A weekly recap – US equities, gold, oil and the USD
We wrap up this week with comments on a number of markets. There was some serious volatility in the US markets but they still did manage to post an up week. This however is not showing much strength as this rollover continues. We also touch on the move down in gold and oil plus the pop today in the USD.
Have a great weekend and we hope you all enjoy this week’s weekend show.
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Former Soros Associate Just Warned The Price Of Gold Is Going Skyrocket To $2,000
http://kingworldnews.com/former-soros-associate-just-warned-the-price-of-gold-is-headed-to-2000/
It will probably go well past $2,000, if historical movements are rhymed the expectation is closer to $3,500 within 3-4 years.
That article was quite weak. I was not convinced at all by Vic’s argument especially as it relates to the US Dollar. How does he presume that it will fall versus the other major currencies (for example) which it would need to do in his scenario to propel gold higher.
The thing is, the dollar is on a trajectory that should take it much higher in the coming two years. We know that by the look of the Euro on a monthly chart. For anyone not familiar with that I will link it below. Please take the time to examine that chart carefully.
And please note that on a monthly, the Euro is in the process of mean-reverting to its 2001 lows. Just the simplest observation indicates that very little significant support remains between where we are today and the old lows at .85 or thereabouts. Furthermore, the obvious, negative, dome pattern is one of the most damning of any charts we have to look at lately.
The Euro is toast much as Martin Armstrong has been asserting for several years now and that long term chart is evidence that trouble is coming as the slide accelerates in the last innings of its decline.
The dollar will thus move up in response (much as a rare few expect) since the Euro is such a large percentage of the dollars weighting. If gold is to keep rising in other words it must do so for reasons other than its existing inverse relationship to USD.
But I have my doubts it will. Some in the gold community who understand the obvious chart pattern on the Euro and how it implies significant strength for dollars have started asserting that dollars and gold will soon start to rise together.
Maybe.
But that is sure not happening today and as we have seen the more familiar dollar / gold relationship is holding true to form. Nor is the threat of a rate increase by the Fed doing gold any good. During the past weeks as the September FOMC has been approaching, gold has been selling off rather than responding positively as it did last December.
So if a potential rate hike is not benefiting gold and simultaneously the rising dollar is still exerting downward pressure on precious metals then we don’t have a great deal of confidence that a gold price recovery is imminent unless for mere technical reasons such that it is getting a little oversold.
Even on that count though its hard to make a good case just yet.
We are still in a deflation. Gold, the dollar, low rates and non-existent inflation are telling us that golds 2016 bounce is not yet a bull market in the bag. We should all be cautious to not buy the gold bug narrative that metals will be soaring anytime soon.
Unless everything I mentioned above is violated of course. And what are the odds of that?
The Euro on a monthly chart — Does that big fat dome pattern REALLY make you confident the dollar is going to crash anytime soon?…….I didn’t think so……..
http://finviz.com/futures_charts.ashx?t=6E&p=m1
KWN is known for sensational headlines. Negative interest rates will be the anchor around the financial system. Armstrong said Europe first. Confidence may be lost sooner than Armstrong’s computer says around 2018. The next Lehman moment is being managed in Germany as we speak. Douche bank owns a lot of bad paper.
The implications of a Deutsche-Commerzbank merger
Deutsche Bank and Commerzbank are presently discussing merger talks. The fact that these meetings are occurring is a signal that Germany’s banking troubles are indeed accelerating.
Interestingly, rates are not just low within the context of American history, but they also happen to be at their lowest levels ever in over 5,000 years of civilization.
http://www.resourceinvestor.com/2016/09/16/implications-deutsche-commerzbank-merger
Thanks Marked. The Euro is going to be playing a starring role at the center of the developing troubles with European banks. Deutsche should quickly wind up its troubles with the DOJ or they will be faced with paying that massive fine in substantially more costly dollars next year.
Refer again to the dome pattern on the Euro (a rounding top to others) and you will notice an obvious peak that was established 8 years distance from the lows in 2000.
Dome patterns (when valid) are quite symmetrical on the time bars. We can therefore infer that an equidistant 8 year period will pass before the pattern completes by retracing most of the initial rise.
And that means that 2017 could be devastating for the European single currency as it plummets from its current price relative to dollars. Both the initial rise and final fall on such charts are generally sharp. In this case, the Euro rose more than 20 cents during 2002 alone.
A similarly steep decline should see the euro drop below .90 during the 2017 trading year with a final bottom being found in early 2018. Don’t be fooled by the manipulative, chart-blind, gold-bug narrative of a collapsing dollar therefore.
The dollar should soar next year and deflation will be at its strongest when that happens, possibly even rising into its own peak. The outcome can only be that the wheels are going to come off the wagon by 2018 as this current period of zero to negative rates enters its most important and potentially damaging year.
Long dollar / short euro bets should pay off rather well for those who buy enough time and get on the correct side of the trend in motion. This is more a process than a mere trade in any case.
What I wonder about most however is if the rising dollar will be enough to offset the impacts on gold by a Yen that may put in a handle (cup and handle) in the next few weeks.
In other words….which currency will prevail where gold is concerned? Precious metals will be in conflict if both Yen and USD are on the rise together since one is inversely correlated to metlas and the other positively correlated.
that’s the big question for the smart people in the room I suppose.
Birder,
Alex Merk is also bearish on the USD too.
Along with a few other guys. I am pretty surprised sometimes how often I hear people saying to get short dollars for the long haul because USD is finished or it will crash versus gold.
That cannot be correct for the next year and a half based on the monthly USD chart though. Its why I say if gold is going to go up it has to be for reasons other than the dollar. A safe haven play might be one legitimate answer.
An unprecedented decline in the Euro that comes about as a result of European economic problems might be another. And indeed, should the Euro crash 20% next year as the chart suggests then that would drive untold billions into Yen, metals and USD as defensive moves courtesy of our friends across the pond.
(Aside…it could also significantly boost the value of Sterling in the process next year and put a floor under the current sell off……but I don’t want to get too far ahead of my idea here)
In that case we had best carefully watch Yen moves for signs of strength based on a Euro failure because it will be giving us the most valid information on just how strongly gold might move up in response.
And we should stop relying on the dollar as an inverse proxy on what gold may or may not do in the future. As I noted above, either the Yen or the Dollars correlation must fail next year based on the set up. This rambling post seems to conclude its Dollars that will give false signals because gold could indeed trade alongside it both rising and falling as time progresses from here.
And there you go, I logically boxed myself in a corner and killed my bearish case for precious metals with a sensible macro argument on currencies. Sheesh….nobody but me could persuade myself!
But neither has anyone else rationally made the case for gold based on the monthly chart of the Euro and then connected it to why the Yen must soar into 2018. Nobody I know anyway.
I am a genius! 🙂
The COTs for the USD suggest the majority of traders do not believe the dollar will rise so net long positions have been declining since the start of 2015.
http://edge.alluremedia.com.au/uploads/businessinsider/2016/09/ANZ-cftc-positioning-Sept-5-2016-USD-chart.jpg
Holy SHIT!!!!
That means gold WILL slingshot skyward once this current corrective decline is ended. So the next relative bottom approach is critical to watch for signs that the *real* gold advance has begun.
We will know that first by the action in the Yen which as many of you know I have been discussing with regards to its apparent cup and handle pattern that is in the process of developing (it is most obvious on a weekly chart which I will link).
And secondly we will know from rumblings in Europe if banks or countries begin to actually default next year while in the background the Euro project ideals like Shengen begin to unravel in acrimony. They are holding together so far but there is no guarantees of open borders in Europe come the next year.
And now I get why Armstrong has been saying it would be a confidence crisis in government that would take the Euro down the tubes. It all makes perfect sense. It is going to be European buyers who are shoveling the bid under the floor for gold and thus starting the stampede, not Americans as in the past.
For US citizens it really won’t matter if you hold dollars or you invest in gold since both will be making large gains. I think this is really my key point this morning. The gold rush is one that MUST originate outside the US because it can only happen in concert with a rising dollar due to flight to safety issues.
Playing this will therefore be a little trickier for US dollar holders because gold itself won’t offer the most bang for the buck versus just holding dollars and doing nothing. There is one exception. Miners should soar.
So positioning US Dollars on the mining sector will give you both a currency rush and capital appreciation on the asset itself which you will feel pretty good about if you are a Belgian for example who traded out of his Euro before the carnage became acute.
And with that said….the bear case for gold has just died (sorry).
I want to add one more aside here on the topic of interest rates.
It is this:…..if there is a significant movement out of euro’s and into dollars and Yen then there will be an equally large amount of pressure on the BOJ and FED to continue or even expand their low rate policies and Treasuries could indeed go negative as a result if only in attempts to stem massive capital inflows into the US which are by virtue of themselves deflationary. A Euro collapse will kill jobs Stateside in other words just as it will exacerbate the ongoing depression in Japan. This is a freaking disaster in the making. It also has housing bubble bust.2 written all over it. The next 18 to 24 months will be harrowing for anyone invested in the markets who does not cotton on to what is about to happen.
I will get the Chinese repercussions in another post.
Axel Merk is wrong. He is drawing his conclusions based on the popular belief that the inverse dollar / gold relationship will hold. I think however that I have made a valid case for why that is not going to continue and my idea presented here is based purely on the mechanical links between currencies, metals and public policy that will cause a landslide of Euro selling as the Euro chart is warning will happen.
(no offense Axel, I love your shows!)
It is long past time when Congress ought to get its act together and have hearings on the criminal activities of banks, and then reconsider instituting a new version of the Glass-Steagall Act.
It was lunacy to repeal that act in 1999 and allowing the corruption of the banking system.
I’m sure Bill Clinton, or the Clinton Foundation was greatly rewarded for that action, but it was wrong. The normal banking operations should be separated from more risky “investment” operations, especially if regulatory authorities are going to turn a blind eye to naked shorting and other supposedly illegal acts.
The Goldman Sachs revolving door.
After the housing collapse Lloyd Blankfein didn’t go on CNBC for a full year.
The House Oversight on Government Reform has turned the blind eye for to long.
