Friday Commentary from Gary
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I’ve got $4,190 burning a hole in my investment pocket. Missed the chance to average down on RUSL (didn’t have cleared funds), Keeping a real close eye on JDST and SPXS. Might have to stay in cash over the weekend. Boat gonna start rocking next week.
I bought Nugget yesterday.I can see gold heading to 1220 or even 1250 before the global commodity bust takes the precious metal down below 1000.
Velma: FYI..NUGT will have a 1 for 10 reverse split on Sept. 9, 2015. Supposedly won’t affect value. Sure clears the way for it to fall further though.
Thanks for that info.
Thanks for bringing up the reverse split again Silverdollar. I knew it was coming down the road but forgot the actual date.
Gary gonna give his listeners heart failure when he misspoke and called for $50 gold. lol
Yeh Jason, that was kind of funny!
Yeah Al I don’t know what would have been funnier, Gare calling for $50 gold or $1150 oil.
A couple of days ago SeekingAlpha writes:
http://seekingalpha.com/news/2743706-some-oil-companies-may-be-just-weeks-away-from-bankruptcy-analyst-says
So I note the companies……
look at MPO today, man was that article wrong with regard to MPO.
Unannounced takeover attempt? I don’t know.
That could easily have been the low for oil. VERY few seem to think so but when has that ever been a bad sign at a bottom.
http://stockcharts.com/h-sc/ui?s=%24WTIC&p=M&yr=11&mn=11&dy=11&id=p71798045266&a=418727636
Would oil have bounced yesterday and today if Saudi Arabia had not invaded Yemen today with ground troops?
I think not.
I think oil rose dramtically yesterday because thouse in the know about the coming invasion covered shorts and/or went long.
Today is now the obvious reaction to the invasion as those ‘not in the know’ instinctively react to anything that Saudi Arabia does by buying oil.
I think oil was not allowed to find its natural bottom.
Yes, I think it would have absolutely bounced yesterday. You can see why on the chart above if you are a stockcharts subscriber. That chart was annotated way before the $38 low.
In addition, there’s that multi decade low it reached versus real money. The following chart is gold priced in oil not oil priced in gold so the spike high you see is a multi decade high for gold vs oil/multi decade low for oil vs gold.
Gold hit almost 31 barrels per ounce. In the summer of 2008, it was worth just 6 barrels per ounce. Smart money knows that, in real terms, it’s been decades since oil was so cheap. Even in nominal terms, it hasn’t been so cheap since the panic of 2008.
http://stockcharts.com/h-sc/ui?s=$GOLD:$WTIC&p=W&yr=7&mn=3&dy=0&id=p78307319818&a=388661094&listNum=1
Those who can view a monthly chart can see that oil, even priced in dollars, has not been so oversold since 1986. Based on the RSI(14), it never even got oversold in the crash of 2008 despite plunging $114. That should tell you something about the state of people’s perceptions right now.
http://stockcharts.com/h-sc/ui?s=%24WTIC&p=M&st=1983-08-28&en=today&id=p42294007095&a=375436964
It may well have bounced for all the reasons you stated but you can’t deny that it wouldn’t have bounced to the levels it has without the Saudi invasion.
What I do know is that there is always a handy little story for the media to use to explain away every market move.
For example, to this day, the vast majority of people blame OAPEC for the oil crisis of 1973 when it was really the U.S. itself that deserves the blame for defaulting on its obligations by making the senior reserve currency no longer “good as gold.”
https://en.wikipedia.org/wiki/Bretton_Woods_system#Nixon_Shock
AGREE 100% Matthew, being a 100% technical trader the resistance zones falling on the oil chart propel the swing, news is a driver but I trade off the chart not news fwiw, many will argue chicken before the egg, lol how many time have we seen chart action move against positive or negative news?
I mostly agree but with a few caveats. Political stories don’t seem to move markets all that often. Even wars get shrugged off. On the other hand financial events like Lehman were equal to a fire in a theatre and most here would agree the Fed moves markets when it speaks. Guess it all depends on what kind of news we hear. Like Bre-ex, Long Term Capital, ECB QE announcements etc etc. What I mean is that financial events shake things up in the way ordinary news does not. And 911 was clearly a financial event of the highest order. But Ebola and Israeli Airstrikes on Gaza were hardly market movers.
In this case though where Saudi has launched strikes on Yemen I think the story crosses the divide because if oil is threatened it matters a great deal to investors who will rightfully perceive that rising crude will typically translate to falling USD.
So I agree with all of you.
