People still seem to be wrapped up in the Super Bowl
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I always thought that we were, Mark!
So what will cause such a sell-off? The cycle by itself? Profit taking?
I believe we still have not put in the short term bottom in gold/silver mining stocks, but that they will likely bottom with the short term drop in the general markets in a “sell everything” motion later this week. Again, I expect Gold to still test the 1240-1250 area and was expecting it last week, but we should see that towards Thursday of this week. Then we’ll finish the rest of the leg up in February for Gold/Silver/ and the PGM group. March will likely start a new correction after that due to seasonal lows.
After spending a little more time reviewing it, Gold could test that Dec 9th high of 1232.40 before heading back up for the remaining part of Feb. So even if Gold dips below 1240 briefly, that level of 1232-1233 should be another good layer of support.
The high on the 9th was actually 1239 but I agree with your view that we could see a test of the closing price that day at 1232.10. Whatever happens, I think the consolidation will be done this week.
Yes, I should have phrased that more carefully. I meant to say the Dec 9th high, not the high that day. Personally I put more emphasis on the closing price, so I was using the 1232.40 showing on Kitco’s charts. I do think it is relevant that the high that day was 1239 because there are a number of traders that will use this figure as the 1240ish support zone.
I agree again, including sharing your preference for the closing price.
I’ve noticed a change in the last several weeks where traders of mining shares seem to be learning that the one day smacks of gold generally corrects itself in a day or two……..Not long ago as soon as you saw gold down a few bucks, you could count on a sell off of shares. Think there are many who have learned to take the gyrations with a grain of salt.
Second thought: The weekend show had a lot of one on one conversation between some folks. Somebody might suggest these talkative ones trade phone #”s. Just sayin’.
Not a bad idea, Silverdollar!
Canadian oil sands up around 20% after around a 14% up day last Friday. I sold mine a few weeks ago. I am keeping my xop. It is about to go over the 50 day average. Panic short covering in oil should move it to the 54 to 56 area.
You are on my page Paul. I also think we get some covering this week and prices start to bounce back a little. We are overdue.
It looks like GDX will go above the 200 day average soon and this time it should break out when it goes above 23.
Greece default and german and french banks going bust.You can imagine the consequences.the ripple effect of that are gonna be catastrophic for the financial world.The derivatives in the form of swaps and other sorts of contracts tied to european debt is enormous.The chances that there is a company similar to AIG which has insured against the possibilty of a greece default are great. The American insurer(AIG) needed a $182 billion federal bailout during the financial crisis because it had insured the performance of mortgage bonds through derivatives and could not pay on all of them.
Game over for the EU experiment will be when Germany picks up its ball and goes home. Until then the gang over there in Brussels will find a way to prolong the pain.
ECB’s Is NOT Stimulating Economy – Its a Bank Bailout- Martin Armstrong
The ECB’s monthly spending will include its existing programs to buy covered bonds and asset-backed securities. However, of the added purchases, Draghi said 12% will be debt issued by European Union institutions and agencies, and the rest will be government bonds – 88%. Given the problem that the banks use government bonds for reserves and these are NOT marked-to-market, you can read between the lines and see this is buying in bad debt that is not worth the pretend face value to begin with. This is a continued bailout for the banks – NOT a stimulus plan for the economy. This will have ZERO impact upon saving European economy for the money will NEVER create a single job. This is a drop in the bucket for this group of assets amounts to about €2.7 trillion euros. This is reserves and they will swap the bad debts and switch to German bunds. They will be looking to change the way sovereign debt is held without mark-to-market accounting.
http://armstrongeconomics.com/2015/02/02/ecbs-is-not-stimulating-economy-its-a-bank-bailout/
Don,
I had a very interesting conversation yesterday after the Super Bowl about the concept of bailouts.
Guess what? All of the folks involved were adamantly against them! How do you feel about them?
Al:
Broad subject. But I’m certain that if given the choice, most would have NOT bailed out the banks. However, we weren’t sitting there being told by Paulson that on Monday the world would implode without it.
I give it some credit for smoothing over some disruptions like AIG failing, etc., but look at the ‘moral hazard’ created. Most of these people connected with the failing banks and AIG should have gone down like the corner gas station since we never fine or imprison individuals of their class any more. That failure is my biggest gripe with Obama’s justice Dept.
Countries that receive bailouts resemble drug addicts craving the next dose.The therapy must be detoxification and rehabiltation.Greece was not ready to join the eu but in 2001 thanks to Goldman sachs (one of the most corrupt entities in the world)it succeeded to set up a secret loan swap that helped the country to hide its debt levels in order to meet requirements to join the eu.A country cannot be bailed out and then forced to implement austerity measures.It is nonsense.The revenue will diminish just the same because people will spend less and investments (foreign and local) will run to a halt.What you are doing with bailouts is prolonging the life of a drug addict but ultimately a drug overdose will kill the addict.
