Gold & Precious Metals

Leading Indicators for Gold’s Turnaround

Posted by Jordan Roy-Byrne

on Monday, 20 October 2014 14:27

Gold is currently getting a reprieve as it trades close to $1240 which is above important weekly support at $1200. It’s safe for the time being but we believe that Gold will ultimately break back below $1200 and below $1100 before the end of the already long in the tooth bear market. Because Gold is somewhat of an anti-asset, it’s important to chart its course against other asset classes. Gold performs best when its strong against all other classes. Moreover, prior to recent important bottoms Gold bottomed first against other classes before bottoming in nominal terms. It appears that could happen again.

The first chart looks back at the 2008 bottom. We plot Gold against foreign currencies, commodities, global equities and the S&P 500. Gold’s lowest tick was late October 2008 while its daily low was in November 2008. Against other asset classes, Gold bottomed before then. Gold bottomed against foreign currencies and the S&P 500 in September while bottoming against global equities in May and commodities in June. 

oct16ed08bottom

We should also note that while Gold bottomed in April 2001, it bottomed in real terms (against foreign currencies, equities and commodities) months before then.

Let’s look at the same charts today. While Gold has only recently emerged from a weak triple bottom, it is showing more strength against the other asset classes. Against foreign currencies Gold is nearly 10% above the December 2013 low. Gold is very close to an 11-month high against commodities and is trading at a 7-month high against global equities. Gold remains weak against the S&P 500.

oct16ed14bottom 

Going forward there are a few things we will be watching. Assuming Gold breaks back below $1200 and eventually below $1100, will it be able to hold these recent lows against the other asset classes? If yes then that will show that though Gold is declining it is maintaining the kind of relative strength that was in place at previous major bottoms. Secondly, the Gold vs. S&P 500 ratio is very important. US equities and precious metals have been on a divergent course since the summer of 2011. If we get a weekly close in the ratio above 0.75 then it would signal a major turning point in favor of Gold.

In the meantime we would advise continued caution. Gold and Silver have bounced but only from an extreme oversold condition. Though Gold has rallied $50/oz the miners have done nothing. The large caps (GDX, HUI) are trading dangerously close to recent lows while the juniors (GDXJ) have tread water at best. They are hinting that this rally won’t last. Please stand aside for the time being. I see a potential lifetime buying opportunity emerging in the months ahead. Consider learning more about our premium service including a report on our top 5 stocks to buy at the coming bottom.

Good Luck!

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com

Extreme Precious Metal Shorting Peaks

Posted by Adam Hamilton - Zeal Intelligence

on Friday, 17 October 2014 19:18

Extreme futures short selling is inherently self-limiting, because all shorts must soon be covered.  The underlying commodity borrowed from someone else to be sold has to be repurchased and paid back.  And in the futures markets, the price impact from a trader adding a new long contract or buying one to offset and cover a short contract is identical.  Major short covering means massive gold- and silver-futures buying.

That will catapult gold and silver prices higher, gradually enticing investors to return.  And with the Fed-distorted stock-market levitation finally rolling over, the extreme PM-futures shorting looks to have peaked.  Every Friday afternoon, the CFTC publishes futures speculators’ positions as of the preceding Tuesday in its famous Commitments of Traders reports.  And the latest from Tuesday the 7th reveals change is afoot.

Zeal101714B

While silver recently broke below its major support, this was on the most extreme silver-futures shorting in at least 15.7 years and almost certainly ever!  When gold’s recent reversal gains enough momentum to look decisive, capital is going to come flooding back into silver on short covering alone at one of the fastest rates ever seen.  Talk about bullish.

American futures speculators borrowing vast amounts of silver to sell it low is truly the only reason silver prices are so dismal today.  But just like in gold, extreme shorts must soon be covered.  So the record levels of silver shorts almost guarantee we are in for a monster silver upleg ignited by a short squeeze

Finally the gold price is superimposed over this CoT futures data as seen through the lens of the flagship SPDR Gold Shares gold ETF, which trades under the symbol GLD.  

Zeal101714A

So gold is perfectly set up for a monster upleg in the coming months.  Even before the stock-market selloff started to snowball, I was telling our subscribers that there was nothing to worry about in gold because the only reason it retested support was extreme futures short selling.  Since those highly-leveraged shorts must soon be repurchased, there was never much risk of major new gold lows with shorts so extreme.

…..read more HERE

 

Knowledge is Power: All-Star Silver Panel

Posted by Miles Franklin Precious Metals Investments

on Friday, 17 October 2014 13:14

The top minds in the silver research community discuss supply/demand of gold and silver, mining production, oil prices, trading, and the bullion industry. The panelists below include David Morgan, Harvey Organ, Steve St. Angelo, and Bill Holter of Miles Franklin. Listen to the interview below:

silver-2

 

Wacky World of Precious Metal Stocks

Posted by Ruben Varela, Jr.

on Thursday, 16 October 2014 13:17

Have mining companies’ stock valuation ever been more undervalued relative to the price of gold? As the $XAU:$GOLD ratio chart below illustrates, the answer is NO!

 

1

After cutting costs to the bone in 2013, mining companies in 2014 have resorted to decreased production and shuttering mining operations. As the second chart below illustrates – mining companies, as represented by $XAU, are presently valued at the same level as they were when gold traded as low as between $350 – $500/oz! 

2

Perhaps these “whacked-out” metrics will matter someday, maybe even soon. Maybe even to mining company executives – who apparently are finding it more convenient and cost effective to buy their metal on the open market rather than actually mine it, and who – in response to the ongoing decimation of their industry, as well as their investors’ portfolios – we hear from leadership the collective and thunderous sound of…

…crickets. 

