Morning Gold & Silver Market Report – 1/17/2012

Gold steady watches China data, Europe woes

on Tuesday after Standard &  Poor's downgraded the euro zone's
rescue fund, while investors watched for growth data from China
to gauge the impact of the region's debt crisis on the global
economy.	
    	
    FUNDAMENTALS	
   
 * Spot gold inched up 0.1 percent to $1,645.60 an
ounce by 0034 GMT.	

    * U.S. gold gained nearly 1 percent to $1,646.30.	

    * After downgrading nine euro zone nations en masse last
Friday, S& P cut its credit rating of the bloc's EFSF rescue
fund, adding pressure on Greece to break a deadlock in debt swap
talks to avoid a default. 	

    * But the downgrades failed to stifle government funding on
debt markets on Monday, with French short-term borrowing costs
falling slightly and Austria saying the cut did not alter its
issuance plans. 	

    * China is due to release later on Tuesday its gross
domestic product growth for the fourth quarter of 2011, which is
expected to show the world's second-largest economy on track to
slow for a fourth successive quarter.    	

        	
    MARKET NEWS	
    
* The euro hovered just above a 17-month trough against the
dollar early in Asia on Tuesday after Standard &  Poor's dealt
the euro zone yet another blow by downgrading its bailout fund.
 	

    * Asian shares inched higher on Tuesday as investors focused
on economic data from China to gauge the impact of the euro zone
debt crisis on global growth.  	
       	
    DATA/EVENTS	
 0200  China     GDP yy                       Q4                   
 0200  China     Industrial output yy         Dec                  
 0200  China     Retail sales yy              Dec                  
 0200  China     Urban investment (ytd)yy     Dec                  
 1000  EZ        Inflation, final yy          Dec                  
 1000  Germany   ZEW economic sentiment       Jan                  
 1230  U.S.      NY Fed manufacturing         Jan                  
 1400  Canada    BoC rate decision                                 
        	


  

  

Closing Gold & Silver Market Report – 1/16/2012

Gold Silver News

January 16, 2012 • 06:42:37 PST

‘Dr. Doom’ Investor: Prepare For World III

The only way for the West to contain China is to control the oil tap in the Middle East.” Read More

  Good news and bad news: Analyst and businessmen Dr. Marc Faber says World War III is near. The good news: He said the same thing last year.

 

 

clivemaund.com 


JANUARY 16, 2012 

 

The current standoff in gold is approaching resolution and evidence is starting to pile up in favor of an upside breakout. We have been cautious on the PM sector for months starting with the September top which we shorted, resulting in massive profits in a matter of days, especially in silver, but there is always the danger of taking caution too far and getting caught on the wrong side of the trade. Charts patterns allow for all possibilities and there remains the danger of a downside resolution, as we still have a Descending Triangle in gold and a potential Head-and-Shoulders top in silver, and the downside potential of these patterns would of course become reality in the event that the deflationary scenario prevails, which could be triggered by, say, a major bank failing in Europe, leading to an out-of-control run on the banks. That said, however, there is no denying that both the COTs and public opinion, particularly for the dollar and silver, are strongly bullish for the PM sector, and past experience shows that it usually a costly mistake to trade contrary to their indications.

It's time to make the call - to come down off the fence and take decisive, resolute action, and the great thing is that you (and I) can do this without fear of getting egg on our faces - why? - because of the highly favorable risk/reward ratio that now exists for the sector, as we will now demonstrate on the 2-year chart for gold.

Remember when gold was racing ahead and making successive new highs back last August - September? It rose almost vertically to open up a huge gap with its moving averages as it became wildly overbought. This resulted in a highly unfavorable risk/reward ratio as shown on the chart, which was why we shorted it and especially silver aggressively, but now look at it! - the tables have turned and the risk/reward ratio has now swung back to being highly favorable as gold has become oversold and hunkered down beneath its moving averages. For sure the pattern that has formed is a Descending Triangle which is often bearish, especially as the price has dropped well below its 150-day moving average for the 1st time since 2008. We are aware of this which is why we have noted the positions of the exits, but we must set against this the strongly bullish COTs and public opinion. Fortunately for us, the fact that gold found support in December EXACTLY at its September lows establishes this level as obvious crucial support - if this support fails it's probably curtains for gold at least for a while as a deflationary bust would probably ensue, but if gold can hold above it for a little longer, the chances of a blistering rally will increase greatly, which will be triggered by a break above the red constraining trendline that marks the upper boundary of the Descending Triangle.