The bailout money was never meant to help Greece. Most of the money went to German/French banks who were knee deep in Greek malinvestments.
BTW last month standards and poor’s agreed to pay more than $77m (stealing billions and fined millions) to settle charges tied to its role in the financial crisis and will also take a timeout from rating some mortgage securities in an unprecedented move by regulators.There are two types of terrorists in the world.Those that undermine the country’s security with the excuse of their fundamental beliefs and those that undermine the country’s economy for the greed of money.The U.s. harbours the latter i.e. the financial terrorists which can bring as much misery as the others do.
I guess that we all agree on this one!
Gary, I don’t know about you but I saw a “bearish golden cross” on the monthly S&P500 chart. What do you think?
Peter,
One would have to use a pretty fast moving average to get a death cross on the monthlies. If one uses a 10 and 20 month there is no death cross.
Well, this song explains our predicament quite nicely: https://www.youtube.com/watch?v=-BaKloZpjBM
I swear wheat is on its way to retest the 2010 lows. Still dropping as I suspected it would.
Gary,
What are your thoughts on the dollar both short term and long term after we hit your target last week?
Thanks in advance
What about the COTs folks – don’t the commercials now hold huge short positions in gold and silver?
Don’t the metals usually fall big time when the commercials are short?
Bingo Bob. Be careful listening to anyone claiming gold and silver are about to blast off anytime soon. This pattern remains bearish in my view and the longer term charts seem to support that position. We have not fully retraced the past rise yet and more pain lies ahead.
I have a gut feeling that these markets – conventional and metals – could break down any day now. I know that Gary has written about this over on his blog this past weekend but, and I am no expert, looking at the markets now I just get the feeling that they could drop like a stone soon.
I have been keeping my eye on GPRO as I feel the stock could bounce on Thursday when earnings are published… but my general unease about the markets is making me hold back from buying in.
I know that silver margins were increased recently but nothing was done about gold? I am still expecting to read sudden increase in margins re gold that will knock the metals – especially as the big boy commercials are currently massively short.
As price rises commercials hedge more and more to lock in higher prices.
It is due for an intermediate degree correction any time.
Gary,
I asked you a question and you responded to Bob.. Must I sign up? 🙁
I have told you before – I am not a paid up member of Gary’s site. I visit his blog as I find what Gary has to say to be very interesting.
Bob,
sorry, yes yes your not a member from what you told me. Frustration on my part as Gary clearly seen my post above yours and decided not to respond to it. Maybe it’s time constraint as Gary has much to do. I will give him benefit of the doubt as Gary is a stand up guy 🙂
Glen,
The comment right above you was meant for you. No idea why it posted half way down the page.
Thanks Gary looks like decline has started in dollar.
See my other notes below though. There is a conflict with the metals that I cannot put my finger on and it relates to what is happening in copper as just one example where the Commercials are getting long.
Bob,
COT is another tool as part of a great baggage of tools one uses to make decisions in there investments.
Just curious as to when you will be a buyer? Is there a specific price your looking for? When was the last time you bought any miners in a substantial amount?
Some of us want to know your trading technique as you post quite a bit in here and always seem like your down that you missed a move up and now that we headed down your still not buying. Are you going to regret it later if it goes to 1350-1400?
Just trying to understand your investments techniques.
Thanks in advance
I don’t think we have bottomed yet glenfidish. I will let you know when I buy – we can have a party.
Sorry if my negativity is causing you angst but, as above, I just think we are going to go lower. Believe me, when I think it has bottomed I will fill my boots.
I am not a day trader.
Bob,
Negativity? Nah im just following your post as simple as that. No stress here :). Not sure why this response from you. An honest question as you made a comment one week back regarding your failure to get in at the november lows and were upset with yourself. Just trying to understand your philosophy. That’s all im doing. I read your post on a constant. You share good info so it baffles me why you don’t enter when it’s red or bleeding on day’s like today or the other day.
Fill your boots, your pants and your tights with all you can because once she is gone, it will be bye bargain forever. I hope for your sake and many others that cheaper prices come true.
If you immediately know the candlelight is fire then the meal was cooked a long time ago 🙂
Bob, not sure what you mean by your comment.
Wish you best..
Does gold price fall because the commercials are short, or are the commercials short because the price is expected to fall?
Maybe we should ask the gata guys? or Ted Butler or Harvey Organ…
JPMorgan to pay $99.5 million to resolve currency rigging lawsuit
bb – this is a good site which does a daily review of the gold and silver markets with a weekly analysis, usually published on Saturday, of the gold and silver COT reports published each Friday.
