The VC Price Momentum Indicator Weekly Futures Swing Trading Instruction August 29, 2014

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Signals are automatically generated by integrating electronic weekly statistics with proprietary algorithms.

GOLD

WEEKLY MOVING AVERAGES

The December gold futures contract closed at 1288. The market closing below the 50 day MA (1294) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing above the VC Weekly Price Momentum Indicator of 1287, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1276 – 1264  levels and go long on a weekly reversal stop. If long, use the 1264 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1299 – 1310 levels during the week.

SILVER

WEEKLY MOVING AVERAGES

The December silver futures contract closed at 19.51. The market closing below the 50 day MA (19.61) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing below the VC Weekly Price Momentum Indicator of 19.60, it confirms that the price momentum is bearish. A close below the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 19.26 – 19.01  levels and go long on a weekly reversal stop. If long, use the 19.01 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 19.85 – 20.20 levels during the week.

RUSSELL 2000

WEEKLY MOVING AVERAGES

The contract closed at 1.174. The market closing above the 50 day MA (1.140) is confirmation that the trend momentum is bullish. A close below the 50 MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing above The VC Weekly Price Momentum Indicator of 1.171 it confirms that the price momentum is bullish.  A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1.165 – 1.156  levels and go long on a weekly reversal stop. If long, use the 1.156 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1.180 – 1.186 levels during the week.

UCO

WEEKLY MOVING AVERAGES

The contract closed at 32.89. The market closing above the 50 day MA (32.36) is confirmation that the trend momentum is bullish. A close below the 50 MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing above The VC Weekly Price Momentum Indicator of 32.36 it confirms that the price momentum is bullish.  A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 31.82 – 30.74 levels and go long on a weekly reversal stop. If long, use the 30.74level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 33.43 – 33.98 levels during the week.

 

 

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

Long-term Strategic Money Entering the Precious Metals Markets

In a recent interview, Rick Rule, Chairman of Sprott USA, discussed the changes in the type of big money coming into the precious metals markets.

“What’s really healthy about this market is that the big money that is coming into the sector is very different than the big money that took the sector up last time,” Rule said. Last time, he explained, the big money was from generalist mutual funds, which were retail and momentum oriented. The big money was not sector specific. This time, Rule said, the big money is from sovereign wealth funds, private equity funds and strategic partners. Such investors have a very different focus than the big money investors of the past.

Rule said the new big money investors in the precious metals markets have “a strategic focus to gain control of product flows,” such as copper, gold, silver, lead, zinc, oil, and gas. Their time frame is also far longer, 5, 6 or 7 years. The soft market in precious metals attracted the interest of such buyers but, given their long-term focus, such investors should add stability to the market.

Speaking just about new money coming into Sprott, Rule said it was mostly Korean and Chinese money. Such investors, he said, are “Completely unconcerned with what Ms. Yellen might have to say about the economy.” They are focused on “their own needs for commodities,” and believe that silver, gold, platinum, and palladium all have a place in their investing matrix.

Rule has also noticed an “Increasing interest among high-end retail to participate in income-oriented investments and natural resources,” as well as an “Incredible interest among both retail and institutional investors in more passive investments,” such as Sprott physical gold, silver, platinum, and palladium trusts. Such investors want to own precious metals but do not want to have to store the physical commodity.

Rule said that we are “Beginning to emerge from the wreckage of a very, very, very bad bear market” in precious metals.

In terms of trades based on fear and greed, Rule said that the destruction of the “paper markets is indicative of the fear trade.” Big money is on the greed side. Big investors want to “secure supplies of base metals, ferrous metals and energy…for the home economies.”

When asked about the US 10-year Treasury, which is yielding 2.7% even while the underlying currency is losing 5% a year compounded, most sovereign wealth fund investors he has spoken with say, “It [the US Treasury] is still the deepest and most liquid debt market in the world….They have to be present” in that market. However, Rule said, such fund managers tell him that “They will do their best to lead the political decision makers away from the predominant” reliance on the US Treasury in such portfolios.

In the longer term, Rule said he expects that the “conservative nature of Chinese investors…will begin to pass…The Chinese will become more sophisticated in investing.” Even a “very, very small diversion” of the wealth of China into precious metals, Rule said, would have a major impact on the market. “I do believe that this will occur.”

Rule believes that we are witnessing a “once in a generation change in leadership in resource finance” from general, equity buyers focused on momentum to industry specialists who want to control supplies. “I think it’s a very good thing,” he said. He expects a “very shallow, very gradual recovery” in a classic instance of “equity moving from weak hands to strong.”