Even after the rally of the past 2 weeks, which can be seen more clearly on the 6-month chart below, the risk/reward profile is highly favorable, but should the price of gold drop back over the short-term towards the support again, the case for piling on the longs will be really compelling. This is because, in terms of the risk/reward ratio, it will be a " no brainer" . We may see just such a minor reaction over the next week or two, for on Friday a " hanging man" candlestick appeared on the chart after the " shooting star" on Thursday which led us to take some profits off the table, and there is considerable resistance just above the current price near the falling 50-day moving average. Both these candlesticks are bearish, although they are rather small so we are only looking for a short-term reaction back towards the major support. If we do see such a reaction it will be time to " back up the truck" and we can do so without fear, confident that our stop, a little way below the support is unlikely to be triggered. (don't place the stop too close though, in case Big Money money engineers an intraday dip below the support to shake people out). An actual stop level is not given here in case Big Money gets to read this and decides to run us out of our positions for a bit of sport. In the less likely event that gold does not react back at all and instead powers through the red downtrend line you should grit your teeth and buy, placing a higher stop beneath the red line. On the site  We Closed Out The Put Side Of A Straddle Trade On The Approach To The Big Support At The End Of December And Went Long The Sector  with a stop below the support, due to the compelling risk/reward ratio, and we will be buying more if we get the expected reaction in coming days.

A big negative for PM stocks is that that they broke down in December from Diamond Tops, in the process establishing a zone of heavy resistance near to the apex or nose of the diamond, as we can see on the 4-year chart for the Market Vectors Gold Miners Index below. This resistance will need to be overcome to abort the bearish implications of the pattern, and traders may want to wait for that to occur before committing to stocks, and such waiting will not result in missing much in the way of the gains, as the really big upside action would follow on from the breakout above the apex resistance.

Unless we fall into a deflationary abyss this certainly looks like a good time to start accumulating PM stocks from the standpoint of sentiment, for as we can see on the Gold Miners Bullish Percent chart below, sentiment is at the abyssmally low levels that we would normally associate with a major bottom - this is the worst it has been since the depths of the 2008 selloff.

The notion bandied about in some quarters that gold is going to " disconnect from the dollar" is of course total nonsense - how can it disconnect from the currency that it is primarily priced in? It certainly hasn't disconnected from it in the past few months, as can be readily seen by comparing the charts for gold with the charts for the dollar from last September. The dollar has been powering ahead and gold has suffered accordingly - and silver has been slammed.

Having reminded ourselves that the course of the dollar is indeed important for the gold price outlook, let's now take a look at the dollar in an attempt to figure out what lies in store for it. Our assessment in the last update that the dollar index could storm ahead to the high 80's now looks too optimistic, after further consideration of the latest dollar COTs and sentiment indicators, and this is clearly good news for gold. It now looks more likely that the current dollar rally will peter out at the resistance zone and trendline resistance shown on our 2-year chart below, especially as upside momentum on this rally is considerably weaker than on the last one back in September, and it could end immediately. If this assessment is correct then it has only got a little further to run at best before it goes into reverse, and this " little further" fits with one last reaction back in gold and silver that should present a great buying opportunity.

The 6-month chart shows the two intermediate uptrends and one downtrend thus far within the larger uptrend in the dollar. As we can see the current uptrend, which has opened up a large gap with the 200-day moving average, is getting " long in the tooth" . It thus looks likely that the dollar will turn lower soon, probably after a final run at the parallel upper channel return line shown. The entire rally in the dollar from last August could be a 3-wave countertrend rally that is approaching completion.

We thought that the Commercials had big long positions in the Euro back in October, but just look at them now! If the massive back door funding of the ECB by the Fed succeeds in doing the trick and enables the ECB to steady the ship by means of massive QE under another name (can't call it QE - the masses might recognise that), then the Large Specs are set to be " taken to the woodshed" for the hiding of their lives. This would also be great news for gold and silver, and for commodity prices generally.

The extreme level of Commercial long positions in the Euro are of course mirrored by their extremely high short positions in the dollar, which are close to record levels. This is a big reason why the dollar rally is expected to fizzle soon.

The public at large, who make it a point of honor to be always wrong, as a result of being clueless, are of course now strongly bullish on the dollar, see below, another warning.