This was a great thread on Oil and by everyone. I agree it was the technical bounce that was expected, but I do also remember plenty of time where military events in the Middle East did move the Oil markets for the short term. Eventually they do get shrugged off and technical analysis is the way to go. I just think the bounce got some rocket fuel with happening at the same time as the conflict.
Great discussion everybody.
Maybe the attack is really to boost the oil price.
I’m not sure the attack was designed to boost Oil, as there are border concerns, it obviously assisted with the price rise Thur/Frid. I am sure that there were some that knew about the attack in advance, and likely profited by betting on Oil at the lows in anticipation of military conflict having a price-boosting effect.
As I posted a month or so ago, I think we will be in a trading range for oil for the next couple of years, proving no extrene geo-political events. I had thought the trading range would be about $50-$70 and I was clearly wrong about that, but a range of about $40-$60 would not surprise me. That range would be adequate to not eliminate all fracking and oil sands production, but allow significant profit for the majors, and adequate funding for Saudi and other middle east countries.
providing not proving
True Matthew. And we should recall the peak before the decline began was hardly a strong topping signal. Very few believed we would see the declines we saw and yet they went on relentlessly.
macd on the wtic chart had a sell signal/short back in May at $60 and never suggested covering until Thursday at $40.30, a great trade!
The bottom is in for sure with such big increases. The GDP must have contributed significantly too.
That’s a funny one CFS, of COURSE they are going to urge congress to reject the deal.
They work for the military industrial complex and there is huge profit in war.
Anyone ask them how many shares they have in related companies par chance? or do they just get cash for their opinions? Whatever it is, there will be personal profit for them.
Heck, lets all stand and cheer when our young people go off to be led by them.
Don’t bite your tongue, bb!
Good comments, bb. Things never really change. Had Kennedy followed his military advice from the Joint Chiefs, we would have struck Russia first with our nuclear arsenal. It was advice from the generals that kept Johnson believing we could ‘win’ in Vietnam. Don’t know how complicit they were in the Iraqi debacle, but likely the majority were on the ‘let’s do it’ side. Although, that’s what we train them for so what a waste if we don’t use them, huh? And let’s not forget that war is how most of them get promoted.
These are RETIRED Generals and Admirals, bb. Cynical!
My experience with talking to retired warriors is that they are more opposed to war than the general public.
Case in point would be President D.D. Eisenhower.
And I would say “good for them. A case in point is Bob.
CFS:
After 911 General Wesley Clark reported that he had been warned that the US intended to attack and destroy 7 countries and would end with an attack on Iran.
You keep spouting the propaganda that the totally controlled media have been cramming down our throats for many years.
Iran is not the enemy of the US, Iran has never attacked us, Iran has no nuclear weapons program and the treaty agreed to by Obama and 6 other countries and the UN would remove any vestige of a nuclear threat from Iran.
Israel controls our media and convinces Americans to fight their wars for them. We need to stop doing that.
You either stand up for America and American interests or you stand for nothing.
American interests do not include a nuclear war over a peaceful nuclear program in a country not our enemy.
The same traitors who brought us Iraq now want to lie us into another war with a country three times bigger than Iraq over a weapons program that doesn’t exist.
I am not going to make any comments, and will only post major news items, probably only from newspapers of record.
CFS:
You can go ahead and say it, you support American kids dying for Israel. For certain the US has no reason to conduct war on Iran unless induced to by Israel.
No Comment, other than to deny your assertion, Mr Moriarty.
You sound just like Hillary Clinton, deny, deny, deny.
How perplexing! I wonder if saying “No Comment” is, in fact, making a comment.
lol Bob !
Hope you’re well.
LPG
CFS, other than this topic I appreciate pretty much everything you post. That said, didn’t Al just request that we knock it off on this topic?
Posting on it, even from the ‘newspaper of record’, is just passing on the war mongers’ propaganda. The NYT was a shameless cheerleader for the criminal 2003 Iraq debacle.
Anyone who supported that debacle needs to do some serious soul searching, and double and triple think how they made such an error that severely damaged their own country, killed about a million people, created millions of refugees, and led to the ongoing chaos we’re observing now.
Why don’t we just leave this topic alone???
GH,
FWIW, Al said: nothing on Arabs and Jews.
Discussion here seems to be about Iran, US, and Israel.
My 2cts.
LPG
Maybe you’re right. It was my impression that it was specifically this topic, but maybe I’m wrong.
Bomb both sides and I bet the price of oil goes up real quick.
