- U.S./Russia relations deteriorate.
- Is the U.S. petrodollar at risk?
- Gold and Silver bottoms completed.
In my most recent interview I asked Sprott’s John Embry, how can the Fed’s current monetary policies regarding tapering help the U.S. economy and the dollar?
And he remarked:
“In the long run, it can’t. I mean, right now their greatest fear is that the dollar is going to break down particularly at the time of the Russian Crimean crisis, and if you looked at a chart of the dollar, the trade-weighted dollar, it looked hideous, and so consequently, I think a lot of this right now is focused on the dollar, and they’re trying to maintain the fiction that the U.S economy is staging a relatively robust recovery. I do not see that in the numbers. I think that the policy will change again as the economy becomes a problem.”
In a recent interview, John Embry, Chief Investment Analyst for Sprott Asset Management, discussed factors in the global economy that are bullish for gold.
Embry views Fed Chair Janet Yellen as “Ben Bernanke light.” When Yellen announced that with the sub-par job recovery, the Fed planned to keep interest rates low for some time, the stock market loved it and gold was knocked down. Even so, Embry sees the long-term prospects for gold as “Wildly bullish.”
Metals Outlook: Has Silver Bottomed?
China’s debt levels out of control?
China is amassing debt at record levels and it signals the potential for another major financial crisis in the horizon. Since June of last year, more than 10 provinces and cities in China have loaded up on fresh stimulus plans that total up to 20 trillion Yuan ($3.3 trillion), according to a recent report by the Chinese newspaper First Financial Daily. China’s doubling its debt levels to $3.3 trillion at the end of 2012 is a very disturbing sign.
“China has the highest investment-to-gross domestic product ratio in the world — a downturn in its investment cycle would not only adversely affect its economy but also those of others, and global commodities prices,” Standard & Poor’s said in a February report.
Japan’s default is imminent.
Silver Bottom Completed
It appears the silver markets have fulfilled the secondary corrective pattern objectives with the low of 19.58 established on Thursday March 27. The secondary cyclical bottom came in as expected during the 28/31 March time frame. Once this bottom unfolds, the next wave up in silver should takes us into the 26 to 27 region over the next 3 months. This pattern projects an intermediate uptrend into the late May early June time frame.
A Speculative World About To Blow
- The Fed is creating a world speculative bubble.
- U.S. response to Crimea is stupid and dangerous.
- World instability creating demand for gold.
In a recent interview, David Stockman, former director of the Office of Management and Budget, painted a grim picture of an unstable global economic system drowning in speculation due to the free-money policies of central banks around the world.
Stockman said…to read more click HERE.
The ‘Risk On Trade’ For Gold Is Back In Town
- The dollar broke major support levels signaling lower prices are possible.
- More uncertainty regarding U.S. monetary policy not supportive for the U.S. dollar.
- The gold and silver markets are becoming the “Risk On Trade” flavor of the month once again.
The U.S. dollar Index March futures contract closed at 79.44. This is a very significant close as it broke the previous long-term support level of 79.47 made on October 21, 2013. This is not so coincidental that the gold and silver markets had their best prices in months and closed above the $1,360 resistance levels made back in October of 2013.
Silver Is About To Make A Move. Will It Be To The Upside?
- The Fed’s tapering exit strategy has created uncertainty globally.
- The U.S. Stock market is due for a major correction.
- Silver is making a cyclical bottom.
The current Fed’s monetary policies and exit strategy from its debt monetization have created a high level of uncertainty globally. The Fed is trying to assure us that the transition will be a smooth one. But the global markets are telling us another story and are reaching a different conclusion.
Even though the U.S. stock markets are not taking into account the catastrophic consequences of such policies, the emerging markets and interest rates are reaching a completely different conclusion. They are giving investors a clearer indication regarding the negative implications from ending QE.
Are Gold And Silver Ready To Rumble?
At first glance, silver appears to be moving in step with gold. Gold’s up 11% year to date and up over 7% month to date, while silver’s up 10% for the year and gaining 11% for the month.
“The silver market is showing quiet strength and major support has been defined in the $19 to $20 levels for May Silver.” Commented Karl Schott, a silver specialist with the Equity Management Academy. The fundamentals have not changed and in fact have gotten stronger.
Have Gold And Silver Mining Shares Bottomed?
The Market Vectors Gold Miners ETF (GDX) has climbed 26% year to date, including nearly 14% this month to date. That compares to the gold-backed SPDR Gold Trust’s (GLD) gain of around 10% year to date, including 6.3% this month.
The current price action seems to have discounted all the bad news regarding reserve losses, write downs and margin compression commented, Brien Lundin, Editor of Gold Newsletter.
When you take a look at the gold miners, they have recouped a third of what they lost last year…
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