Friday Morning Thoughts from Gary Savage
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The audio is now fixed and normalized.
I am not asking for detailed analysis, graphs, or interpretations (I realize that is for your subscribers). I just need to be pointed to a few examples and I can do my own research from there.
Just look at the charts for every intermediate degree decline. The last 5-10 days of the decline.
You had some very sound advice today on the is editorial Gary. Thanks for your insights!
Brian + 1 and Yes please!
With the “paper markets controlling the gold price theory” as we therefore should have seen sub $800 by now. This logic is WAY WAY WAY too simple for my liking.
I think it can only suppressed the price not control the price due to physical delivery.
People used to predict gold would go to $7 when gold was de linked in 1971. If paper sets the price, they should be able to keep under that level.
I also think that these guys might not want gold to drop to a bottom quite yet. That being said there is also the possibility that not a whole of people are paying attention to gold so why not wait until more interest comes in for a faster move up when the bottom is hit.
I guess everyone is willing to miss the boat just for a 10-15% POTENTIAL drop. I believe the future is bright for gold/silver. If the drop happens, I am willing to take the ride and if it does not happen, I will wave to you from the moon. Only other one who is willing to take the hit is Matthew. I am sure most people here will buy at much higher price and I will be selling.
You cannot sell if you don’t have any.
I used same strategy with my Chinese A share even I was much less sure about that market. It worked out well.
Good point Confused. I think there is more going on than just some traders out there controlling the paper markets.
Having said that, I do agree with a fair bit of your analysis. Just not some of the paper logic. This is a currency we are talking about NOT a commodity as you like to call it.
There is more than enough physical to meet demand.
The shut down of eagles is normal, happens every year.
jpm amassed the largest physical hoard of silver ever collected in how long? 2 weeks?
Kind of a clue there is a lot of physical around.
So, paper may affect price for awhile yet.
There are a lot of silver due to thousand year accumulation. But they may not be enough for sale at this price. There are more gold around but no one want to sell at 15 with the quantity enough to satisfy the demand. If there is enough people sell at 15, gold will be 15. The problem is that there are a lot of paper pretending to be physical. They can just evaporate if the last ounce is taken by the buyers.
Good point Heathen.
This is getting ridiculous. They are talking about raising rates 1/4 point. I ABSOLUTELY cannot believe there is so much discussion about this, press conferences, etc. Downright stupid. Raise the rates already and get it done. Banks have record deposits at the reserve, they don’t even need to borrow. This constant debate is going to wreck the markets. The FED needs to follow the bond market. The bond market is already flashing signs of higher rates. If the 10YR exceeds 2.5%, it should accelerate higher. The panic is going to set in when the FED is FORCED to raise rates more than 0.25% to keep up with the market. It will be a sense of loss of control. GOOD LUCK.
I never understand why FED has to follow the bond rate. They can set the rate by buying more bond to lower the rate. So it should be the other way around. I am sure FED does not report every purchase, especially using proxies.
Bond market is too large even for FED, once it gets moving one direction or another, there is no stopping it. A panic situation here in interest rate land MAY be very positive for gold.
That’s something I don’t quite understand, if interest rates on bonds go up, that means they pay more to own them right?
If interest increases why own gold that yields nothing?
I think it matters most of the world are paperbugs.
They should buy bonds not gold when bonds pay better interest.
How is my thinking off?
Bond price goes down while rate goes up
It is the perception that inflation is rising and that would be a positive for gold. If inflation is rising, the general notion would be that institutions would sell more bonds to invest in other asset classes. At some point after that it may be attractive to purchase bonds when they yield more.
Bonds pay the same coupon when issued. If rates go up, you would lose principal on your bond unless you held to maturity because you purchased them at a lower interest rate.
Good explanation Richard. Thanks for the question heathen.
Thanks, that helps a little.
Inflation is HUGE now, gold languishes.
Sure, maybe more people want gold if rates increase, (high level thinking if you ask me)
but I recall people I know buying bonds when rates went to about 20%, years after they felt that was a pretty good thing to do. They did not go to gold.
Yes, gold could increase, but I think a heck of a lot of bonds will get bought, no idea how government debt payments get handled, more printing maybe?
On the other hand, I know people that question now if locking money up for years at low interest is worth it, 1/4 %? Cant see that convincing too many people.
Thanks for the explanation.
Doesn’t matter how large it is. Everything is on margin. Even for a 9 trillion market like treasury, 1 trillion printed money make big difference. It is proven rom QE1-3.
Nothing beat printing press as long as you want things to inflate.
Good point Richard! I think the Fed could be boring the markets so that when the raise does come nothing significant happens.