I just hate COT reports on the precious metals, Bob. Right now we have the Cots showing an upswing in most major commodities where the Commercials are concerned and yet for gold and silver they are turning down!!!!
How can that be? There is a big inconsistency here.
Mind you guys.Dont know If you ever noticed but JPM stands for Just Pure Manipulation and Goldman Sachs in reality is Gold man Sucks.These two cartwheels are greased by rating agencies s&p (stupid and prepostrous),Moodys,fitch and the sec (so ever criminal) and are held in place thanks to the bofa merrill linch pin.The fed(For Ever Damned) is the donkey that carries the cart.
Cute, Don
So what’s up with the price of rice? In the past months futures have plummeted and are now rapidly closing in on major support not seen since the middle of 2010….a long five years back.
It’s not the only grain that is falling hard either. Corn, Beans, Oats and Wheat are all on the same path and I think this coming bottoming process will tie in with the point at which metals finally show life and rise from the dead because we could finally see the commodities declines come to an end.
They should all be on a buy anyway. These are all going to be discount prices so lots of choices for speculators to chew on. What is not clear is what it means for the dollar though but my suspicion is that it must soften if resources are going to be moving up.
Check the charts yourselves and put it on the radar. First one of the group to hit bottom is rice and that could be just days away so this is going to get interesting fairly soon.
And just ask yourself this one important question…..what does it mean to the rest of the market once the commodity sector starts to turn around and rise again? That may be all you need to know to start waking up to the changes that appear impending.
Same story for sugar, cotton, copper and others by the way so this is a fairly broad based bottoming process. But what does it portend? Who the hell really knows. Technicals don’t reveal that to any of us, they only indicate a trend turn. Commercials are getting long though and the COT shows an upturn across the spectrum so a change is at hand by summer.
So, given that some softs, grains and metals are approaching or have seen long term support and it tells us the commodity complex is about to reverse higher should we not ask ourselves if Crude is not already near (or at) it’s bottom?
How about gold and silver?
And what should we be worried about in all this? Is the shift that is in progress from debt (bonds) to commodities now happening before our eyes? Does this warn of interest rate hikes? How about inflation changes? Maybe fear in the markets and a return to “real” stuff in which to protect our capital?
And what does it say about timing? I figure we have until summer for most of the switches to take place meaning we have time yet to move ahead of the herd and avoid whatever it is that is coming.
By definition, if commodities are going to be on the rise again (as a group) then that means something else is about to fall. Anybody want to suggest what it is that will get the gut shot and send money fleeing to resources in the coming months?
Stocks perhaps? Maybe the stars are lining up for a Greek default. Or maybe its none of those big news stories at all….it’s just time for reversals from a technical perspective.
Anyone?
To my eyes, we have the makings of a very large pattern playing out. Another example is that the Australian dollar (a commodity currency) has just posted a 2009 / 2010 low.
Similarly, the Canadian dollar which is a currency we know correlates well with copper, crude and gold is also coming down to 6 year lows and has now arrived within just a penny of its 2009 support at 77 and a half.
One of my favorite stocks to watch is TCK which is breaking above its 50 MA. Up two and a half dollars since it double bottomed in January. It is a leading indicator to my way of seeing the world.
Are these patterns too obvious to be reliable? I know others watch the markets in different ways. My choice is to scan across currencies, equities and commodities to get a feel for what is happening.
So then, maybe this tells us why stocks look a little haggard right now. There is indecision as worries about rate changes are being seriously discussed by the Fed. And in the back of my mind I can’t help but think this is all coming together in the form of a surprise even though everyone and his dog expects trouble this year!
So will the 30 year top in the coming weeks? It too is close to seeing a multi-year high and although there are some who express certainty rates will fall much lower I can’t help but notice all these other trends that tell me maybe that just ain’t so.
Gary, I am curious about your take on all this. Maybe on today’s show. The question is this….do you think stocks, bonds, commodities and currencies are converging in their various patterns to signal a major change lies in wait in the months ahead?
The last point here is the 30 year bond. It has broken out of its primary trend channel as it raced higher since the start of 2014 and is setting up to peak near resistance at the November 2013 highs. Actually the chart appears to have taken on a slightly parabolic tone in the last weeks so we should expect price to begin to fall back fairly fairly soon. But what might the cause of that outcome be? Rumblings of rate hikes that grow louder perhaps?
Hell, i did not even mention Nat Gas or Heating oil as two others that are soon to be touching down on long term support. This adds credence to my belief that the oil price collapse may have already ended or is very near its bottom.
We are already seeing oil stocks rise, in some cases double digits. I am not the only one watching this and it seems possible most are going to miss the turn (if it has indeed already happened) while they wait for yet deeper lows.
So what is really happening here?
Why would commodities turn up in the coming months given the backdrop of very slow global growth and even outright deflation in parts of the world? And why would prices rise just as the US and Canada appear set to enter recessions?