 

About Ruben Varela, Jr. 

Ruben is an independent trader specializing in the precious metals sector. Email: rtvarela@yahoo.com. The foregoing is for entertainment and educational purposes only and not investment advice. Please do your own research before investing.

Oct 14, 2014

  1. It’s the dawn of another day, in the worst month of global stock market “crash season”. Long ago, I defined global stock market crash season as the August 7th to October 31st timeframe. 
  2. Investors who fail to exit general equity market positions by August 7th each year take the reckless risk of watching most of their holdings getcompletely destroyed.
  3. That’s because history’s greatest stock market crashes, including the 1929 wipeout, have occurred in the month of October. Horrifically, many investors in the global gold community sold substantial amounts of gold stock at enormous losses in 2013, and put the proceeds into global stock markets. My analysis shows that trend continued into August of this year.
  4. In any asset class, the penalty paid for “chasing price” can beenormous. On that note, please click here now. That’s the monthly chart of the Dow Jones Transportation Average.
  5. The uptrend line is broken, and it’s become resistance rather than support. The 14,3,3 Stochastics oscillator, shown at the bottom of the chart, is rolling over in an ominous fashion. If it declines under 80, a major crash could ensue.
  6. Also, note the bearish change in my gold “swingograms” indicator. I’ve circled it in red. It’s been positive since 2012, and now it is flashing a sizable sell signal. The “trannies” are in serious technical trouble, and they often function as a leading indicator for the entire US economy.
  7. Please click here now. That’s a closer look at the trannies, using a daily chart. The August lows have now been penetrated, on a closing basis.Sell-side volume is beginning to surge.
  8. America’s industrial companies are also in trouble. Please click here now. That’s the daily chart of the Dow. The August lows have also been penetrated, by yesterday’s price action.
  9. In late 2013, I predicted the Fed would taper all the way to zero in 2014, and suggested that taper would turn the Dow into a “wet noodle”, while creating a rally in gold prices. That’s the opposite of what most analysts thought would happen in 2014, and it’s exactly what has transpired.
  10. The risk of a complete global stock market meltdown is growing now. The Fed’s number two man, Stan Fischer, has thrown gas on the fire, by aggressively suggesting the Fed’s next move will be to raise interest rates. To view his latest statements, please click here now. 
  11. In my professional opinion, the stock market has risen higher for the past 5 years on low volume, because US corporations have borrowed money at low interest rates, and bought their own stock with that money. Higher rates will cook that golden goose, like rice paper gets cooked in a blast furnace.
  12. I think many investors are assuming the Fed can engineer another huge stock market rally with further easing. Instead, what they could experience is something more akin to an economic ice age. 
  13. Please click here now . That’s the daily oil chart. As the caption says, the situation for the US oil industry could become truly dire, as prices tumble. A hike in rates could push oil much lower. It could create a horrific implosion, of the only sector of the American economy that has shown any real gains in wages.
  14. The enormous debts carried by Western governments is making the Fed’s monetary easing tools ineffective. Unless governments move aggressively (and quickly) to reduce their debts, the Fed may be quickly forced to discuss gold revaluation with the US Treasury, and perhaps with other nations, including China.
  15. While mainstream media focuses on the past rise in the US stock market, the reality is that gold-oriented China and India are the only nations showing real economic growth, with low unemployment. This is a trend that I expect to continue not just for years, but for decades.
  16. Please click here now. This PDF document on the Shanghai Gold Exchange should be read thoroughly by all members of the Western gold community. The Chinese government is clearly committed to increasing the amount of gold owned by Chinese citizens, in a major way.
  17. I own substantial amounts of stock in Chinese jewellers, and I also use them as leading indicators for gold prices. That’s because jewellers are the closest link in the supply chain to the largest source of consumer demand for gold. I cover some of these individual jewellers in my Graceland Juniors newsletter, and they look bullish.
  18. Please click here now. That’s the daily gold chart. A week ago, I predicted gold would rally towards sell-side HSR at $1240, and that’s what happened. It’s going to be a bit of a fit to surge towards $1270.
  19. To understand why I think gold will trade at $1270, and higher, pleaseclick here now. That’s the weekly chart. Note the incredibly bullish position of the price stoker (14,3,3 Stochastics) at the bottom of the chart.
  20. The bullish technical position of gold is supported by great news about inflation in India this morning. To view that news, please click here now. 
  21. The case to reduce interest rates in India is growing daily. Here’s why that’s important: Chinese citizens currently own about 5 grams of gold per person, compared with 25 grams per person in the West. The Chairman of the Shanghai Gold Exchange has suggested that Chinese holdings, on a per capita basis, can rise to Western levels, and should be encouraged to do so. 
  22. I believe Indian citizen holdings can grow at about five times the already-impressive rate that Chinese holdings can grow at, because Indians spend a substantially higher percentage of their income on gold than Chinese citizens do. A decline in Indian interest rates can help boost economic growth, and hence boost gold demand enormously. The import duties are meaningless now. No serious gold player in India cares about the duties, which means that no serious investor in the Western gold community should care about them. 
  23. Junior gold stocks are the darling of the Western gold community, and I have some great news for all GDXJ enthusiasts. Please click here now. That’s the daily GDXJ chart. 
  24. Note the beautiful buy signal generated yesterday by my gold “swingograms” indicator! I circled it in green. The last signal was on the sell-side, in mid-July. My price stoker at the bottom of the chart has surged above the 20 line, also generating a buy signal. The bottom line is that gold and silver are the ultimate assets, and now is the ultimate time to own the stocks that mine them!

Oct 14, 2014
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
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Monday Oct 14, 2014
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an invetor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line: