Revised GDP, A Bottom In Gold And A Looming Catastrophe

Many analysts are blaming the recent GDP revision-the largest since 1976-on the weather this past winter. It was the worst winter in many years. Even so, that even such a brutal winter can probably only account for about half of the decrease in GDP. Furthermore, with plenty of quantitative easing and record low interest rates, it shouldn’t have been that bad. Even if you cut the current 3% figure in half and make it only minus 1.5%, That’s still terrible…way off the estimates. Worse, estimates for the second quarter have been downgraded from a 4% increase to 3%.

The consumer price index is also weak. The most recent figure was 0.2% after being flat in April and consumer spending accounts for 2/3rds of US economic activity. Two thirds of your economy should not be based on spending but instead on manufacturing. Adjusted for inflation, consumer spending actually fell. With such figures, we don’t know what’s really going on. We do know it’s weak…We see in number after number…very weak growth.

Stagflation is also increasing in the US, even though it is not being acknowledged as a classic threat and symptoms of inflation – slow growth, high unemployment and inflation are present. Recent economic data shows weak US factory output and home building data suggests that the world’s largest economy is slowing down again.

Official inflation numbers in the US remain benign as the Fed’s continue to make many adjustments to the methodology of calculating inflation in the last 20 years. The many adjustments made in the last few years is a clear indication that the consumer price index formula previously used is no longer an accurate measure of the real level of inflation.

What do the numbers mean?

Expect a rise in interest rates by the first quarter of 2015. The current artificial low interest rates are robbing the average person of the future. The ability to put money in a savings account for a rainy day is a thing of the past.

Who is benefiting?

Equity markets, since investors can borrow money for almost nothing.

Who’s borrowing the money?

Mergers and Acquisition companies. M&A activity in the last 6 months has been averaging $10 billion a day, or nearly $2 trillion in total. Such figures are similar to those seen in 2007, before the Panic of 2008. Cheap money is also fueling the real estate market. It’s being engineered from the top. However, when interest rates rise, as I believe it will occur early next year, the economy will go down again.

The downbeat of media coverage about reasons why gold should go down is another way to manipulate prices. At the same time Latin American countries pawn their gold with Goldman Sachs.

The Fed’s goal is to keep you in currencies that aren’t worth the paper they are printed on. When interest rates go up…[it will] strengthen the dollar, in theory, [but] even if does, [it will be] short term. Why? Because, when interest rates rise, the economy goes down as there is less available spendable income due to the rise in the cost of money They’ll come up with another scheme to try to pump up the economy under another name.

Chart: Copyright 2011 by Bloomberg.

In China, the real estate bubble has already burst and money is flowing out of Hong Kong into the United States.

Where are we headed?

The days before 9-11, President Bush’s popularity hovered around 50%, with the recent dot.com bubble collapse and a recession. After 9-11, the Federal Reserve lowered interest rates to 46 year lows, which ignited another boom. Look out beyond the economy to geopolitics. The destabilization of the Middle East, in Syria, Iraq, Yemen, and Bahrain destabilized, as well as the crisis over Ukraine as threatening a possible war. But, the US can’t afford a war, neither can the world. With recent spikes in oil prices, however, this is the perfect recipe for economic panic. If there is economic panic, it may be an excellent time to invest in gold.

Gold and Silver Past, Present and Futures Swings – 7/18/2014

Gold and Silver Past, Present and Futures Swings

After opening the week at 1339.50, the gold market made a brief new weekly high of 1340.90 on the downing of a Malaysian Boeing 777 over the Ukraine early Thursday morning. On Friday the market came down and tested the 50 and 200 day MA of 1299.48 and 1289.52 and found good physical buying support to rally and close at 1311.40. This was the first down week after a string of new highs were made over the past 5 weeks.

After Monday’s opening at 21.49, the silver market made a brief new weekly high of 21.53 early Thursday morning. On Friday the market came down and tested the 50 day MA of 20.79 and found good physical buying support to rally and close at 20.93. This was the first down week after a string of new highs were made over the past 5 weeks.

Echoing comments I made recently:

“As we can see all swing targets have been completed and accomplished for both metals last week.”

For a more detailed technical landscape, let’s take a look at the weekly charts for next week and see what trading/investment opportunities we can identify.

GOLD

The August gold futures contract closed at 1311. The market closing above the 50 day MA (1299) 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.

With the market closing below the VC Weekly Price Momentum Indicator of 1315, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

Cover short on corrections at the 1289 – 1267 levels and go long on a weekly reversal stop. If long, use the 1267 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1337 – 1363 levels during the week.

(click to enlarge)

SILVER

The Sep Silver futures contract closed at 20.93. The market closing above the 50 day MA (20.79) 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.

