers away from the housing market.
August factory orders decline 0.5 percent- AP
Regarding the pending home slaes number, it is important to note that July's number was revised DOWN 0.7% to make August's number appear better than it actually was. Yes, the pending home sales numbers still stink compared to a year ago. Just pointing out how they continue to polish these turds and expect the public to accept them as Baby Ruth bars.
In light of Friday's Chinese manufacturing report, today's August factory orders number for the US should be hidden as a global embarrassment.
Stay on your toes this week folks. Opportunity may be knocking along with sales prices on the Precious Metals.
China's Manufacturing Growing
By AARON BACK
BEIJING—China's manufacturing activity expanded in September and accelerated from the previous month, an official gauge showed Friday, adding to evidence that Chinese growth remains robust and that its slowdown from extraordinary growth rates earlier this year will be mild.
China's Purchasing Managers Index rose to 53.8 in September from 51.7 in August, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement.
A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction.
"The continuing rise in the September PMI indicates that the process of economic growth adjusting downward from a high level has already moderated," said CFLP analyst Zhang Liqun in a note. "Economic growth will shift from being supported by stimulus policies to being supported by market forces."
http://online.wsj.com/article/SB10001424052748704483004575524830497577638.html?mod=googlenews_wsj
The Chinese economy continues to confound the Western financial market pundits. This news will no doubt add fuel to the US Congress' push to punish China for keeping it's currency weak, and supposedly stealing jobs from America because of it.
When will these clowns in the US Congress come to the realization that American jobs left the country because of their endless government regulations and rising taxes? American business are in business to make money, not fund the US Treasury.
It is not the responsibility of the US Government to create jobs. that is the job of the PRIVATE business man. This is the foundation of capitalism. The US Government has worked overtime to destroy the private sector base of our economy, and has decide to blame the Chinese for it's own mistakes instead of getting off American business' back.
The Precious Metals have not followed thru higher on Friday's squeeze in prices, and I suspect this head fake could signal the end of this tired leg up in these markets. The Precious Metals are NOWHERE NEAR A TOP, and "the bubble" is not about to burst. No markets go straight up, and a rest here in Silver and Gold would not only be welcome, but constructive to prices moving forward this Fall. Whether we see a correction in prices, and a retest of recent breakouts, or a consolidation in prices remains to be seen. Either scenario should NOT shake you off this Precious Metals Bull, but could offer some excellent trading opportunities over the next few weeks.
Investors, as always, be right and sit tight...or add to your positions at support.
Gold Report 9-30-2010
By Ira Epstein
A rally in the Dollar could initially bring with it a down draft in gold prices over the short term. Longer term, I view price breaks as buying opportunities.
What bothers me is that practically everywhere I turn I see recommendations from trade advisors to get into gold, for investors to have a portion of their portfolio in gold and so on. While the advice is good, seeing so much of it take place at new all time highs has me concerned.
It’s important to remember that markets can and do correct. Few go in straight lines, gold included.
A popular seasonal play I mentioned in past reports was to go long in early to mid September and be out on October 1st. That idea worked out nicely, given where prices are as I write this report.
Below is a Seasonal Chart of Gold prices produced and provided by Moore Research Center, Inc, (www.mrci.com). In my last report I wrote about gold’s tendency to see prices turn up in mid to late August and run up in the fall. Last week I mentioned that September 10th began another seasonal time frame for a run up in prices.
Gold has followed its historical pattern.
Now gold may be ready to correct before beginning another up leg, late this year.
I welcome a price break as I think it offers those not involved yet in gold, a possible entry point at lower prices.
http://www.kitco.com/ind/Epstein/sep302010.html
On the WEEKLY charts both Gold and Silver remain strong in their respective accents to higher prices. It would take major corrections in both to negate the current bullish posture in the markets. However, on the daily charts, and with respect to the seasonal charts in both Gold and Silver, a rest for the bull is warranted. The month of October is annually a weak one for both metals. However, with respect to the ongoing global financial fiasco, seasonal patterns may not be as reliable an indicator of strength or weakness in these markets. BUT, they must be respected. Particularly when the daily chart technicals warn of a pending change in the "daily" trend.
In today's economic news we get more of the same: deceitful headlines.
Top Stories
Pending Home Sales Rise 4.3 Percent in August- AP
The number of people who signed contracts to buy homes rose in August for the second straight month but remained far below last year's pace. The weak economy and fears that prices will fall are keeping many consumers away from the housing market.
August factory orders decline 0.5 percent- AP
Regarding the pending home slaes number, it is important to note that July's number was revised DOWN 0.7% to make August's number appear better than it actually was. Yes, the pending home sales numbers still stink compared to a year ago. Just pointing out how they continue to polish these turds and expect the public to accept them as Baby Ruth bars.
In light of Friday's Chinese manufacturing report, today's August factory orders number for the US should be hidden as a global embarrassment.
Stay on your toes this week folks. Opportunity may be knocking along with sales prices on the Precious Metals.
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