No worries GH. Just to clarify:
http://www.kereport.com/2015/08/22/comments-blog-big-al/
On August 22, 2015 at 2:23 pm,
Big Al says:
I completely agree bb. I just want to eliminate conversations about Jews and Arabs.
Reply to this comment
Hope this helps.
Best to you,
LPG
CFS:
Would the New York Times qualify?
Israeli Minister Agrees Ahmadinejad Never Said Israel ‘Must Be Wiped Off the Map’
Other than I do not think Israel should be wiped off the map, because it is US’s primary ally in the region, I have always been concerned about the US, not Israel.
I have never advocated the US going to War over Israel.
I was raised as an Army brat; and do not advocate war.
I registered for the US draft, but was not drafted, so I have not served.
I am concerned about the US, not Israel, Mr. Moriarty.
I have a long record on this blog, check out what I have written rather than put false words in my mouth.
Now tell me He never said “Death to America”.
Sorry, Big Al.
We have been conducting war against Iran since 1953. It would surprise me if everyone over there didn’t hate Americans. They don’t, I’ve been there and Iran is a wonderful country. They hated the US government overthrowing their government in 1953 on behalf of the oil companies, they hated the US cramming the Shah down their throat, they hate having their scientists killed by Israel, they hate the illegal sanctions but they don’t hate Americans.
They do hate the US government acting like an attack dog on behalf of Israel and if you don’t understand that this whole Iran nuclear nonsense is about Israel dominating the entire Middle-East, you haven’t read any of the articles I posted.
My point is that any attack on Iran would have to be nuclear and if you are for a nuclear war, you are insane.
We killed over 5000 American kids in Iraq, Iraq wasn’t our enemy either.
BOB…………..Well said.
Silver just dipped below the 200 month moving average this week for the first time in 12 years. It didn’t even come close to doing so in 2008 and would’ve had to drop another 23% from its $8.40 low.
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=M&yr=10&mn=8&dy=8&id=p91210459263&a=418627705
What are your short-term thoughts on Silver Matthew? Doc mentioned $12.50-$13 about a month or two out. Does that seem likely to you, since Silver has had a bit of chart damage lately?
I really don’t see that, Shad. I realize that most of the indicators not friendly looking right now, but I think things will look a lot better after Labor Day.
I said silver looked fine on Wednesday as it made a new low and that proved to be the case for now. Rather than a scary high volume wash, it went up more than 5% and closed the week 43 cents above the December low. BUT, it did put in a new weekly low close:
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=W&yr=1&mn=0&dy=0&id=p90540494379
As far as daily closes are concerned, silver closed Thursday at the previous low close and Friday (today) 12 cents above it.
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=0&dy=0&id=p56822140131
This is interesting; silver reversed at the trigger line of this particular fork:
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=W&yr=5&mn=8&dy=0&id=p55027168106&a=370837400
Thanks for the feedback Matthew. What concerns me on that daily Silver chart is the bearish MACD cross.
As you know, I’m a big fan of Silver longer term, and expect it to outperform on a percentage basis Gold and the PGMs. I’m even a bigger bull longer term on the small silver producers and the silver miners in general. At present I have very minimal exposure to silver miners holding only Mandalay, Americas Silver Corp, and Coeur. When I feel satisfied that the lows are in I’ll ratchet up my exposure by adding Alexco, Avino Silver & Gold, Sierra Metals, Endeavour Silver, Hecla, Great Panther, Mag Silver, Fortuna, Impact Silver, and maybe Aurcana. As speculative plays I’m also considering Bear Creek Mining, Kootenay Silver, Defiance Silver, Avrupa, Excellon Resources, Santa Cruz Silver, Mirasol, Trevali Mining, Dolly Varden Silver, and Minco silver.
There are other even more speculative silver miners I am watching, but I wandered which silver miners or producers you like best other than the ones we’ve discussed before (Alexco, Americas Silver Corp, Impact Silver, and Mandalay). You also like Defiance & Kootenay don’t you? What are your thoughts on Avino Silver & Gold, Mag Silver, Mirasol, Avrupa, or Minco silver? Do you think Aurcana has been beaten up enough and will recover at $18-$19 silver so they can open back up TX?
Any thoughts you have on the miners are appreciated as always.
You’re right about the MACD and like I said, most of the indicators don’t look that great right now. But there are some small signs that are positive.
