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We focus on the rise in the US dollar and drop in oil and gold

May 19, 2015

Doc joins us for a market wrap. We focus on the major movers today of oil, gold, and the US dollar. As we get closer to summer we need a little buffer for gold.

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Discussion
47 Comments
    May 19, 2015 19:57 PM

    In the new green world order Gold mining is a NO NO ! Paying for trillions of debt is a YES YES ( SLAVES ) !

      May 19, 2015 19:05 PM

      I happen to agree with you Franky

    bb
    May 19, 2015 19:41 PM

    Goldshares look like their going to roll over.
    Sounds like Gary has it figured.

      May 19, 2015 19:37 PM

      Unfortunately there are a number of people saying that the gold shares are looking weak. They were preforming fairly well compared to the metal so now possibly they are just having a little pullback. Moving into summer can be a tough time for these stocks…

        bb
        May 19, 2015 19:46 PM

        There is nothing to be concerned about, I just re listened to Bo Polny @ financial news.
        Gold will break out upside before summer.
        Funny, Puplava? before the interview started said “if you don’t like what he says go stuff yourself”. Not in those words but that’s what he ment. Thought it was funny.
        I hear his service is reasonably priced at 13k per year, Bo was saying gold to $2000 before year end in 2014. Worth every penny Im sure,my guess he keeps the good stuff for subscribers, as so many other “gurus” do.

          May 19, 2015 19:07 PM

          I find it difficult to believe that a rational person would pay that kind of money for advice that has proven to be inaccurate for so long. Oh well!

          May 19, 2015 19:51 PM

          YOU KNOW THE REAL NAME OFF ( DAVID MORGAN ) ?

            May 19, 2015 19:38 PM

            DAVID, SOONER OR LATER I’LL GET THE BOTTOM IN SILVER RIGHT, MORGAN….and will make sure everyone knows I picked the exact bottom………eventually!

            May 19, 2015 19:08 PM

            That is his real name. I have known him for about ten years.

            May 20, 2015 20:53 AM

            I really like David Morgan for the macro overview in Silver, but you are correct Original JJ that his calls for the bottom in the PM pricing have been off for some time. Recently when I’ve heard him talking though, he has admitted that, and really, most everyone in the space was premature calling bottoms. Overall he’s a pretty smart guy and I like him as a person, and listen to him more for stocks or macro insights, and not market timing.

            I figured it would be about 3 1/2 to 4 years until the bear market plays out and personally haven’t come out and mentioned anything about bottom projections until just this year. My projection was for a summer bottoming in June/July and it may take until early August, but that is when I’d anticipate weakness.

    May 19, 2015 19:50 PM

    Al, I didn’t save your newsletter that recommended Midway Gold@.74, but I checked my records and found that I bought MDW@.64 on Nov. 6 before your letter had mentioned it. So your letter, which had a chart, had to have been an issue from mid-Nov through Dec. It was still over .70 till early March when it crashed and reached .04 yesterday but made it up to .12 this morning. When your letter recommended MDW I wrote you guys that I was glad you had because I had already bought some. But your letter never mentioned it again.

      May 19, 2015 19:36 PM

      Bonzo this is a breakdown of the companies listed on the right side bar, you should not toss a penny at these companies unless you have the ability to trade them, or lose what you put in, below is the range over the past year and todays close

      KOR 1.60-.63-.76
      NVG .17-.06 -.15
      GCU .42-.09-.25
      CFO .27-.05-.21
      RPM .20-.10-.16
      NXT .95- .45 -.58
      IDAH .22- .06- .10
      SCZ 1.00- .18 -.18
      TLT .78- .25 -.37
      XRC .90 -.60 -.67

      I wouldn’t buy any of these with your money!

    May 19, 2015 19:10 PM

    Well since nobody saw the US$ reaction of today coming, and how could have anyone as todays blow out housing start data nobody called nor did anyone think the ECB would be jacking up its monthly purchases this summer, so if Fed minutes are hawkish the $ is going to get juiced higher tomorrow.

    Doc when anyone looks at the weekly gold chart going back to the summer of 2013 gold has NOT been able to produce a higher high since $1434…..$1392….$1346….$1307 that in its self is very, very bearish!!!