With the market closing below the VC Weekly Price Momentum Indicator of 21.03, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

Cover short on corrections at the 20.53 – 20.13 levels and go long on a weekly reversal stop. If long, use the 20.13 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.43 – 21.93 levels during the week.

(click to enlarge)

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.

India’s Impure Gold, Short Squeeze To $5,000

The India Times recently reported that the Reserve Bank of India is planning to ship impure gold to the Bank of England to swap it for pure gold that can be traded as London pure bars.

If the objective is to exchange impure for pure bars that is very easily done. Any major refiner would be happy to smelt the gold, test it for impurities, remove the impurities, and then recast the gold at the purity India desires. The gold could then be shipped back to India, instead of being stored at the Bank of England, as the current scheme appears to require.

Is Something Else Happening?

To read more click here…

Gold and Silver Past, Present and Futures Swings

Past, Present and Futures Swings

This was the fifth week in a row the yellow metal made weekly highs closing on Friday at 1340 after a new weekly high of 1346.8 was made, almost matching the highs of 1347 anticipated in last week’s report published in Seeking Alpha. In this report I said, ” Look to take some profits on longs, as we reach the 1333 – 1347 levels during the week.” Since the low was made on June 3, the market has rallied sharply scoring consistent highs into the weekly and monthly resistance and profit levels posted since Dec 22, 2013.

With gold closing above the 50 day MA of 1333, it is confirmation the intermediate to long-term trend has turned up. This validates our previous cyclical expectations that a rally should ensue by no later than June 28, 2014.

Echoing my comments made in this report:

“The gold and silver markets have extended their corrective patterns during this most critical and decisive period of time and price. A cluster of major short-term, intermediate and long-term cycles converge around this time frame from late December to the August/September time frame. This is another reason why the expected bottom that started back in late December of 2013, is in the process of completing a major 6 month bottoming process ending by June 28, 2014.”

I also said, “This is approximately the mid-point to the 180/360-degree cycle that created the high in the middle of March and projects an extension of time and acceleration in price towards the middle of September of this year.”

Now that the yellow metal has fulfilled all our expectations for a cyclical bottom to unfold in a very timely manner, it confirmed the major uptrend is underway until the middle of September of this year towards 1500 per ounce. Over the short – term look for rallies to the 1354 – 1368 levels of weekly resistance to lock in additional paper profits that can be converted to actual physical bullion ( real money). The time has come to take an aggressive attitude and accumulate physical gold and silver while prices are at historic lows and short of supplies to meet to future demand as it becomes more evident and clear that paper money will continue to implode globally in terms of its purchasing power.

Let’s take a look at the gold and silver technical charts and see what trading/investing opportunities we can identify for next week.

GOLD

The June gold futures contract closed at 1340. The market closing above the 50 day MA (1299) 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.

With the market closing above the VC Weekly Price Momentum Indicator of 1333, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

Cover short on corrections at the 1319 – 1298 levels and go long on a weekly reversal stop. If long, use the 1298 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1354 1368 levels during the week.

(click to enlarge)

SILVER

The July Silver futures contract closed at 21.50. The market above the 50 day MA (20.77) 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.

With the market closing above the VC Weekly Price Momentum Indicator of 21.63, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

Cover short on corrections at the 21.03 – 20.56 levels and go long on a weekly reversal stop. If long, use the 20.58 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.80 – 22.10 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.

A Recession, Under-Reported Inflation And A Run On Gold

Summary

  • US is nearing a recession according to the latest GDP data.
  • Are gold stocks missing in US vaults?.
  • Currency wars to intensify.