Rule has no idea what the upside potential of the precious metals markets is, but he said, “There is nothing quite as insane in my own experience as a precious metals equity market boom because…greed and fear feed on each other.” He said, fear buyers buy precious metals over concern about a possible economic collapse, and then greed buyers try to get in on the momentum, thereby feeding off each other. He said, “Manic bull markets are completely and utterly out of control.” He warned that in a manic market, it is wise to “take some money out of the market” and look for something that is undervalued at the time.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.
TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Yellen Pulls Away the Punch Bowl, Will Rates Rise?

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Let’s focus in on negative interest rates and the potential for gold to increase in value.

As the Fed met in Jackson Hole over the weekend, gold was trying to hold on at the $1,300 level. Using a negative real interest rate model, gold should be around $1,400. Why? There is lots of concern about global GDPgrowth maintaining itself.

Let’s take a look at the overall metals landscape. Some precious metals appear to be doing well. Palladium is at a 13-year high and rhodium is up 45% from the start of year. However, it is important to understand that rhodium has much greater volatility than gold or silver, although it is important in industrial growth. If the global economy remains “strong,” then rhodium will run even further. Platinum is “more emotional” than gold, but if there’s a big spike in gold, there will be a similar spike in platinum.

Gold Stocks

Turning to gold mining stocks, they are beaten up. In 2007, gold mining stocks peaked at almost 25 times cash flow. In 2013, they fell to four times cash flow, and now are up to 5.5 or 6 times cash flow. Twelve times cash flow is the all-time average, so, they have more upside than downside potential.

China experienced a 51% decline in gold imports in the second quarter year over year. This was in part due to the fact that the ability to track gold moving from Switzerland to China has become more difficult. The same is true for India. The ability to track how gold gets into India is far more challenging so the figures are falling. Furthermore, for China, last year most of the gold being dumped from ETFs went to China, so China’s spectacular growth last year makes it difficult to maintain growth this year.

I do not see Europe’s trade surplus in June as a threat to gold. What’s really important is negative real interest rates? The German 2-year bonds went negative and US 10-year bonds fell, which is good for gold.

Bottom line? The real concern is that Yellen is going to pull away the punch bowl from the party and interest rates are going to spike….I’m of the thesis that it can’t spike very far given various regulations and rules. Governments are going to have to maintain real negative interest rates and that is positive for gold.

For the coming days, if the CPI is positive or flat at 2%, with the 10-year government bond falling, then I think gold pops on that because of interest rates. I’m also watching for the China CPI, a key to commodity usage, including precious metals.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

Yellen Pulls Away the Punch Bowl, Will Rates Rise?

by 

Let’s focus in on negative interest rates and the potential for gold to increase in value.

As the Fed met in Jackson Hole over the weekend, gold was trying to hold on at the $1,300 level. Using a negative real interest rate model, gold should be around $1,400. Why? There is lots of concern about global GDPgrowth maintaining itself.

Let’s take a look at the overall metals landscape. Some precious metals appear to be doing well. Palladium is at a 13-year high and rhodium is up 45% from the start of year. However, it is important to understand that rhodium has much greater volatility than gold or silver, although it is important in industrial growth. If the global economy remains “strong,” then rhodium will run even further. Platinum is “more emotional” than gold, but if there’s a big spike in gold, there will be a similar spike in platinum.

Gold Stocks

Turning to gold mining stocks, they are beaten up. In 2007, gold mining stocks peaked at almost 25 times cash flow. In 2013, they fell to four times cash flow, and now are up to 5.5 or 6 times cash flow. Twelve times cash flow is the all-time average, so, they have more upside than downside potential.

China experienced a 51% decline in gold imports in the second quarter year over year. This was in part due to the fact that the ability to track gold moving from Switzerland to China has become more difficult. The same is true for India. The ability to track how gold gets into India is far more challenging so the figures are falling. Furthermore, for China, last year most of the gold being dumped from ETFs went to China, so China’s spectacular growth last year makes it difficult to maintain growth this year.

I do not see Europe’s trade surplus in June as a threat to gold. What’s really important is negative real interest rates? The German 2-year bonds went negative and US 10-year bonds fell, which is good for gold.

Bottom line? The real concern is that Yellen is going to pull away the punch bowl from the party and interest rates are going to spike….I’m of the thesis that it can’t spike very far given various regulations and rules. Governments are going to have to maintain real negative interest rates and that is positive for gold.

