Yesterday I remarked, “The technical damage (in the precious metals) is severe, and not going to reverse in a single day on a single estimate (of gasoline inventory in the US). The commodity markets are global in scope and the global economy is shrinking.”
Earlier this year, I sent out a (draft) report on Goldcorp (GG) to 200+ of you who requested it. The price was US$44.71 and all the dozen or so broker-dealer analysts who follow it were positive. I opined, however, that GG was a SELL and that a trader could buy the stock at $31 later in the year. That was a good call as the price of GG closed at 30.92. I suppose my crystal ball worked. Anybody who wants a copy of that report should just hit the e-mail button and insert GG. You should know, however, that I was at the time merely using GG as a case study for a new type of report Cara Trading Advisors (Bahamas) Ltd is preparing. I didn’t have the time then to finish it. But the message was clearly there.
Now that my price objectives have been met, I’m going to say that the cycle bottom for GG will likely be hit within 30 days. I recommend that everybody study the Monthly RSI-7 data for the gold miners that I list in the WIR. The Monthlies are quickly catching up to the Daily and Weekly RSI-7 values that have fallen below 30, but the Monthlies are still above 30. I feel if there is a rally here, it will be a short-term rally because the technical damage needs to be corrected before a new Bull phase for these stocks can begin. But if the current cycle grinds out a bottom as Crude Oil continues to plunge, that bottom could occur in the next month.
In any case, traders know that, whether it is the US or Europe or many other countries, governments are not being (as kaimu says) honest with the money. They are still printing excessively. Governments are still not prepared to drop key interest rates in advance of the onset of deflationary pressures because they are too scared that commodity price inflation will suddenly reappear. So, there will be a break in the commodity Bull, but it will be fairly short-lived. Oil is a consumable so the price, in a period of economic contraction, will drop further than the precious metals. Traders like me will be looking ahead and figuring that gold and silver is not a bad place to be later this year.
Look at it this way: When thinking long term, would you rather put your confidence in government and banks than in gold? The answer depends on many factors, but at this point, I have very little evidence that shows me that financial assets and government budgets deserve our support.
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This article has 16 comments:
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2008traveler
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17 Comments
My Website
Aug 15 05:46 PM-
Malkiel
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592 Comments
Aug 15 06:05 PM-
MarkMedayski
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32 Comments
Aug 15 06:29 PMProbably it will be much lower than today,but it will keep moving up from now on and support might be near,I see the gold will reach it's high by December as speculators will stay away from stocks and buy everything gold,only what this high will be I can not now but it might be anything between 700-1000 as I don't expect demand to be at more than 1000.
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JasonC
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367 Comments
Aug 15 07:10 PMAs for the silly people comparing gold to paper stuffed in a mattress, try comparing it to interest earned on anything instead. Gold may have some insurance value in a portfolio for zigging when other things zag, but its long run returns are punk and its volatility enourmous. The last thing it is, is "safe".
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CLH
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717 Comments
Aug 15 07:50 PM-
pitaking
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44 Comments
Aug 15 09:03 PM-
gigem77
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99 Comments
Aug 16 09:05 AMThe driver for the CRB is oil and oil bears failed again to close below 112. How many more times will they beat their brains out on that wall before they cover, reverse and go long? T. Boone says 110 will hold. OPEC says 100 will hold. OPEC has control of what little spare capacity still exists in world supply. Oil will lead the CRB and gold higher.
Read the IEA Interim report omrpublic.iea.org/curr...
Non-OECD demand is growing 3.8% per year, more than compensating for the drop in OECD demand. World demand is still growing.
During the 4 weeks of spec liquidation and shorting in crude, gasoline demand increased week over week. There has been no demand destruction, just demand suppression. As the price declines, that demand comes back.
This sharp 5 week dislocation in commodity prices was caused by hedge fund speculation, not by fundamentals. The lower prices are causing resurgence in demand.
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bold4gold
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44 Comments
My Website
Aug 16 09:26 AM-
usslbcgn9@earthlink.net
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163 Comments
Aug 16 10:03 AM-
BrunoT
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70 Comments
Aug 16 11:07 AMYou tell me. When it costs you $15,500 to buy a week's groceries, will gold still be at $800/oz?
Meanwhile, when credit has frozen up, consumers are maxed out and unable to borrow anyway, and foreigners have wised up and quit lending us money to re-lend, will our domestic stocks prosper and show record sales levels? You think people who can't pay their mortgage or credit cards are going to spend like they could in the days when they could pay them?
Go check the reports on Ford or GM or any retailer and tell me we're in for great times in the stock market.
Then go ask yourself. If not US stocks, if not gold, if not silver, if not ag commodities, if not oil, then WHAT? What are you going to put your money in that will at least retain its value in a period of real 10-12% inflation?
Only if one is so myopically concentrated on his beloved "markets" can one ignore all that and say "gold will be lower when the dow is at 4,000".