    May 19, 2015 19:07 PM

    Notes From Underground yra harris
    Where 2+2=5 is also a beautiful thing
    « Notes From Underground: Is There Something Bigger Bothering the Bond Markets?
    Notes From Underground: The San Francisco Fed Says It Ain’t Rocket Science … Again
    The talking heads in the financial media have a great deal to answer in regards to yesterday’s release of the San Francisco Fed’s Economic Letter by Rudebusch, Wilson and Mahedy in which the three researchers said: “We find that a second round of seasonal adjustment implies that real GDP growth so far this year appears to have been substantially stronger than the BEA [Bureau of Economic Analysis] initially reported.”

    The purpose of their research is to remove the “wild seasonal swings” between the first and second quarters of the years as they noted that the first quarter dropped “… about 10% at an annual rate every first quarter and rose about 20% every second quarter.” The short FRBSF shows that using the newer methodology of the “double seasonal adjustment can be used to gauge how much first-quarter GDP growth has been affected by residual seasonality.” The new and improved methodology results in a GDP number for the first quarter of 1.8% versus the reported BEA number of 0.2%.

    Last week I wrote that I believed that the FOMC was seeking to raise INTEREST RATES faster than the pundits believe based on the DEPENDENT DATA. In fact, SAN FRANCISCO FED PRESIDENT John Williams presented Steve Liesman with a t-shirt that advertised the view, data dependent. It seems that what the San Francisco Fed should be distributing is a t-shirt I used to wear: “When In Doubt, Manipulate the Data.”

    Zero Hedge captured the insanity of the FRBSF letter very well and it plays upon my opinion of last week. The FED wants to raise rates so to test its normalization tools, the O/N RPP-IOER corridor as a way to drain reserves from the financial system. The ZERO rate seems to be a problem for Simon Potter and the System Open Market Account. Again, if the FRBSF can manipulate the data to create the illusion of greater growth in an effort to give the FED cover for raising rates IT AIN’T ROCKET SCIENCE.

    Zero Hedge also points out that the Atlanta Fed’s GDP NOW forecast had the first quarter GDP number PEGGED and it is NOW projecting second quarter GDP growth of 0.7%. It seems that the FED is going to have to move fast to stay ahead of the slowing data if it wants to RAISE RATES IN AN EFFORT TO REMOVE EXCESS RESERVES FROM THE SYSTEM.

    If my THEORY is correct it should lead to a nice risk/reward play in the September FED FUNDS contract, which is currently trading at 0.9982, reflecting an effective yield of 18 BASIS POINTS. It may well be a return of 6-1 if I am correct. I am putting on a small position to test the theory but the bigger moves may come in the DOLLAR, commodities and precious metals.

    Any hint of a FED on the move to raise rates will TEMPORARILY push the dollar higher and the other assets lower, but the operative concept will be: For how long? If the FED is one and done the market will not keep the DOLLAR HIGHER AND METALS LOWER FOR LONG. Remember, this will be a TEST. Remember, last week Janet Yellen noted that equity valuations were extended. On with the high-level math of rocket science or the scientific envy of IVY LEAGUE ECONOMISTS.

      May 19, 2015 19:41 PM

      I wonder whether the bond market is ahead of the curve and signaling a fed rate increase.

        May 19, 2015 19:51 PM

        BINGO! Doc your on it baby! that’s exactly what they are signaling and so is the $

          May 19, 2015 19:22 PM

          I agree; that means Rick is going to have to find another bridge in Brooklyn to sell.

            LPG
            May 19, 2015 19:46 PM

            I may add that if it happens, then I guess Chris T. will be on that bridge to celebrate the Cubs’ World Series victory ! 🙂 🙂 🙂

            Best to all and GL investing/trading

            LPG

            May 20, 2015 20:57 AM

            funny.

    May 19, 2015 19:08 PM

    I wonder how many readers here still expect gold to go below 1100. Does anyone care to vote? My vote is no, it will not.
    It is also clear to me that the miners have already had their big washout.

      May 19, 2015 19:46 PM

      I have no idea Matt, but a 120+ US$ suggests sub $1000 is very possible and if a Greek situation creates a European Lehman event everything will be sold hard as it was in 08 as the liquidity of the $ is sought

        May 20, 2015 20:57 AM

        What will be left to sell?……I think wmk is correct…based on his chart below. After 4 yrs. many are OUT of GOLD and gone………… …jmho

          May 20, 2015 20:59 AM

          Org jj………I am not saying the 120 US$ will not happen…………FTB

            May 20, 2015 20:06 AM

            You don’t need only longs to sell their positions Frank, shorts taking on new positions can drive a market much lower

            May 20, 2015 20:28 AM

            GOOD point……in the past………but, if the ABX starts up…..might be a little less shorting for the naked shorts. New game, new plan, who knows, nothing stays the same.
            But, good thoughts just the same.

