- When the 3rd quarter numbers
come out, Morgan Stanley predicts that US business investment &
exports will show a decline, to the lowest point since mid-2009.
- The inventory-to-sales ratio is
approaching 2009 levels now, and yesterday's Empire State index report
came in at -6.16.
- This important report shows the
contraction or expansion of New York area manufacturing, and
obviously things don't look very good.
- Mainstream media called it an
improvement over September's -10.41 reading, but unfilled orders came in
at a horrifying number of -18.28.
- A good chunk of recent GDP
growth is related to inventory building, and that may be nearing an
end. Companies are becoming very concerned about the approaching " fiscal cliff".
- Despite all this bad news,
general equity markets rose yesterday. Many analysts believe that Spain
is moving closer to signing on for a bailout, thereby enabling the ECB
to increase the pace of quantitative easing.
- Market prices move mainly on
perception. For stock markets, money printing is becoming perceived as
the " engine of growth".
- Silver can do very well when
institutional money managers operate on the perception that stock
markets are healthy, growth is stable, and money printing is good. It
doesn't matter what the economic reality is; it's their perceptions that
determine their liquidity flows.
- On that note, please click
here now. Commodity traders might call the price action around the
$35 area a double top pattern, but it's pretty small.
- I'd like to draw your attention
to the current position of the Stochastics (14,7,7 series) indicator. The red line is already
reaching oversold status, near the 20 area.
- From the lows near $26.25,
silver rallied more than 30%, to the $35 area. Since then, it has only
declined by about 8%.
- Silver may not be able to
outperform gold in this crisis, but it can still do very well in the
current environment of institutional perception.
- Please click
here now. Note the position of the MACD (12,26,9)
indicator. In a trading range, it often bottoms well below zero.
- In a trending market, the turn
often comes from the zero area. I expect MACD to turn up very soon, and
the silver price to move towards the high at about $37.50.
- The price action of the euro has
a big effect on liquidity flows in the gold market. Please click
here now. Currency traders are focused on the downtrend line drawn
across the highs of about 1.3180 and 1.3080. A move above there could
ignite strong buying of the euro, and gold.
- Some gold investors believe that
the "banksters" can stop gold from
rising, by selling unlimited amounts of futures contracts, and
overwhelming buyers with limited funds. In the stock market, stock is
sold from one investor to another.
- In the futures market, contracts
are bets, with one party being short, and another party being long. As
central banks increase their gold reserves, some of that gold is
purchased from commercial banks. There can be a time lag between the
date the contract is made, and the date delivery of the gold occurs.
- A lot of the short position that
you see on the comex is simply a result of
commercial banks hedging their risk between the sell date and the
- As more gold is bought by
central banks, more institutions are seeking to get on that " bandwagon". I believe the reason
the decline in gold from the recent $1798 area highs has been so timid,
is because central banks and institutions are placing more and more
orders to buy.
- I realize that many investors in
the gold community are concerned about the possibility of a major price
correction, but the longer term charts don't really support that
- Food commodities have sold off a
bit, but that comes after a horrific drought in the United States that
produced near-vertical moves in the grain markets.
- It takes time for a rise in crop
prices to trickle down to the consumer; as longs as six months. Prices
have only backed off a little bit, and the effects of the initial price
blast are yet to be felt by consumers. When Asian consumers really feel
the bite of higher grain prices, gold could begin a very powerful move
to the upside.
- Please click
here now. I want you to look carefully at the position of the MACD
(4,8,9 series) indicator on this long term
monthly chart of the HUI gold stocks index. It produced a major buy
signal about two months ago, and the 8,16,9 and 12,26,9 series look set
to follow suit.
- I think the current dip in gold
and gold stocks is more like an athlete yawning before breakfast, rather
than starting a major correction . I
don't see anything to be worried about.Please fcus on the fact that in this crisis, gold is
great, and getting greater!