In conclusion it now looks like a really big rally is incubating in gold and silver, and thus it is a good time to accumulate ahead of the breakout, and there is a chance that we will be presented with the ideal buying opportunity if we see a minor reaction over the next week or two, as looks likely. The risk/reward ratio is good, and will improve to excellent if we see such a minor reaction. If this assessment of the outlook is wrong and a deflationary downwave ensues soon, probably as a result of a bank failures in Europe and a possible run on the banks, then we will be closed out on stops for limited losses. 

Monday, January 16th 03:09 PM IST

Gold will explode to $4000 in phase 3 of the bull market

This report will focus on one thing and one thing only, gold. It is the one and only market where I don't question if there's any value.

 

 

 

 

 

 

 

 

By Giuseppe L. Borrelli 
This report will focus on one thing and one thing only, gold. It is the one and only market where I don’t question if there’s any value. 

Of course you wouldn’t know that by listening to the mainstream media as they parade out one “expert” after another in an effort to convince the world the bull market in gold is over and done with. It happens every time we experience a correction.

This is the same crowd that says every decline in the Dow is an opportunity to load up on cheap stocks, and yet they can’t wait to through dirt on the gold bull’s grave. Since most people know little or nothing about the yellow metal, it’s easy for these analysts to gain a following. After all they are the experts!

On Friday it was more of the same as we experienced a bear raid early in the morning and the Bloomberg crowd warned that more pain was sure to come. When spot gold bounced back to close down 7.90 at 1,640.90, after a failed attempt to test strong support at 1622.20, they simply moved on to another whipping boy.

Friday’s intraday low was at 1,625.70 but price recovered to finish well above it and marginally below good resistance at 1,641.30. 

When gold put in a lower low a couple of weeks ago, I came out and told clients right then and there that I thought the bottom was in. After watching gold’s behavior following the big sell-off two weeks ago, I am now convinced that we’ve seen the bottom and the end of the correction. 

Also, the overall decline (using closing prices) equaled $364.00 or 19.2% and was middle of the pack when compared to previous reactions that checkered the eleven-year history of this bull market.

So we have a low coming after two symmetrical legs down, you have a Fibonacci connection, and you have a strict adherence to the 90-day cycle. When I add it all up I would say that you have an 80% chance that the bottom is in and the only piece missing is a close above the trend line that connects the all-time closing high with the lower high and currently comes in around 1,715.00. I believe this final condition will be met within a couple of weeks.

As some of you know by know I sit through reactions in the gold market and try to add on when I think the reaction has run its course. That’s why I purchased gold at 1525.50 and I’ve added on along the way up with my most recent purchase coming at 1,642.00. 

Friday’s early morning bear raid scared a lot of investors, but the reality is that it failed to test even the first level of good support at 1,622.20. It then went on to recover most of that decline by the time the spot market closed later that day. That’s bullish behavior. 

Finally, it is worth mentioning that gold has exhibited a change in character. For the 90 days that it declined it moved inversely to the US dollar and in lock step with commodities. Now gold is rallying even though the dollar has made new highs and in spite of the fact that commodities are being sold off. 

That’s an important change in behavior and such changes almost always accompany a bottom. Also, gold is not the only thing that’s moving higher. Silver is on the rise as well after bouncing off of strong support at 26.48 two weeks ago. Gold’s poor cousin closed out the week at 29.75 after trading as high as 30.67 on Thursday. 

The key will be silver’s ability to close first above the 50-dma at 31.32 and then to close above strong Fibonacci resistance at 31.91. If I am right and gold bottomed, you will see silver take the lead in a month or so and both metals will surge 

I would like to conclude this article by not telling you how ominous things look or how inept our current leadership is. Most of you don’t want to hear it and all of that is cooked into the new leg up anyway. Instead I’m going to tell you how things will play out in the gold market from here on out, and I’ll leave you to extrapolate how it will reverberate through other markets on your own. 

All bull markets move in phases and that’s especially true with gold. The first phase was powered by the smart money and drove the price from $252.00 to $475.00 and ran from 2000 to late 2005. The catalyst for the second phase was institutional buying and ran from late 2005 until the December 2011 bottom. Assuming the bottom is in we are seeing the birth of the third phase and almost no one realizes it. 

Surprisingly there are very few people who realize that this bull market in gold is an event of historical proportions. We are witnessing the demise of the one hundred year old fiat currency experiment designed to take wealth from the many and transfer it to the few. 

