The path of least resistance for gold, USD and US markets
The theme of today’s talk with Doc is the path of least resistance. We look at gold, the US dollar and the US markets. Since no breakouts in any of these asset classes is predicted in the short term we need to consider the overriding trends.
Click download link to listen on this device: Download Show
I would agree with that Pardu. It has become progressively more difficult to have any civil conversation here anymore. The more gold went up the more aggressive the gold crowd has become. Maybe they think its payback for almost five years in the wilderness…I really don’t know. But very few exercise any self control anymore and it is very difficult to ignore them.
Bird…I gotta tell you that you promote most of the controversy. An aggressive gold crowd doesn’t need criticism from you simply because you disagree with their belief in the metals. You have made it quite clear that you are a perma bear and that’s fine but don’t rag on the others that aren’t.
I have not been ragging on anyone. We are all entitled to our opinions. So I voiced mine.
At one time though we had some pretty good dialogue and a lot of ideas went round. Now instead we have one single guy trying to dictate what this site is about and what everyone is permitted to discuss while writing 2000 word posts about what a bad person I am along with a few others he dislikes.
Talk about nuts. No blog would allow that but it is being permitted here. As if one person should dictate everything. I still cannot engage them with a really great chart I found.
What a waste of my time.
I think most people are interested in a miner to put some cash on.(duh)
Ricks analysis of companies is great for that I think.
What I mean is most people dont seem to be interested in details or what may impact etc as much as they ar in “where do I put cash” they dont really want to think about it too much.
Cant blame anyone for that.
Its all criminal Bird, it could all shut down at any moment, from the brokers,banks to websites.
Derivitives could explode at any moment no?
Or DBank.
Just cant see too many pople wanting to or even having the time to dlve too deeply.
Sure, I get that b. But there is no reason for anyone to try and box the whole site into a single idea that fits their personal goals. This place is made up of a lot more than just one single vocal individual.
I don’t think CFS is going to be singing this song for HH: 🙂
https://www.youtube.com/watch?feature=player_detailpage&v=jYAOubmH1BU#t=230
Kind of a slow downtrend for gold.
August is the historical best time of year to buy I think.
It does not look positive to me. I am using platinum as a proxy and on the weekly chart it may be double topping. The right translation is no issue as a similar set up has happened in the past before large declines. On the monthly both gold and silver look to be setting up nice reversal candles. Just my opinion of course and we won’t know for sure until the year is over but the declines simply do not look to be complete to me. If I am wrong I am wrong. That’s fine. It is still worth playing in the meantime but I still don’t buy that this is either a new bull market yet or that its the continuation of the old one. Let G-D sort it out.
It does look like everything is going to trade in a range for a while. Doc, what do you think about JNK ? That chart (to me) is the looming move down that creates volatility on everything else. The way banks, derivatives and junk bonds are looking, something has got to break loose. It’s amazing how long the general markets have held their values. The longer it goes, the worse it will be when the black swan comes. But, it’s guaranteed to come.
The powers that be corrupt, have done an excellent job postponing the inevitable!
This pretty much says it.
http://www.zerohedge.com/news/2016-07-25/system-has-no-chance-regaining-stability
Exactly Chartster. Now that’s what I am talking about.
That chart in your article of GDP / Debt tells us a great deal. First and foremost though is that the problems we are experiencing are taking a great deal longer to come to a boil than almost any predictions I have ever come across.
But there are other charts that might just help us sharpen the image and get a better feel for when the wheels come off the cart and guess what?……I have just such a chart for you today.
This is another doozy and boy does it set off alarm bells. This one from FRED is called “Household Net Worth as a Percentage of Disposable Income” and what it tells us about is how well households are doing overall financially speaking. Whenever I come across one of these gems I usually print it out and stick it in a binder to follow up as time goes by.
Anyway, as you can see from the graph, Americans seemed to be doing pretty well right up until the housing bust in 2006. But in the three years that followed we also saw the Global Financial Crisis and by the time it was all said and done average Household Wealth had crashed by a mind-numbing 22%.