            May 20, 2015 20:37 AM

            ABX is a very key chart to watch for the sector as going back to Oct 2014 $13.30 was a support tested zone when it fell, it fell hard and has tried many times to overcome that major resistance area, many times, with only two wee closes above that key $13.30 level, the weekly shows when 413.30 is left behind major resistance comes in at $15.00, these zones are what needs to be overcome to create a new trading channel between $15 and $21

            May 20, 2015 20:57 AM

            Allocated Bullion Exchange………ABX……, SORRY, I was referring to the proposed exchange to do battle with the Comex and LBMA. Sorry for the confusion………FTB

            May 20, 2015 20:58 AM

            Thanks for the abx chart……..good info………..FTBoot

    LPG
    May 19, 2015 19:26 PM

    Hello WMK,

    I don’t know about <1100 or not… As often, I have no clue but stay open-minded to potential outcomes.

    Having said that, my personal "hope" is OML, Daft Punk style:
    https://www.youtube.com/watch?v=FGBhQbmPwH8
    🙂

    And to finish on that, as I've said long time ago, if it goes <1100…it is likely to be "open fire, no mercy" on my side. Cash is set aside, plenty of orders are ready and in place on several stocks. Given how stocks have behaved in recent weeks, I've even started to consider that some of my stink bids were too aggressive (too low). We'll see how things play out.

    Best to you, and GL for the rest of the week.

    LPG

    May 20, 2015 20:56 AM

    Thanks for sharing LPG and JJ.

    This chart tells me we’ve had the final washout:
    http://stockcharts.com/h-sc/ui?s=GDXJ&p=W&yr=4&mn=1&dy=0&id=p12702838170&a=408942144

      May 20, 2015 20:52 AM

      THANKS for the chart………

        LPG
        May 20, 2015 20:39 AM

        +1 re: chart
        LPG

      May 20, 2015 20:12 AM

      Matt, my chart of GDXJ since its inception, the volume is a tuff read imo, once again anyone with the ability to read a chart can clearly see the exit zones saving themselves a lot of financial pain!

      The jr’s topped out 5 months before gold, still lower highs and lower lows on the chart these past 2+ years

      http://stockcharts.com/h-sc/ui?s=GDXJ&p=W&yr=5&mn=11&dy=0&id=p41015956941&listNum=1&a=408986413

        May 20, 2015 20:49 AM

        Volume went up about 50 fold since the top but price would only have to go up about 8 fold to get back to the top. In addition the time at the top and volume up there was small. If we combine the two levels on my chart, the volume is even more indicative of a bottom.
        Notice too that we now have weekly closes above moving averages that are finally pointing up for the first time in almost a year. The oscillators (MACD, etc) are also positive.

        The miners ($GDM) bottomed in Nov. 2000 but gold bottomed over a year earlier. In 2008, both gold and the miners bottomed in October.

        Yes, the cyclical bear trend is still intact, but not for much longer in my opinion.

          May 20, 2015 20:11 AM

          Well the chart action will confirm your not much longer opinion. Bulls, bears, whatever we have clearly been trading a decending channel for awhile, break down or break out I have no idea but the goal posts are clearly defined, for those that can see, lol. I never hold a 6 fig short position but when the bull resumes making higher lows and highs I will be well positioned, until then I trade both sides within the channel

          http://stockcharts.com/h-sc/ui?s=%24GDM&p=W&yr=2&mn=11&dy=0&id=p79785079403&listNum=1&a=408996861

            May 20, 2015 20:30 AM

            Yes, the channel is well defined but notice that the bottom rail wasn’t reached at the March low. Yet, with the help of some less conventional indicators, I was able get buy heavily there (3 fills for GDXJ below 21 as glennfidish knows).

            So far, the dollar’s move up appears to be only corrective, imo.
            http://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=0&mn=9&dy=0&id=p15030976098&a=407163476

            May 20, 2015 20:46 AM

            I don’t trade GDXJ but my indicator had a buy signal March 11th and a recent sell signal May 18th (with sell buys along the way for active traders)

            Regarding the $, 95.85 is the first resistance level before 97 shows its resistance before a clear attack on 100 just as the Euro$ has 110.40 for support but real resistance at 115.50 the $ is waiting to see what the Fed minutes spin is towards a rate hike and Thurs CPI these events alone can take out 100 into the next FOMC meeting, we will see?