Thanks Cory,
I would like to see the mining share index HUI land somewhere not much lower than 10% from the 150 prior low. This is my point of interest. If we can rally from that new swing low, we could be in for an intermediate rally in miners.
I did not listen to the press conference, but nobody is talking about the FED and their balance sheet. They can raise the lending rate .25% or .5% and that is no big deal. The real question is when are they going to halt their asset purchases since they are maintaining the balance sheet.
Kind of clueless if you remotely envision JPM could amass 350 million oz in 2 weeks:
……silver demand is expected to grow by 142 million ounces by 2018 compared to 535 million ounces used in 2013. More than half of the demand will come from electrical and the electronics sector.
http://www.kitco.com/news/2014-12-11/Industrial-Demand-For-Silver-To-Grow-By-27-pct-By-2018-Silver-Institute.html
….. interest in silver in the face of falling prices is a global phenomenon, not a JP Morgan one.
So the silver in JP Morgan’s warehouse could be owned by its clients (individual and wholesale), other banks, or owned by itself but hedging other short positions. Only after taking off these three would any remaining silver be owned outright by JP Morgan.
http://research.perthmint.com.au/2015/05/04/silver-investors-corner-market/
Kind of clueless not to take it into account maybe.
demand 535 million according to you. world production? 877 million,2014, increased 5% and has been steadily increasing from 2005.
Enough supply to meet demand.
Matt, you miss the point of the jpm hoard, it doesn’t matter who it belongs to, just that they could acquire so much in such a short time.
In 2011, the global silver reserves amounted to 530,000 tonnes = lots.
If we add eagles/leafs to your demand figure, assuming leafs eagles are not included in that.
Aprox 100 million eagles and leafs sold in 2011, industrial demand 535 million, total 635 million, supply 877 million = all demand met with available supply.
Just maybe that’s a reason the price is falling? more demand than supply.
The bottle neck for coins is at the mints it would seem, not because there is a silver shortage or the planet produces less than it consumes.
oops, Just maybe that’s a reason the price is falling? more supply than demand.
Plenty of supply would not shut down the US Mint.
Also,it is the Perth Mint stating that the 350 million oz figure that is ALLEGED to be held by JPM would predominantly belong to others using their vaults. No entity purchased 350 million oz in two weeks.
HSBC said it looks for the global silver market to swing to a deficit of 11 million ounces in 2015 from a tiny surplus of 3 million ounces in 2014. “A small but persistent deficit should limit further price declines,” the bank said.
http://www.kitco.com/news/2014-12-11/HSBC-Physical-Demand-Less-Supply-To-Support-Silver-In-2015-Dollar-Weak-Commodities-To-Cap-Upside.html
Meantime in silver mining, cost-cutting since the price crash of 2013 means the recent surge in new-project output is set to end in 2015, GFMS says, with total production flat-lining from last year’s new record high.
https://www.bullionvault.com/gold-news/silver-mining-051220152
So,global deficit despite record global production-which tops out this year due to mines shutting down due to the paper price being set below the cost of production.
Plenty of supply would not shut down the US Mint.
Also,it is the Perth Mint stating that the 350 million oz figure that is ALLEGED to be held by JPM would predominantly belong to others using their vaults. No entity purchased 350 million oz in two weeks.
HSBC said it looks for the global silver market to swing to a deficit of 11 million ounces in 2015 from a tiny surplus of 3 million ounces in 2014. “A small but persistent deficit should limit further price declines,” the bank said.
http://www.kitco.com/news/2014-12-11/HSBC-Physical-Demand-Less-Supply-To-Support-Silver-In-2015-Dollar-Weak-Commodities-To-Cap-Upside.html
Meantime in silver mining, cost-cutting since the price crash of 2013 means the recent surge in new-project output is set to end in 2015, GFMS says, with total production flat-lining from last year’s new record high.
https://www.bullionvault.com/gold-news/silver-mining-051220152
So,global deficit despite record global production-which tops out this year due to mines shutting down due to the paper price being set below the cost of production.
Gary,
I’m glad you are seeing a bounce here on gold. Most think it’s going down right here. I agree it should bounce up a few days before it resumes the decline. Way too oversold to fall right now.
Wow, five to 7 weeks away from the bottom? Exciting stuff man…
I agree Chartster but I do not see a huge bounce. Maybe a bounce over $1,200 but not by much.
Cory,
I’m thinking 1225’ish. But hey, let’s get on with the pop and drop. I know I’m ready.