That was pretty bad. Especially since it had been preceded by a crash during the years of 2000 to 2003 which was on the heels of the Dot Com bust. So you will see that the 2000 bust resulted in a 15% loss of net wealth while the 2006 bust was significantly worse.
OK….so get this…………the chart is another expanding wedge.
That is to say this is another megaphone pattern and we are again at the top of the cycle about to crash back down. And this chart, similar to the one on earnings that I posted the other day, also projects to a new lower low suggesting we could see as much as 30% of our wealth evaporate on the next turn.
But why? Well that’s a question I just cannot answer and I don’t know that anyone else can either. All I can tell you is that these kinds of charts have a strong tendency to complete themselves and I doubt this one will be any different.
With a rising megaphone pattern such as this, each peak is higher than the one that precedes it and each low is lower than its predecessor. The third and final decline can be very sharp and projects to a deep lower-low.
So in this case we should see household net wealth decline below the 2009 lows and if you recall that was a period of almost universal and significant US losses, bankruptcies, foreclosures and poor stock returns. We factually had a crash in 09 so this is a pretty distressing chart if it portends the near future.
And most interesting is that it aligns with the S&P500 Corporate Revenues chart I keep trying to get everyone to look at. My problem here is that both these charts look like they could manifest themselves imminently.
I don’t know if they will of course. I am not predicting timing here. Maybe we will see a throw-over and the chart will rise for another year but at this time we are seeing a H&S pattern develop on the tail end and if that fulfills itself and this chart drops then we are pretty much going to be in another shit-show this year and heading into 2017.
And that is DEFINITELY tradeable information for anyone who cares to know and it DOES point to a deflation in asset values of all kinds. All we can do is watch and wait now and see where this one takes us. You can find the updates on FRED if you care to follow along.
But for now…please look hard at the pattern on this chart. It is as scary as they come. (and usually reliable too). Comments on this post are welcome. Comments about me personally will be ignored!!!!!
Household Net Worth as a Percentage of Disposable Income — 1986 To 2016
(You may have to plug in the dates yourself if it prints out as the maximum chart period)
https://fred.stlouisfed.org/series/HNONWPDPI
Why a 30% loss.
No idea, but a guess, remember reading how many people couldnt come up with 400 cash if they needed to.
People are busted, so who losses 30%, people with cash (obviously) where is it? the bank, a bail in could hit 30%
Another 30% loss, not sure if it would count, but the pensions.
One result would be people having even less expendable income, reducing demand for pretty much everything, here comes the deflation?
Couldnt these charts simply be expressing the dirivitives popping? bond bubble pop?
Something most around here have been talking about for years now, maybe these charts are just further confirmation of what we already know.
A well stocked pantry, a chest of metal buried in the back yard and a few boxes of small bills.
Pretty girls are nice too.
The 30% is just a ballpark estimate based on the pattern. It could be worse or it could be better but it will be more than 22% which was the loss last time around. Household net worth refers to home ownership, stocks, bonds, other property investments including vehicles and that sort of thing. So everyone with physical property or financial assets can be a loser and that includes all homeowners. The chart strongly suggests another housing bust is coming. Last leg down perhaps? We do know factually that the Baby Boomers will not be cashing out for what they think their land is really worth. There are just too many of them and not enough buyers in the generations that follow. So this is a problem that will carry on for many years once it begins. An asset bust is the definition of a credit cycle coming to its close. What I am trying to convey here though (and this is important) is that the end is actually pretty close now so not much time remains to prepare. Either you are debt free and flush when it comes or you aren’t but if you cannot service your obligations there will be hell to pay and very few people are going to slip through that noose.
Look at this other chart B.
Can you see the megaphone this time?
These are very large and significant termination patterns and they are now appearing in charts all over the place. It is why I keep repeating that we have almost “arrived” even if I cannot define what it is exactly that is about to happen.
All I am sure of is that it will not be very pleasant because these charts really affect much more than just the state of the economy in the US. I am pretty sure we will get the vibes in Africa too. As will Europe, China, Russia and Japan.