Real GDP figures are under-reported, meaning the United States is nearing a recession and, with physical gold stocks missing from US vaults, when there is a rush from paper currencies, there will be no gold to buy. The US government recently revised the GDP growth figure for the first quarter down to -2.9%, which means the economy shrank. We are also probably going to have a negative second quarter. The Wall Street guys, whose job it is to sell financial instruments, attribute the poor performance to the weather. However, poor weather may keep people out of stores, but any decrease in sales is usually offset by fuel use for heating, which is included in the GDP. Clearly weather is not the excuse…What it implies is that we may officially have a recession declared later this summer…QE did not work…It did not revive the economy. After unprecedented money creation and unprecedented change in fiscal deficits, the economy still turned in negative growth. The situation may be far worse than government figures suggest. According to Dr. Paul Craig Roberts, the deflator converter used to convert the nominal GDP into real GDP, is incorrect. The government uses a figure of 1.25% to adjust for inflation. ” You can easily add to that number two full percentage points.” He said. If you deflate the nominal GDP by 3%, then you get a much larger drop in GDP growth, about a 6% drop. The debt/GDP ratio is also, therefore, much worse than reported. “Since the government has been understating the real inflation rate dating back to 1980,” Roberts argued, if you take a reliable measure of inflation, and use that to deflate the US GDP, “you wouldn’t have anything like the $17 trillion in GDP…That means the debt to GDP ratio is much higher than reported…The whole thing is a fraud.” Roberts believes “US GDP is probably closer to $12 trillion…The situation is far worse than the figures reported to the public.” Given such figures, the United States is on the verge of a recession, which means a further drop in tax revenues and a further increase in debt. Roberts called it, “An amazing crisis waiting to happen.” Recently, Germany announced that it is content with storing their gold at the New York Fed? The United States does not have the gold and cannot deliver it. They have forced Germany to stop asking for it…The implications are nobody will get it [gold] back. It has been suspected by many for years that the Fed has used up all the US gold to suppress the price of gold, and then started using the gold of others stored there on trust. We have seen more and more reliance on dumping huge amounts of naked gold shorts on COMEX…to knock the gold price down. The US was protecting the dollar from QE by shorting the paper gold market. They’ve mainly been controlling the gold prices using naked shorts. With a recession looming and QE failing, a catastrophe is looming. The worst part of the catastrophe is a currency war environment and they won’t be able to get into gold because the Chinese will have it all. Even today, if the holders of all of the contracts for gold, demanded that the contracts be settled in gold, it would be impossible and most likely we’ll see a default. What happens when the change takes place that the people who have these contracts are unwilling to settle in cash and want to take delivery? The United States has run through its stock of gold and the stock of gold it is holding for other countries, so there is no possibility of making delivery on very large orders. When that happens, there will be an astronomical run on gold.

The Gold and Silver Market Webinar Series

Wednesday, July 15, 2014

Time: 2 and 4 PM PST

Building Wealth With Gold And Silver!

“The Gold and Silver Markets are entering one of the most exciting periods since the bull market began in 2001. The bear market for the last three years completed a major long-term level of support at current levels. These levels indicate the gold and silver markets are in the process and transformation to a new and explosive new bull market developing that could last until 2017.”

Conducted LIVE by: Patrick MontesDeOca from the Equity Management Academy 

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Session  1 hour.

Please note this session starts at 2 pm PST, so please double check your local times by adjusting the time zone above.

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Gold and Silver Past, Present and Futures Swings

For the third week in a row the price of gold and silver managed to close above its 50 day MA respectively. This very is strong confirmation the weekly trend has turned up from neutral for the precious metals markets.

Echoing my comments recently, “The gold market rejected the low of $1250 that coincided with the 9-day MA, and found good buying support on high volume. A very good indication that we have some new players back on the long side for silver and gold, increasing the probability that the $19 levels for silver and $1240 for gold are fundamentally supported by technical and fundamental reasons.”

With gold and silver dropping to the levels of support mentioned in our last report published in Seeking Alpha, they found the technical and fundamental support needed to complete a major long-term bottom on June 3, 2014. This is approximately the mid-point to the 180/360-degree cycle that created the high in the middle of March and projects an extension of time and acceleration in price towards the middle of September of this year.

The test of the June 3 low confirmed the latest swing trade bottom and advanced to the corresponding swing trading targets and weekly resistance levels of 1316 for gold and 20.79 for silver as documented in previous reports.

I also said, “Short-term, intermediate and long-term traders/investors should use this final window of opportunity to trade short term and accumulate to build a long-term bullish position as current prices trade around the $1,240 range and are truly in a historic environment when fortunes can be made in a relatively short period of time. The next 2 to 3 years will go down on the books as such a period of time in history for the yellow metal and current prices will be a thing of the past.”

In a weekly report published for the Equity Management Academy last week, I made the following comments for the gold and silver markets:

“Cover short on corrections at the 1312 – 1309 levels and go long on a weekly reversal stop. If long, use the 1309 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1323 – 1.331 levels during the week.”

“Cover short on corrections at the 20.67 – 20.44 levels and go long on a weekly reversal stop. If long, use the 20.44 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.17 – 21.43 levels during the week.”

As we can see all swing targets have been completed and accomplished for both metals last week.

Gold and silver corroborated expectations for a June-September advance documented since December 22, 2014 by spiking to new lows in the month of June and testing critical long-term support. Rejecting the lows made on June 3, then surging to make an outside monthly close reversal it confirms a 2-3 month advance. This scenario fits perfectly with previous analysis we’ve documented and published in Seeking Alpha.

For a more detailed technical picture, let’s take a look at the weekly gold and silver markets and see if we can identify trading/investing opportunities for next week.

GOLD

The June gold futures contract closed at 1320. The market closing above the 50 day MA (1299) 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.

With the market closing below the VC Weekly Price Momentum Indicator of 1322, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

Cover short on corrections at the 1308-1300 levels and go long on a weekly reversal stop. If long, use the 1300 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1333 – 1.347 levels during the week.