Gold is going to put a stop to it with the advent of the third phase. The general public finally becomes aware and rushes into the relatively tiny gold market in search of a true store of wealth, one that cannot be frittered away by prostitutes disguised as politicians. Can anything stop the third phase? Only a final volcano-like blow-off to the upside! Perhaps a better question is can anything impede it and the answer is only to a small degree. We have experienced manipulation in the paper gold market for two decades and it had an effect, but the third phase will turn out to be a completely different animal. 

This third phase will turn out to be a mostly uninterrupted move run up to, and more than likely beyond, US $4,000 an ounce. When I say almost uninterrupted I mean no more than two or three reactions of 12% to 14% and of a relatively short duration. Manipulation will not be able to do much as people finally come to the realization that all fiat currencies are just a government-sponsored fraud. 

You will see that gold will rally against anything and everything including real estate, commodities, bonds, stocks, fiat currencies and Indian beads. It will be a real scorched earth policy. The third phase of the bull market will only run its course when you see extreme levels of greed and euphoria in the market place, and we’re no where near that. 

Now here’s one last question, do you know what will make this all so interesting? The fact that 98% of the people in the world have absolutely no idea of what is about to occur. Imagine their reaction when the finally figure out that they’ve been completely defrauded by the very people they entrusted to manage the economy and their future. 

The final epiphany will come about when they recognize that judges, lawyers, bankers and politicians all colluded to steal the wealth of the many for the benefit of a very small group of individuals. That folks will be an interesting realization.

 

Gold firms as stocks recover, euro lifts from lows

Morning Gold & Silver Report – 1/16/2012

Friday, January 13th 03:12 PM IST

Jan.6.12 Weekly  Recap

Gold prices started the week trading higher amid New Year optimism in global markets. It was a volatile week for the precious metal yet prices were still above $1,600 per ounce as the week came to a close.  Analysts remain optimistic over Gold’s performance in the coming year, with many expecting demand for the precious metal to see a boost in response to any quantitative easing by the Federal Reserve and/or European Central Bank. Analysts from Merrill Lynch said this week that they “believe the high cost structure of the global Gold sector should provide support” to the price of the metal.  They expect the price of Gold to average $1,850 an ounce in the coming year.  Even Dennis Gartman of the Gartman Letter changed his view on  Gold, becoming “officially bullish” again. He wrote, “The bear run that began in August has now officially ended.”

Geopolitical tension  strengthens Gold’s appeal as a safe-haven asset. This was apparent during the past 13 months, with the start of the Arab Spring that spread to Tunisia, Egypt, Libya, Bahrain, Yemen, and others. Now, there are many other situations at play. The ongoing conflict with Iran over the Strait of Hormuz, combined the news that Iran produced its first nuclear rod this week, brought about some safe haven buying ofGold. As the U.S. continued to hit Iran with sanctions, the Middle-East country threatened the United States Navy with military action if a departing U.S. aircraft carrier returns.  Iranian army chief Salehi said, “I advise, recommend, and warn [the U.S.] over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once.” Meanwhile, the financial sanctions imposed by the United States and the European Union (EU) started to affect Iran negatively by cutting off the ability of Iran to collect payment for oil exports. The European Union came to a preliminary agreement with the U.S. to ban imports of Iranian oil. However, many countries in the EU are dependent on the oil imports. Paul Stevens, economist and emeritus professor at Dundee University in Scotland told CNBC, “”Greece’s economy is already mired in deep recession and could feasibly collapse entirely if the sanctions were imposed. But the impact that would have on countries like Italy and Greece would be enormous, and the Greeks are not going to slit their own throats for the sake of an EU sanction when Iran is the only country willing to offer them oil on favorable terms. It would utterly destroy the Greek economy.”