Profit Margins Predict Recessions — Thompson Reuters.
Please people….Do NOT tell me you can’t see the megaphone pattern in this chart or that you cannot understand its significance!!!!
http://davidstockmanscontracorner.com/wp-content/uploads/2015/11/margins-recession_0.jpg
I have been doing FA and TA in the PM mining sector for 10 years. I admit to making LOTS of mistakes, so listen:
You have lots (and I mean LOTS) of buzzwords in your post, but there seems to be VERY little internalized knowledge; where are the annotations to the chart? You just type, and type, and type. Then you reference a generic chart. I just don’t understand how anyone can follow your reasoning, let alone consider this to be useful in changing an investment strategy. Yet you IMPLORE people to do just THAT, change their strategy based on your invaluable input.
On the bright side, you have knocked down tour own-self a notch: you don’t seem to need that disclaimer at the end of your posts: “This is not investment advice”
Brian, I encourage like minded people to use their heads and look at what is obvious. Nothing more and nothing less. This is not exactly TA on a stock chart but a long range view of macro theory.
It is a well developed area of economics and is regularly employed by all the major banks and worlds Central Banks. The Fed itself has recently commented on that exact chart so I am not some lone person coming out of left field with a crazy new theory.
In fact, the data itself is produced by the Federal Reserve……… and don’t you just wonder why………
You might familiarize yourself with the basic ideas if you care to learn more.
Well said Brian.
Actually it was a rotten post Shad. Right along the lines of the kind of thing you have been writing so much of lately lately. The reason is that it is an attack on the writer (me) rather than a response to the idea. You might consider that before being so quick with your usual rejoinder.
I was being serious. I didn’t see how that chart was actionable by other investors, there is no time frame, and you mentioned it looked like a crash or end of the world.
The end of the world crash scenario doom is getting old. That could always happen on any day of the week, but I’m not going to trade this week like that’s happening. It is good to have hedges in place, and an insurance policy in metals or currency diversification or bonds, but after that, who wants to wait around for a crash all day in their investing? Not me or anyone I respect.
I cant see it.
ha, kiddin ya Bird.
I understand what your getting at and 30% is ballpark, bet its more than that.
Anyway, Im just saying it all could be logical, baby boomers selling all at once, young people not having cash, a bail in.
Something will set it off, but thats gonna be a black swan, your not going to see it comeing.
Like Rickards has been saying for how long now? The snowflake that triggers the avalanche.
Bix Weir “road to Roota” figures it happens within months I think.
Virtually nobody believed that the US could suffer a housing price collapse the first time it happened. But it happened anyway and if those charts I presented are good indicators its going to happen again.
I think that is what is bothering my detractors here. They think these posts are gloom and doom porn and that too much is being read into the analysis. So instead of debating the ideas they just attack the writer.
I think that’s about fear though that I am correct. It’s denial too. Nobody wants another bust like 09 because that one was incredibly stressful for millions of people but I am sorry to say its going to happen again.
And how do I know that?
Because its written all over the chart, that’s how. The doubters ought to be careful. In the last 5 months guess what else has formed an expanding rising wedge pattern and is on its third and final drop ? If you guessed gold you get the class star.
The gold megaphone pattern is about to have its revenge on all the bugs (God bless them all but don’t say you were not warned). We are going to see a deflation bust by 2017 and there is nothing that can be done to stop it anymore.
GOLD
Price Support Pivot Point Resistance
1,318.4 1,311.0 1,325.6 1,340.2
GSV looks like it will be one of the first stocks to head higher in about a week.
Analysis for Rick?
Doc, I found it very interesting that you feel that both gold and conventional stocks will continue to drift down.
With the FOMC on Wednesday a lot of people are looking to a lack of interest rate, if that is what happens, to weaken the USD but you are saying the opposite. Is that simply because the USD is the best pig in the barn at the moment compared to other global currencies?
OK so I’ll give my opinion, I think gold/silver may drift lower for the next month, then have a real up move into year end. And you know what if other posters don’t agree with me that’s fine, if you want to insult me (although I don’t know why you would) that’s fine, come on people it’s just an opinion, who really knows whats going to happen, chill out, have a beer, or whatever, nobody lives forever, and i’m sure ‘god’ doesn’t look at your bank balance when you finally keeled over
Nigel no one can accurately predict the future.
Some good Chartists can come close, but charts fail the most in predicting turnarounds until they have happened. Rick is fairly good at point out where turnarounds might happen, but even he does not predict where or when, until after it has happened.
If you look at strength in Palladium and Platinum, I would suggest that might be telegraphing that the current correction/weakness in gold and silver will not be long lived.
DFS – Interesting thoughts on the potential of Palladium and Platinum to be telegraphing the severity of the pullback in gold & silver. While they do behave differently and for different fundamental reasons, often the PGMs will nudge Silver one way of the other, and this can in turn be a leading or lagging indicator for Gold during different cycles.
Good stuff.
Interesting DFS. I was just discussing the same thing yesterday but have come to the opposite conclusion. The platinum monthly chart tells me that the final bottom is not yet in for the PM sector.
Nice Nigel. And no, I will not insult you. As you say, its just opinion. We could all use a cold one (except I quit drinking so make mine a soda!). Are you buying btw?
Hi Birman, I haven’t bought much this year (I’m overweight gold in my portfolio (35%) anyway so I’m trying to be sensible), bits and bobs only in the gold market, silver a difficult option due to the 20% vat in the UK, whereas gold there is no tax, so it’s a big hurdle to climb. I think silver will get the bid though and if you buy antique silver dinner services (spoons forks etc) at local auctions, the price is close to spot – that’s my tip in the UK anyway
Good tip.
Its Birdman btw
Just because I can.
The following five junior mining stocks are 10 baggers, through just the first half of the year. These are the best performing junior mining stocks on the Toronto Stock Exchange, as they have posted gains of 1,000% or more over the past six months!
#1) Rupert Resources (CVE: RUP or RUPRF) +3,500%
#2) Gold Mountain Mining (CVE: GUM) +1,200%
#3) West Red Lake Gold Mines (CNSX: RLG or OTC: HYLKF) +1,200%
#4) Silver Bear Resources (TSE: SBR or SVBRF) +1,020%
#5) Colorado Resources (CVE: CXO or CLASF) +1,060%
According to mining.com
Which will be one of the exhibitors at the Sprott symposium.
Thanks for the list of mining companies.
Here are some lists for your files. Enjoy!
https://en.wikipedia.org/wiki/List_of_lists_of_lists
+1
Believe it or not that was actually the most helpful post you’ve put up in weeks.
Thanks.
Alas B, does not mean that they will do brilliantly in the next 6 months.
Not meaning to rubbish your excellent info but… these miner prices are tied up very much in the future of gold and silver… and that is currently unclear… unless you believe that we are now in a new bull…
I really didnt mean anything Bob.
The info is from Mining .com
They are an exhibitor at the Sprott Symposium.
Only interesting as Cory was asking people who they wanted Cory to interview.
Anyone intersted will do their own due diligence Im sure, I dont need to post any.
Cory could ask Mining.com about all or any of them for example.
People that write about companies sometimes know a thing or two about companies as opposed to the compny blowing their own horn.
Or. so Ive heard.
Maybe the best performering companies this year might interest people.
Ya never know.
But your absolutely right Bob, past performance is no gaurantee of future returns.
Ya need to donate to the Clintons for that kind of gaurantee.
I found them interesting. Don’t let me stop posting more 😉
Lighten up people!
I agree Cory with your plea for civility and respect on your site. I believe that the unnecessary rude and angry comments are sadly, a microcosm and reflection of our society today. Is it any wonder that there is also similar incivility in the political realm? All points of view are just that, points of view. Opinions are opinions and do not harm anyone, but lack of civility and respect in our communications are not helpful. One can disagree without being disagreeable.