Furthermore,the US Mint ceased sales when inventory ran out in the bear raid last Tuesday with no orders to BEGIN until August:
http://www.zerohedge.com/news/2015-07-07/us-mint-runs-out-silver-same-day-price-silver-plunges-2015-lows
If you recall last year the US Mint sold out during October/November–the US Mint has not been able to produce Silver Eagles for a continous 12 month stretch for the past two calendar years. The last continuous 12 month run of sales was 2013!! How do the prices continually fall when the product continually sells out?
http://thedailycoin.org/?p=35614
Cycles work I recieve stipulates the bear market bottom for silver and gold is in between Monday and Friday of next week.
The stocks should be anticipating that as silver should have already met its price lows last Tuesday with the 14.60 futures price near the $14.50 price target.
Yes, my initial work could see a bottom within 2-3 weeks or of course sooner. i will review over weekend.
And yet when you look at the HUI on a long term chart it is very easy to imagine it retracing all the way back to prices last seen in the year 2000, as crazy as that might sound right now. But look at the chart for yourself. Most of the declines have already taken place with 76% of the price lost since the peak. It makes a 50% retrace in gold itself a distinct possibility.
Well, one of Ricks numbers is $817.
Garys “bloodbath” could happen.
One step at a time. Lots of support at $1,100 and $1,000. Let’s get through those levels first before thinking about the $800s. Silver $14, test of plunge bottom.
I hear you man (because I am a pretty good listener). Nothing would really surprise me anymore where gold or miners are concerned. I can’t entirely rule out 10.00 dollar silver either no matter how improbable it sounds.
But what would that really be telling us about the deflationary trend in motion for commodity markets?
I just think its kind of interesting how the HUI looks like it wants to make a 100% retrace. When you look at a 20 year chart there is even a measured symmetry to how that chart is ending versus how it began to rise in its first 5 or 6 years.
I know one thing for sure. There is going to be a lot of dejected GoldBugs if the index really returns to its 2000 lows. Have a look at this 20 year chart and see if you agree.
http://finance.yahoo.com/echarts?s=^HUI+Interactive#{%22range%22:%22max%22,%22allowChartStacking%22:true}
Gary, when gold bottomed during the 1999-2001 period there was no bloodbath phase. Gold just hovered above the $250 level and then just rose gradually for the next several years.
Waiting for a capitulation in gold would’ve worked in October of 2008, but it would’ve been the wrong strategy in 1999-2001.
So there is no general rule what we should do.
PF,
I beg to differ. In May and a couple of weeks in June of 99 the bottom dropped out of gold and it lost over 10%. Then it lost another 4% in a final plunge to the final bottom. Classic bloodbath phase with investors in complete shock at the maginitude of the losses into that final 8 year cycle low.
The 1999 gold chart for May-June is one of your examples of a bloodbath phase?
The only emotion involving gold that I remember from the summer of 1999 was how much gold to buy as insurance for Y2K
OK, I see what you mean. That was about a $30 drop or 10%.
I have another question Gary. For a satisfactory “bankruptcy phase”, do you need to see a major gold company like Barrick / Newmont go broke? Or would you be satisfied if just a bunch of smaller miners like Allied Nevada / Midway Gold go broke?
Please “normalize” audio……
good idea eh sonny????
It should be fixed now
Good work sir!
Not that I follow Bo Polny but every now and there a blip comes up on the media about him. He was looking at the three lows, 6/2013, 12/2013, 10/2014 that were forming the triangle and claimed that was really bullish. Look at the recent three lows in Nov 2014, Mar 2015, Jul 2015 of 1130, 1143, 1147. Three higher lows! I haven’t heard anything from him.
June was the months for gold to da moon, now its July.
Gary,
I for one am hoping like hell your bloodbath phase happens. I’d go as far as giving it a 50/50 chance to unfold, because the bankers and the paper boy’s know how this group will react. Truth be known, this community is as easy to herd around as anyone in the greater clueless mainstream markets that hate the PM sector.
Gold at $900 and silver at $11 or lower if it was to ever get to those levels would be a nirvana moment for me. If it happens or anything close to it will leave most people sitting in the corner curled up in the fetal position paralyzed while the few that welcome a extreme downdraft will be doing what rich people do to get rich in the first place……..buying low.
The bankers and hedge funds that shorted the PM to the floor will be buying hand of fist at that moment.
The average bug is dumber than a jar of pickles sitting around everyday fretting about penny’s in price moves up or down when they actually should be hoping they get a grand-slam opportunity at Gary’s bloodbath extravaganza and buying into potentially one of the biggest wealth creating frenzies they will ever see again in their lifetimes.
The bankers have this fleecing crap down to a science but the pickle jar community hasn’t figured it out yet.