(click to enlarge)

SILVER

The July Silver futures contract closed at 21.17. The market closing above the 50 day MA (20.74) 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.

With the market closing above the VC Weekly Price Momentum Indicator of 20.94, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

Cover short on corrections at the 20.88 – 20.58 levels and go long on a weekly reversal stop. If long, use the 20.58 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.40-21.62 levels during the week.

(click to enlarge)

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.

A Short Squeeze In Gold And Future Astronomical Prices

A short squeeze in the gold market, possible turning points and the “astronomical” levels gold may soon reach.

This past week gold and silver had major spikes, with gold up $40. Gold has held its technical levels and this week’s trading. A pretty strong short squeeze. It showed just how oversold this sector has been. I had been expecting this for a while. The big question now, is do we follow through, and how far do we follow through?

It’s a little early to say we’re out of the woods, but I’m very encouraged. For the longest time a bunch of statistics that ordinarily would be positive for gold, haven’t been, which left us scratching our heads. The CPI numbers are providing clear evidence of inflation starting to appear. A lot of central banks are talking about maybe having to raise interest rates, which is normally bad for gold. However, the central banks are playing a difficult game. They have to keep people anchored in the belief that interest rates are going to stay low for a long, long time, even while on the other side there are claims of a strong recovery. The problem is one of perception and confidence….If people perceive that the economy really is strong, and they act accordingly, meaning they expect rates to go up, then it’s going to create havoc in the bond market….So the central bankers have to maintain this confidence amongst investors…that things are getting better…and we are going to keep interest rates low….so keep buying stuff. It works works until it doesn’t.

Is this week a real turning point?

We have noticed some signs of a major change in perceptions about gold mining shares. If inflation expectations are picking up, there are very few things better equipped to protect you against that than gold mining shares. And right now, they have a major advantage in that, they are so cheap…the downside is so small. I can’t remember historically something that has been so unloved for so long….Things are stacking up for a run in the gold assets.

Caution against being overly optimistic. We’ve seen so many false starts. take a long-term view and buying gold and gold mining shares as an investment, not a trade.

Using the $1,300 as break-out level for gold. People need to be told this is a good idea by brokerage firms or brokers, who traditionally hate gold and gold mining stocks. Brokers can change from outright bullish to an outright bearish call overnight. Once you get that as a catalyst, then we’re going to see something happen.

With much greater wealth distributed around the world than ever before, the potential for gold to rise to astronomical levels. Wealth that is being created is going to a very small group of people. High-end real estate and art is going for record-setting prices. Crazy amounts of money are being paid for London apartments. When individuals with all the money start getting interested in gold, the same records that have been broken in real estate and in the art world are going to be broken in gold. There is less gold than high-end real estate, and we’re seeing all-time highs in those markets. I have no doubt we’re going to see all-time highs in gold.

Let’s take a look at the weekly technical picture for the gold and silver markets and see what the charts are telling us for the foreseeable future.

GOLD

The June gold futures contract closed at 1316. The market closing above the 9 day MA (1287) is confirmation that the trend momentum is bullish. A close below the 9 day MA would negate the weekly bullish short-term trend to neutral.

With the market closing below the The VC Weekly Price Momentum Indicator of 1319, it confirms that the price momentum is bearish. A close below the VC Weekly, it would negate the bearish signal to neutral.

Cover short on corrections at the 1312 – 1309 levels and go long on a weekly reversal stop. If long, use the 1309 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1323 – 1.331 levels during the week.

(click to enlarge)

SILVER

The July Silver futures contract closed at 20.91. The market above the 9 day MA (19.64) is confirmation that the trend momentum is bullish. A close below the 9 day MA would negate the weekly bullish short-term trend to neutral.

With the market closing below The VC Weekly Price Momentum Indicator of 20.94, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

Cover short on corrections at the 20.67 – 20.44 levels and go long on a weekly reversal stop. If long, use the 20.44 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.17 – 21.43 levels during the week.

(click to enlarge)

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.

SPECIAL LIVE WEBINAR “Building Wealth With Gold And Silver!”

The Gold and Silver Market Webinar Series

Wednesday, July 15, 2014

Time: 2 and 4 PM PST

Building Wealth With Gold And Silver!

“The Gold and Silver Markets are entering one of the most exciting periods since the bull market began in 2001. The bear market for the last three years completed a major long-term level of support at current levels. These levels indicate the gold and silver markets are in the process and transformation to a new and explosive new bull market developing that could last until 2017.”

Conducted LIVE by: Patrick MontesDeOca from the Equity Management Academy 

Webinar Registration

Session  1 hr.

Please note this session starts at 2 pm PST, so please double check your local times by adjusting the time zone above.

Click here to REGISTER 

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