The MACD is starting to flatten and even turn. To exaggerate that, I cut the MACD in half on the following chart (6,13,5). It’s also positive that the upper Bollinger Band is not yet pointing down. Incidentally, it happens to be at 15.75 right now which is at the top of the next significant resistance area (black line). I think silver can go to that level again before taking a break. If a short squeeze were to develop, it could blast through that level and leave a lot of people wondering what happened.
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=0&dy=0&id=p48707954021&a=422239117
When the pros get back to work after Labor Day, I think stocks will be ready go down again and gold and silver will become much stronger now that the initial panic in stocks is behind us and complacency is greatly diminished. Most weak hands have probably already had to deal with their margin misjudgements.
Enough sector rotation will be going on to keep the metals resilient now that things have clearly turned much riskier for stocks and bonds.
Next week should be interesting.
Great chart annotations Matthew. I liked the emphasis on the turning MACD, slow Stochastics, and the Accumulation/Distribution trend-line holding. Good point on the BB not turning down yet. Lastly, I agree all these markets are going to get a bit more interesting post Labor Day. However, with the last 2 weeks being so turbulent, I bet many of them are already glued to their monitors and are watching attentively.
Yeah, I bet you’re right.
Interesting, but I kind of expected flat to now growth in paper Silver ETFs the last few years, yet a continued interest in the physical silver coins and bars due to the lower pricing (people can accumulate more at at better value), but paper traders haven’t seen a pricing reason to get bullish (yet).
should have said “flat to NO (not NOW) growth in paper silver” reserves.
So much for $1200 to $1250? oh well.
And Bo was hollering $2k again, thought for sure he would get it this time, 3rd time lucky and all.
Yeh, but it is still hanging up there, bb!
I don’t know what golds gonna do Al, but being honust, in Canadian dollars it has done exactly as it is supposed to do, preserved my purchasing power.
Funny how that works.
+1 If only Martin Armstrong could grasp that simple fact!
Yup. Gold has done its job in preserving purchasing power in many countries with falling currencies, and a rising Gold price. It will do it’s job in the US if the dollar continues to fall over the longer term.
Interesting newsletter, thanks CFS
John Rubino yesterday:
Interesting how more and more people are now doing these interviews!
That was an interesting interview on some of the economic decisions that China has been making recently.
Another phony rigged close, taking profits from the last 2 weeks and re-shorting with both hands here.
Yes, I was just looking at the close of these markets and wondering just how many will be thinking about going short.
if greg hunter prefers biden… he just lost all credibility w me..he & Hill are the same
Confirmation is needed but I bet the U.S. Dollar Index has made a massive double top when priced in oil.
http://stockcharts.com/h-sc/ui?s=%24USD%3A%24WTIC&p=W&yr=7&mn=11&dy=0&id=p78483422663&a=384215562
Btw, note the small double top within the much larger one. Each came with a higher secondary high and negative divergences. Behold the fractal universe (dramatic music here).
Good Dollar chart. I had never heard of buying fishing line or selling the rhino horn before.
When we price gold in the US dollar index instead of the dollars in your pocket, gold has retraced 61.8% of its 2001 – 2011 move (vs 50% for the dollar in your pocket). In other words, the ethereal dollar that gets traded has been much stronger than the one you actually spend.
http://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24USD&p=M&yr=20&mn=11&dy=30&id=p43411421405&a=422364542
Matthew Im embarrassed to admit but I do not get the gold dollar you r talking about..
in my pocket and traded…
thx
Don’t be embarrassed, Agatha, I think it’s confusing by design. The current monetary system requires a lot of smoke and mirrors and other tricks for the confidence it has enjoyed so far.
The value of the dollar in your pocket is measured by the everyday real things that you buy like groceries and gold.
The value of the dollar as represented by the USDX, however, is measured only by a specific little basket of arbitrarily chosen types and amounts of other currencies.
As we would expect, the result has been to makes people think that the dollar is stronger than it really is. Gold’s price decline since 2011offers evidence. It gave back just 50% of it’s roughly ten years of gains when measured in real dollars but 62% when measured by the dollar that’s measured by other currencies. What this difference shows is that much of the dollar’s perceived strength has not been strength at all but simply weakness in other currencies. A fall in the value of other currencies does not guarantee that the dollar will purchase more goods and services in the real economy.
As long as the six currencies that are used to measure the dollar for the USDX are devalued with the dollar, the USDX should not be expected to break below its 2011 low no matter how high gold goes.
Great point about the strength of the USDX only being due to the weakness of the 6 currencies in the basket in contrast.
just thought Id mention —Gary was not on until EST 1pm….all the others were on prior FYI.