Well it cannot be that demand will push prices up unless we are about to see a miraculous recovery from stagnation, growing levels of taxation and excess capacity all over the world.
There is clearly something else in the works and I believe this is all part of a long cyclical pattern that has defied all the efforts of the worlds Central Banks to defeat. If resource prices rise it will invariably because investors have shifted from either equities and debt or both.
It could mean that for the time being stock prices have peaked or that rates are going to rise and we will see a stampede out of debt. Commodities cannot rise in price in a slowing world unless there is a speculative element pushing them higher and demand for resources is on the rise as alternatives to other investment classes.
Does it even matter what the source of the change is? We can all review the commod’s I mentioned above and easily see that on their long term charts (up to 5 and 6 years) that we are about to enter a very major basing process and that is valuable information to keep at the back of ones mind as the next months unfold.
Apparently I am pretty much alone in this thinking because after six posts not one person has dared stick his neck out and either agree or disagree. This is a funny site some days. All talk of gloom and Armageddon. Doesn’t anyone care about trends and investing anymore?
I went to bed Birdman.
I haven’t had time to read all your posts… and have to go do some work now… but my only contribution is that SUGA has plunged this year. I am trying to figure out how much of this is to do with a drop in commodities and how much is it to do with fears in the West that too much sugar leads to diabetes and other illnesses.
That’s my two cents.
If it was ONLY sugar that was plunging we might be able to say it related to diet. But look at the rest of the majors like rice, wheat, corn, copper, crude, natural gas etcetera. They have ALL been plunging back towards 2009 lows. That is not to say they cannot fall lower….but I doubt they will. Commod’s are moving as a group and that is what holds back precious metals.
One more post? Why not, can’t hurt since I am talking to myself anyway. The VIX is forming a triangle or pennant formation that could complete by early March. That in itself may help in timing whatever the hell it is that’s coming so it bears watching for a break out. Naturally enough I lean to the side of the boat that says we get a great big fat volatility spike in the not so distant future.
You mean a volatility spike in the VIX? Or one in the actual conventional markets themselves?
Thanks Bob, yes I am referring to the chart pattern itself that is developing and would see a spike in the VIX. Of course a spike in the VIX coincides with declines in stock markets so both would happen together.
Maybe you should repost your VIX thoughts on one of today’s threads?
Enough said. Nobody is listening anyway. But thanks, Bob.
So help me out here Gary. What is your take? None of this has to make sense. Nor does it need to line up perfectly with past history. We only need open our eyes and note the obvious.
There is a bid under the dollar based on the Euro’s decline and capital flowing into the US stock markets. Capital is coming from Asia, Japan, Europe and the Middle East. Most of us think that the dollar could soar as the Euro heads into parity.
Commodities meanwhile WILL hit bottom this year and then go into reverse.
Ordinarily we would see the dollar falling as resources are on the rise (as with gold, they have something of an inverse relationship to USD). But this appears to be different and it looks to me like both the dollar and commodities will rise TOGETHER.
That would include gold and silver and crude naturally.
In the background there is a great deal of pressure on the Fed to hike rates if only so that they have ammunition to lower them later once a real crisis erupts. Well if a modest series of rate hikes are going to cause stock markets to decline as is usually expected and simultaneously we “officially” enter a recession then won’t it seem odd that we suddenly see the costs of primary inputs rising?
I say “odd” because that suggests inflation coming for consumption goods and food even as deflation is ruling in the investment spheres of housing, financial assets and bonds. So I think these are all inter-related and that is what we need to keep an eye on as major changes portend.
So then what do we do? On the surface the answer seems to be to begin escaping debt instruments (especially Junk and everything European), ease back on inflated stocks and start buying resources with both hands. It might also be a great time to buy high quality corporate debt like that recently offered by AAPL although that is a whole other topic.
If the dollar does rise with resource prices would that not also make deeper investments in US mines all the more profitable? Well I think it does. Canadian mines also have a deeper appeal. Anything that has a dividend should be considered and every company with a solid balance sheet should be on the buy list.
I would like you guys to take this up today. Will dollars rise WITH gold before the year is out?
Bird,
As I’ve been saying for a while, I think it’s time for the dollar to take a breather for a while and for most commodities to generate a counter trend rally for a few weeks.
Oil appears to be starting that rally and as of this morning the dollar is moving down below the 10 DMA. So I think the move may be starting.
Gold is hard to say. It’s getting late in the intermediate cycle and I think the rise in gold was driven by the crash in the euro, not anything that was happening in the dollar. The euro is probably done going down for a while so the driver for gold may be ending.
Like I said, hard to say when it comes to gold.
I totally AGREE with AL……………I mean, we all are ADULTS on here…………..I THINK !!!!