In 5 years gold may not be a smart move, but in a period of transition and massive change in the economy (bye bye sharper image, many financials, starbucks, service economy bs etc) where thankfully pitifully few even understand it, those in early should clean up. When it becomes a "sure thing" mania, that's the time to sell.
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lblaine
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30 Comments
Aug 16 12:01 PMThe US mint has stopped minting gold coins. You can buy "paper" gold at $800/oz, but not physical gold!
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jt
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99 Comments
Aug 16 01:21 PMWhat it is is financial hell...for the working class, esp, but not for the Mephistoclean elite who rob them blind day after day thru continued debasement of the currency they get paid in...and then taxing what's left with more and more cleverly disguised "charges" and "levies" and anything else that can be dreamed up to take the little money that's left.
They (the Fed and their fellow Western CBs, their bullion/investment bank lackies, eg, JPMorgain4Elites and GoldmanSuchs, and our "own" Treasury, run by ex-GoldmanSuchs officers, along with the PPT [formally, the President's Working Group on Financial Markets]) "intervene" now daily in...ie, manipulate... ALL markets...COMEX, DOW/DOG/S&P, futures, currencies, bonds to make everything look to still be the Goldilocks economy that Americans want and want to hear about...where everything is "just right."
Then comes price inflation. And since most Americans haven't seen the whole thing yet, what will turn out to be a monster man-eating lion at the moment still looks like a nice little pooty cat with a little bit of a bad temper. But even those who smirk and throw around their little ignorant putdowns about "silly" people know in their knower that the ground they walk on is levitated artificially and that the rumbling they hear below aint their stomachs.
You've got a chance to trade in some good chunk of your worthless paper for real money now--silver and gold...now that it's been taken down on the PAPER markets (though the physical markets are fast becoming very different and changing...go try to buy 100oz silver bars, or 1oz Ag Eagles...or now gold eagles...you can't...and what you can find is at a major premium, despite the law that the mint was to ALWAYS have silver and gold Eagles available on a timely basis for all who wanted them, and if they didn't have the silver or gold, they were to go to the open market and pay whatever price needed to assure a constant supply...yes...that is LAW!!).
Those with eyes to see and not too impressed with their own ability to throw verbal bullets at a real problem that won't kill it any more than taking a piece of note paper and writing $1,000,000 on it will be able to pay their bills...YOU will take the red pill and leave the Matrix before it drains the rest of the life out of you. And no, you won't be able to just up and leave...you do have to live somewhere, under some govt. with some kind of economy. But with eyes opened, you will understand what is REALLY happening and take appropriate measures. jt
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CaptBob
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198 Comments
Aug 16 03:13 PMWe have good people, with fewer jobs every day, more debt and more fiat dollars, that are worth less and less--just because there are more than yesterday, with nothing but a song and dance to make you happy to take them.
Now you can believe the song and dance, believe the figures they put out, and believe all the shills who produce nothing, but owe their jobs to the current financial system. Believe "The almighty dollar" is just crossing a speed bump. And load up on more of the same.
Or you can go with your gut and go for the gold.
And if your gut doesn't tell you something these days, you'd best just get out of the game and watch CNBC, cause either way you're going to be living off your "Victory" garden till you get some down to earth perspective and a "Gut" you can depend on.
You got it right Bruno:
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User 30121
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339 Comments
Aug 16 05:41 PM-
MC dk
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9 Comments
Aug 17 02:41 AMThey don't, it is the paper gold that is pressing it down, as ALL those shorts have to cover at some point, or go to Bear sterns.
ONE day or probably night, the mining company's. will WAKE UP, and actually BUY physical gold in August.
?? WHERE are all those HEDGE funds that are lending short and buying long, this is steal bargin at 20-30% + that they can GEAR up to 100 times.
( Except for BARRICK & co, who for years solf FORWARD >7 years - their gold - for 3-4-500$, forcing the price down, and now creating MASSIVE losses when they have to deliver it today at much higher production costs. Idiots, set up buy their OWN banks, as this was a condition to the loans, they needed to BOOST production, that would suppress the price further.
WHEN will resource company's and COUNTRies, WAKE up and OVER RIDE the paper market.
It could be closer than most think, OPEC looks like they have began to understand, that oil in the ground is more valuable than that sold for $paper - bonds - mortage crap.
Notice that China agree's to pay 70% MORE for iron ore than the spot price, for a longer term kontrakt. ? Is that because there is TOO much supply floating around, I doubt it.
Same with oil, that will expolde when The cantarell and Gehwar mega fields really start declining.
And now the dollar is suppose to be THE best bet....
WAKE UP..... turn of the TV... and start thinking your self. !!
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fxtrader07
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618 Comments
Aug 18 09:49 AMI have news for you: there may not be any physical gold that you can buy then. all you may get your hands on might be some paper contracts, etfs or the like. good luck with those as they could get terminated at any moment and you get paid worthless paper only.
if you think about it, iz makes perfect sense: gold pays no interest, because it has the lowest risk of them all when it comes to payback time. it#s upon you to decide whether 4-5% for treasuries are worth the risk