Interestingly with the Hillary e-mail hearings,the Democrats have come out in her defense questioning the doings of the previous Secretary of State. This is a hole new can of worms.It will be interesting to see who gets thrown under the bus.
Chaffetz obliterate Stunned FBI Official; Serves Him With A Subpoena During Testimony . ZEROHEDGE
Jerry…he definately served the subpoena
Yep.Sure did…. 🙂
I loved it….about time congressmen got some …(( **))
About time!
I have a feeling that maybe Hillary will decide her health will take a turn for the worse, forcing her to drop out of the race, rather than face impeachment for corruption hearings.
NOVO News:
Novo closes acquisition of three Talga properties
2016-09-16 09:06 ET – News Release
Dr. Quinton Hennigh reports
NOVO COMPLETES PURCHASE OF PREVIOUSLY-OPTIONED PROJECT FROM TALGA RESOURCES LTD.
Novo Resources Corp., further to its news release dated Aug. 25, 2016, has completed the purchase of the Talga Talga, Warrawoona and Mosquito Creek projects from Talga Resources Ltd., an Australian Stock Exchange-listed company. Novo issued 765,115 common shares of Novo to Talga in payment of the purchase price for the Talga projects. Completion of the transaction was subject to Australian Foreign Investment Review Board approval, TSX Venture Exchange approval, and obtaining other third party consents and ministerial approval, all of which have been received. The consideration shares are subject to a statutory hold period expiring on Jan. 16, 2017.
I was finally able to dig up the publicly available float on HVU.TO, which is ~12m. shares. So on the weekly chart we have almost 4X the available public float changing hands, over and over. I used to think it was only 879,000 for some reason, maybe it was volume on a particular day.(stupid me) In terms of the weekly chart, this could indicate readiness for a change in trend. You can put any bull+ VIX ETF in the same chart and get very similar results:
The last time VIX funds performed in any way was in 2011, where the correction was only 10%, much like August 2015. But this fund barely showed a blip last year.
GLD is very close to hitting it’s 100 day EMA. If it does it will have broken below the prior low and indicate a continued fall as another lower-low will have registered. We should know fairly soon whether it bounces or keeps dropping. Currently, Investing.com rates it a strong sell based on the 18 indicators it tracks. We can see similar ratings for a large number of individual stocks including Barrick and First Majestic (to offer coverage for both silver and gold). So our friend James-the- Lesser may be correct that gold currently gets a “D” in his ranking system!
Investing.com rating for GLD is currently a “Strong Sell”.
http://www.investing.com/commodities/gold-technical
Bird,
I think that the ratings from Investing.com do not seem to have much value. They have a strong sell for the SP500 and DOW but a strong buy for the NASDAQ. So what do they think? That the SP500 and the DOW are very likely to go down while the NASDAQ is very likely to go up? That does not make much sense.
http://www.investing.com/technical/indices-technical-summary
Can’t comment on that one JMiller. Those ratings are generated automatically based on the inputs and technicals. If the technicals are valid then the conclusion cannot be far wrong. It takes humans to put the really fine touches on the charts though and personal opinion always makes it more colorful. I will lean towards the idea that Investing.com is not far wrong in the assessment though. I doubt they have any bias against gold and miners built into the formula.
That is what I thought. Computer generated. Weiss ratings are the same. They give the TBTF banks a “B-” rating or better based on their methodology.
https://weissratings.com/banks
According to Weiss a “B” rating means that the institution offers good financial security and has the resources to deal with a variety of adverse economic conditions.
However it would not take much to cause those “B” rated banks to go under with all the derivatives they have if things go the wrong way for them. There is no way I could give those banks a good rating for safety.
https://www.youtube.com/watch?v=woMF66nAtFs&feature=youtu.be
silver doctors podcast
Listening to Middlekoop and saying what he implies, but did not explicitly say…..
Optimization occurs for Chinese entry into the SDR, for the Chinese, if the dollar remains strong while they exchange their dollars for SDRs – This implies strong dollar at least until about the end of first week in October.
Dollar strength implies gold weakness, until end of first week in October. (Could this coinside with the Doc’s low?)
Middelkoop suggests eventually gold will replace US (and other) bonds.
Will this cause or exacerbate a bond collapse?
China will try to devalue the RMB after the inclusion of Chinese currency into SDR.
If RMB goes down does Yen go up?
Will correlation with Yen and Gold continue?
What happens if you have a President who is seriously ill, they will not want to see anyone. The only way of communicating with them will be through other people. There will be no way of knowing who is responsible for a failure or who is responsible for making a decision. Your country will be governed by an appointed person not someone who is responsible to the electorate. The executive machine will come to a stop, most policy matters wait on The White House. It is imperative that somebody who has serious health issues is not elected President. DT
I hope others will think this through as I have.
It is more important not to elect a self-centered, lying, bribe-taking, warmongering, criminal piece of scum.
Powell e-mail:
“As Chairman had to review nuclear plans, keep POTUS up to date. thought of putting Trump in this system unbelievable”
David Morgan today:
http://kingworldnews.com/email-from-one-of-the-largest-gold-silver-dealers-in-the-united-states/