Not just the banksters. Spec longs should have lower stops, but everybody is trying to make a quick buck. Playing that game is a losing proposition. If you believe gold has bottomed, your stop should be below the prior low.
Richard,
I don’t begrudge any of the really smart technicians that play the daily and weekly gyrations in the miners and making some paper profits along the way. Making money is what this is all about.
Unfortunately that game is very hard to master and profit from at a high level when powerful unethical forces such as most bankers and govt agencies are on the other side of the trade. Govt controls the information and dialectic while using the spec’s and hedge funds as fleecing machines in their games and they also always have better information than we small investors do. There are far far too many applicable factors to discuss here that could be important and relevant.
Really most folks should be building a war chest of cash and just sit patently waiting for the market to unfold in the trajectory that is most possible to happen. And although no one really knows what that is, the odds favor the downside even in this massively oversold phase.
The gold and silver market is not going to run away from anyone who wants to participate in it. That’s why in my opinion everyone with two brain cells to rub together should be excited and building cash positions for a massive, quick, temporary downdraft to load the boat for easier profits, thus taking the bankers, specs, etc., out of the profit equation.
The info I receive begs to differ.
When the minions think they are smarter than the market it kicks you in the groin.
That will happen to all the smarty pants in the next year-most especially the gold bears.
Just when they reach conversion stage ,setting in on rabid gold bull hysteria they will be kicked in the groin yet again.
I would love to hear some the expert info that you receive. Care to share some of it with us mere smarty pants mortals.
Since I’m one of the dumber individuals that represent the arch on the lower bell curve I always enjoy learning and never pass up thoughtful information.
V
Four years of huffing and puffing and false bravado from the gold bugs is quite enough for me. They have not yet put forward a single plausible reason for gold to reverse its bear market trend and yet they never tire of warning us how we will all soon be left behind (or unexpectedly kicked in the groin).
It would be comedy if it were not so sad. Just look at the charts though as they have broken down through one unbreakable level after another. It’s impossible! And yet it happens anyway.
I do not doubt for a moment that gold will post a number of 50% its highs before this is all said and done nor that we will in fact experience the longest bear market in modern gold history. Just as we are soon to see the longest bull for US equities in the last 100 years.
Anything less than a 50% retrace does not even make sense from a chart perspective. Not after a bear market this long in the tooth. So we should brace ourselves for a drawn out decline that indeed takes gold below 1000 dollars in good time.
What I would be watching for as a good potential entry point to a bottom is a sharp drop (or spike down) once we have hit the key 1050 number. That will take us to the middle 900’s for a brief time and likely signal the end of the bear.
Meanwhile I will forgo wearing a sports cup. The bugs are not that potent anymore.
Sure you would,Vortex. Proprietary information says otherwise.
Google Gold Market Timer of 2014 and you are on your way.
Major cycle low is due this week but the lows may be in.So,as you wait for lower prices to come silver is already up a buck since the $14.50 level was tested.
Of course,blood ran on the street and they kept selling silver and gold stocks three days later while price rose.Max fear was prevalent in PM stocks.
A few days left for timing the cycle low according to my sources.
Gold may weaken in the coming days.Nobody knows but time is nearly up for the MAJOR low and the price level lows may have been put in last Tuesday.
Price and time all but complete.Best of luck.
So I guess you are backing up the truck already since your confidence is so high? Let us know how it worked out next week. Not long to wait to find out!
Thanks Matt,
As I look down the list I do see some similarities in wordings that another well known prognosticators uses quite often.
Proprietary Information. (check)
Major Cycle Low. (check)
Timing The Cycle. (check)
Price level lows may have been put in. (check)
Price and time all but complete. (check)
If I didn’t know better I would take a wild guess and say that is the work of the $20,000 dollar man in Bo Polny. If that’s your expert, I think you can find a few guys a little cheaper than that with better skills to boot.
Actually there are four right here on Al’s site that have far better records in Gary, Doc, Rick and Chris T.
Good luck.
Agreed with several of those points Vortex.
Yeup, waiting for the bottom.
( cross dresser on the ” yeup ” )
Plenty of rainbows to go around. Just hoist the flag and say Yeup with pride.
Here’s the average person’s perspective on the value of Silver.
This is remarkable.
https://www.youtube.com/watch?v=RJm3cRRvPoM
Nope.Not Bo Polny.
Like I said,it is as easy as a google search but when has to pay for advice a google search may not be necessary for most.
Gary
Could you provide a couple historical examples of “bloodbath” phase within the context of your cycle theory? Personally, I would like to research this a bit more.
Brian