With the European Central Bank (ECB) continuing to lend money at a very low 1% interest rate to European banks, the  opinion  is divided over whether that cash flow is actually helping Europe’s sovereign debt crisis, or if the money is just being hoarded by banks. Of issue is a lack of trust in lending between banks, and that lack of trust has the ECB fearing a potential credit crunch within the eurozone, which would be detrimental to the hopes of climbing out of the debt crisis. Renewed concerns about European economic issues caused the euro to plunge to its  lowest point in 16 months  on Thursday, resulting in a corresponding downturn of global stocks and commodities. Against the U.S. dollar, the European currency dropped below $1.28 today, a level not seen since September 2010. Explaining the euro drop, Marc Chandler, chief currency strategist with Brown Brothers Harriman, said, “I think the market’s primarily concerned about the rollover (of debt) risk from the sovereigns as well as the banks’ capital. You also had weaker European economic data.” Chandler said these concerns, although not new, have flared in response to efforts by Unicredit, Italy’s largest bank, to attract investors by offering a 43% discount on new shares. According to Chandler, “People expect a downgrade any day. Next week, you have Spain and Italy coming to the bond market. Full liquidity hasn’t really returned to the market. The euro is falling against the dollar and also making new lows against sterling and the yen.”  European Central Bank policymaker Athanasios Orphanides  said that he thinks banks are paying too much for the economic collapse in Greece.  He recently asked leaders in the eurozone to go back on plans which would make private sector investors – the banks – take a large share in reducing Greece’s debts.  Orphanides said that although the Greek government might suffer, “by restoring trust in the eurozone, it would reduce the financing costs of other eurozone governments.” This idea is unlikely to gain much steam, however, as the main force in the eurozone now is Germany, the country that was very much behind the banks taking a haircut on Greek debt.

Germany sold  4.06 billion euros  of government bonds this week, with a higher demand than previously recorded in November. Also this week, France sold 8 billion euro’s worth of higher-yield bonds, and the European Financial Stability Fund sold 3 billion euros in three-year bonds. This past December, Standard & Poor’s warned German and French governments of possible bond rating downgrades, and some economists have said that France might be the first to lose its AAA credit rating. French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to meet next week to review Europe’s new fiscal agreement before the EU summit planned for the end of this month. Europe seems to be heading towards a recession with the austerity measures in place, which has caused citizens to be more hesitant to spend money accompanied by an increased unemployment rate. Jennifer McKeown at Capital Economics  commentedon the down fall of Europe by saying, “Things are really starting to slow down. There’s an underlying economic downturn going on at the same time as the peripheral debt crisis continues. Even the strongest parts of the euro-zone economy are beginning to falter. We see the euro zone beginning to break up, perhaps as soon as this year.”

A  key U.S. manufacturing index  for December was released that shows evidence of growth. The demand for automobiles and an increase in holiday sales has helped pave the pathway for a U.S. economic recovery. The U.S.  housing market    has been a concern since 2008. The Mortgage Bankers Association reported that applications for U.S. home mortgages fell 4.1% in the last week of December, along with a 9.6% drop in purchase loan requests and 2.5% drop in refinancing requests. The housing market is an important facet of the U.S. economy and should reflect positive numbers to show a full economic recovery. U.S. stock futures rose on Friday after the  nonfarm jobs report  by Automatic Data Processing Inc. was released. Economists expected the number of jobs added in December to reach 150,000, and the report showed 200,000 jobs added. The value of the U.S. dollar also rose.

There were many factors driving  uncertainty  in the market in 2011. With a new year to tackle new problems, the eurozone crisis remains intact with no solution in sight. This ongoing crisis has driven borrowing costs to unsustainable levels and created concern for a banking crisis in Europe. In an outlook note on 2012, David Simmonds with the Royal Bank of Scotland wrote, “The eurozone crisis is life-threatening because there is too much debt, too little growth and huge intra-zone trade imbalances — belated resurrection of fiscal rules is no panacea. We are in a multiyear de-leveraging world with multiyear low-growth consequences, so mistrust most the quick-fix, free-liquidity addicts who seize on each emergency monetary policy response as a cure-all.”

WEEKLY SPOT PRICES

Gold:  Spot Gold prices opened this week at $1,600.50. The high was on Friday,  Jan. 6th at $1,632.30, while the low for the week occurred on Tuesday, Jan. 3rd at $1,566.80. Gold ended the week up $17.90 at $1,618.40. This week, the most popular Gold bullion products were  2011 Gold American Eagles,  1 oz. Pamp Suisse Gold Bars, and  2011 1 oz. Gold Maple Leafs.

Silver:  Spot Silver prices opened this week at $29.52. Silver reached a high of $29.74 on Wednesday, Jan. 4th, while this week’s low for Silver occurred on Tuesday, Jan. 3rd at $27.91. Silver ended the week down $0.74 at $28.78. The most popular Silver products on APMEX.com this week were  2011 Silver American Eagles,  2011 Silver Maple Leafs,  1 oz. Silver Buffalo Rounds  and  10 oz. APMEX Silver Bars. 

 

Closing Gold & Silver Market Report – 1/13/2013

Closing Gold & Silver Market Report – 1/11/2012