For the coming days, if the CPI is positive or flat at 2%, with the 10-year government bond falling, then I think gold pops on that because of interest rates. I’m also watching for the China CPI, a key to commodity usage, including precious metals.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

Gold 2014: The Year Of Transition

Gold 2014: The Year Of Transition
Tuesday August 19, 2014 14:21

In any market, but especially precious metals, price pullbacks rarely proceed according to expectations.
Most “buying opportunities” are perhaps better defined as gulags and torture chambers. Regardless, it’s almost impossible to build retained wealth without enduring a significant amount of pain, so please click here now.
That’s the weekly CRB general commodity index chart. I’ve suggested that 2014 is a key year of transition, away from system risk and deflation, towards some growth and lots of inflation.
Lead by gold, the CRB began the year with a strong rally, as the Fed began to taper its QE program. The rally lost momentum in March, and a decline began in June.
The 284 – 287 area is a key Fibonacci and HSR (horizontal support and resistance) zone. Note the position of the 14,3,3 Stochastics indicator, aka the “weekly chart stoker”. Downside momentum appears to be waning, and gold has outperformed most commodities during the decline.
The next intermediate trend movement for the CRB index, and for gold, should be to the upside.
On that note, please click here now. At about 2PM on Wednesday, the next FOMC minutes get released, and key US housing start numbers will be reported today. The bottom line: With the CRB index approaching solid support, any gold-negative news is not likely to move the price of gold lower than $1275.
The upside numbers of importance are $1325, $1347, and $1392. This is a different market than it was, when QE was the main theme of global gold price discovery. While it will likely take much longer than most investors expect for gold to rise significantly, it will still rise, and gold and silver equities are poised to do extremely well.
A lot of gold analysts believe that the Dow is poised to collapse, and when it does the Fed will bring back its QE program, causing the price of gold to soar.
Unfortunately, I think they are dead wrong. The Dow is certainly overdue for a significant sell-off, but most value investors are on the sidelines now (including myself), and they would likely buy any decline of size. As the economy builds momentum, factory capacity utilization continues to grow, creating inflation.
The money created by QE is likely to make higher inflation appear faster than a normal economic upswing would, and many institutional money managers would be likely to buy gold stocks rather than gold, as that happens. Gold is bought when system risk is perceived to be the main theme in play. Gold equities are bought when strong growth, and inflation created by that growth, are in play.
In a worst case scenario, where the economic recovery suddenly stalls and reverses, I would emphatically argue that the Fed might engage in a one-time stimulus, but a return of QE is highly unlikely.
A return to QE would make the Fed look weak, which it isn’t.
Instead, a “gold band” would likely be the next tool the Fed brings out of its tool box, if the economy crashed.
A gold price band is simply a watered down form of gold revaluation. In an emergency situation, the Fed could be authorised by the US Treasury to quickly establish a moderately higher trading band for gold, likely between $1500 and $1800 area. That would be phenomenal news for gold and silver equity investors, but perhaps not such good news for anyone caught holding giant leveraged short positions on the COMEX.
Please click here now. That’s the GDXJ daily chart. Over the past month, most commodities have suffered nasty declines, while junior gold stocks have shown tremendous resilience. Note the nice green up channel that is now in play.
Copper is in the news, and according to some mainstream media it is declining, and that’s “bearish” for commodities. Please click here now. The commercial traders are now slightly net long copper. Please click here now. This daily copper chart suggests there is little cause for concern about deflation. Note the bullish posture of my stoker oscillator, at the bottom of the chart!
The Western gold community is likely on solid footing in 2014 – 2015, regardless of whether the economy grows and creates inflation, or whether it suffers a black swan crash event. The weight of the evidence suggests that strong economic growth, and even stronger inflation, is what lies ahead over the next twelve months.
While a number of lightweight analysts and mainstream media analysts have spent the past week comparing Chindian gold demand to the demand during the spring of 2013, heavyweight bank economists are focused on the overall bullish trend in play. Physical gold demand must be compared to a multi-year trend, not simply to QE-oriented selling of ETF holdings that occurred during the spring of 2013.
Please click here now. As this snapshot of SPDR holdings shows, once again Western investors have bought price weakness. Over the past week, SPDR holdings increased nicely, from the 795 tons area, to about 797. The new breed of SPDR investor is not QE-oriented. They’re likely inflation-oriented, and certainly strong-hand buyers of price weakness.
Globally, there is a tremendous fundamental floor for gold. Please click here now. Thailand is a significant source of gold demand, and the top bullion dealers there are working on a spot exchange that could rival or even surpass the Singapore market.
China is also “on the move” in the gold world. Please click here now. This snapshot, courtesy of The Economic Times, shows China adding 3 more gold importers to its roster, with the goal of bolstering its role in global gold price discovery.
Please click here now. This chart compares the US dollar to the Indian rupee. There’s a bearish wedge in play for the dollar, and the central bank is generally quite happy with the current trading range.
With interest rates at 8%, the Indian central bank is likely to embark on a modest rate cutting cycle in 2015 -2016, while the Fed gently tightens, in response to growing concerns about inflation. That could cause enormous amounts of capital to flow into Indian equity markets, and out of US stock and bond markets. Gold benefits tremendously, from these twin price drivers. As an asset, gold feels spectacularly strong in its year of transition, and it’s getting stronger…. every day!

Thanks!
Stewart Thomson
www.gracelandupdates.com

Alternative Assets: The Coming Silver Short Squeeze!

Last year, total mine production of silver was 819 million ounces, but demand for silver was 1.1 billion ounces.

Therefore, there was a 262 million ounce shortfall in silver. Thus far, the shortage has been mostly met by using recycled silver and from government stockpiles. Even so, the shortage is there.

Looking At The Numbers

Recently published data points argued that recycled silver cannot continue to meet the gap between supply and demand. The supply of recycled silver dropped 24% last year, which is the largest decrease on record. Supply is also falling. Seven of the ten leading silver mines produced less silver in 2013 than in 2012. Production in the Silver State, Nevada, is down 70.4% over the past 16 years. The US Geological Survey reports that ore grades have collapsed 90%, which means that far more ore has to be mined in order to produce the same amount of silver. Exploration has also come to almost a complete halt due to higher financing costs, so there is little chance of new finds of sources of silver.

On the demand side, physical demand has increased 13%. Last year the U.S. Mint actually sold out of silver products, reports said. China’s use of silver for solar panels was less than 1 million in ounces in 2005, but in 2013 China used 35 million ounces just for solar panels. In 1999, the amount of silver used in solar panels in the United States was not even reported. By 2015, 100 million ounces of silver are projected for solar energy use.

Some 62% of silver is used for industrial applications, 21% for jewelry, and 12% for coins. Given these used, the data argues that “95% of all silver consumed is gone, never to enter the supply side again.”

Even so, “A real shortage in the physical markets is being completely ignored.”

The paper silver market, Comex, sells 100 ounces of paper silver for every single ounce of physical silver available. The Comex price has been depressed by shorts, which are near record highs. The shorts are not held by producers locking in prices. The shorts have been purchased by banks, the CFTC, US Treasury and the Federal Reserve. The shorts have, “Crushed the price of silver,” and mining shares.

Given the demand for silver, however, low prices cannot last forever. “The silver shorts will be squeezed because of the real physical shortage that is upon is,” the story argues. When that happens, the price of paper and physical silver will rise dramatically. Today investors have an opportunity to own silver at a price less than the cost to produce it. The upside potential for silver is tremendous due to the huge and growing gap between supply and demand.

= = = =
The Equity Management Academy recently reported that “Right now there is a severe shortage brewing in the silver markets that could easily double or triple your money in 2015.” Learn more here. 

The VC Price Momentum Indicator Weekly Futures Swing Trading Instructions August 15, 2014

 

Signals are automatically generated by integrating electronic weekly statistics with proprietary algorithms.

GOLD

WEEKLY MOVING AVERAGES

The December gold futures contract closed at 1306. The market closing above the 50 day MA (1297) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing above the VC Weekly Price Momentum Indicator of 1307, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1292 – 1287  levels and go long on a weekly reversal stop. If long, use the 1287 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1321 – 1336 levels during the week.

SILVER

WEEKLY MOVING AVERAGES

The September silver futures contract closed at 19.61. The market closing below the 50 day MA (20.64) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing below the VC Weekly Price Momentum Indicator of 19.80, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 19.38 – 19.15  levels and go long on a weekly reversal stop. If long, use the 19.15 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 20.03 – 20.45 levels during the week.

RUSSELL 2000

WEEKLY MOVING AVERAGES

The contract closed at 1.142. The market closing above the 50 day MA (1.135) is confirmation that the trend momentum is bullish. A close below the 50 MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing above The VC Weekly Price Momentum Indicator of 1.141 it confirms that the price momentum is bullish.  A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1.130 – 1.118  levels and go long on a weekly reversal stop. If long, use the 1.118 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1.153 – 1.164 levels during the week.

UCO

WEEKLY MOVING AVERAGES

The contract closed at 32.52. The market closing below the 50 day MA (34.12) is confirmation that the trend momentum is bearish. A close above the 50 MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing below The VC Weekly Price Momentum Indicator of 32.96 it confirms that the price momentum is bearish.  A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 31.40 – 30.27 levels and go long on a weekly reversal stop. If long, use the 30.27 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 34.09 – 35.65 levels during the week.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

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