The big talk
these days is of the debt ceiling in the US having to be raised. The US is lucky they can do this
unlike other countries such as Spain, Portugal, Greece, Ireland and others
who need to be bailed out or pass huge austerity measures.
Unfortunately
the perpetually increasing debt of the US is what’s going to be their
downfall. It simply cannot last
forever and the only way out now is a devaluation of the US dollar which has
been and is occurring, but so far it’s been orderly.
It’s
impossible to ever pay off the US debt.
If
you do any shopping at all you know prices have been going higher and in many
cases at an accelerating rate.
Do
not be fooled by the snails pace of the
devaluation. A cursory look
through history will show you that this is always how the fall of a currency
occurs. Slowly at first, then it
picks up some steam but is still manageable but when the big fall happens,
it’s almost an over night phenomenon.
I
can’t say whether this will come next week, next moth,
next year or in ten years but it has to happen and
you have to have protected your wealth beforehand.
History
tells anyone who will listen what is coming up. Do yourself a favour and spend half an
hour researching monetary history on Wikipedia or inflationary or
hyper-inflationary events.
You’ll
quickly realize the horror show that is coming and I won’t have to try
and convince you to buy physical precious metals, you’ll know why and
feel confident and comfortable in your decision.
As
for the markets, they’re holding up quite well in the face of bad
economic news and they truly look poised to move higher in the weeks to come.
The
fact is the debt ceiling will be increased and the markets know this and are
acting well.
Several
of our swing trading positions are taking off now out of beautiful bases and
they are poised to move up quickly from here again.
Mining
stocks are doing well, the precious metals are breaking out higher and
it’s shaping up to be a great summer all round.
Let
the good times roll!
Metals review
The
charts today are back to the bar chart form using spot prices.
Gold
slowly and quietly rose 3.15% into new all-time nominal highs. I used to get very excited when
we’d hit all-time highs but really it’s no big deal to me. Sure, we increase our wealth as it
rises but we’ve go so much further to
go. Maybe once we hit closet to
$5,000 I’ll begin to get excited but we’re a long ways off from
that.
There
is no telling where gold can go from here but it’s going to be
higher. The base we built since
May has been great and it appears my pondering that gold had hit it’s summer lows looks to have been correct last
week.
We
are seeing good volume on this breakout which means it’s quite likely
to continue. It will probably be
relatively slow though as gold seems to just meander higher at a leisurely
pace so far. We’re far from
the top as once we begin seeing huge multi-hundred dollar moves higher for
days on end then we will be closer but for now it takes a whole week to move
up a paltry 3% or usually less.
Volume
in the GLD ETF was huge for the week and it’s signalling this breakout
is confirmed.
I
wouldn’t be waiting around here if you’re looking to buy physical
gold as it is not going to be any cheaper in the future.
Silver
rose 6.93% this past week after rocketing out of a nice basing pattern that
has refreshed and powered silver back up for much higher levels. I recently made a small bet with a
friend that silver will be $300 in five years, it’s a shoe in!
A
beautiful breakout here and silver is now trying to break horizontal support
and Fibonacci resistance as well.
As you know we saw a massive quick run higher earlier in the year, and
then an even faster fall. The
speed of both the ascent and descent didn’t allow for any
consolidations so there is really no resistance to speak of from $39 back to
highs near $50.
I
wouldn’t be short this one and it’s actually a good one to trade
since it moves so quickly, but it can be very dangerous if you get caught on
the wrong side.
We’re
not trading it as of yet but I am loaded with a very heavy weighting of
physical silver and it’s been my top holding for years and I
suggest you consider the benefits of owning physical silver yourself.
I
run through many reasons to own physical precious metals here every week.
Volume in the
SLV ETF was solid, but not heavy which tells me we have lots of room for
traders to come into this tiny market and drive the prices through the roof,
literally.
Platinum
rose 1.27% this week and is now trading in a nice up-trending channel. The $1,800 area is going to be the
next resistance level and once that is breached then we could see some real
upside fireworks.
For
now the 100 day and 50 day moving averages have slowed platinums
ascent.
Volume
was good on up days in the PPLT ETF and low on the move lower on Friday. All signs point to higher prices on platinums near future.
Palladium
rose 0.22 for the week as it slowly builds the steam to power through
resistance at the $790 level.
It
looks like we should be ready to see this white metal move up to the $820 in
the near future.
Volume
in the PALL ETF was quite light and not telling me anything at all really at
this time.
Fundamental Review
We
saw Ireland's debt rating sunk to junk this
past week, but as usual the ratings agencies are far behind the curve. They are warning of a second bailout
being imminent. That’s not
very hard to figure out really is it?
Another
ratings agency said Thursday that the US credit rating is on watch and at risk
of being downgraded if a new debt ceiling isn’t reached. Talk of this ceiling is getting
nauseating. We all know a deal
will be reached at the last minute so I’m trying my best to ignore it
all and markets seem to be doing the same.
In
fact the US has to borrow another $5,240 from every single
household in the US to get through to only the end of
September. I know most households
don’t just have that kind of cash lying around and even if they do, I
doubt they’d be thrilled to hand it over. Don’t worry though,
they’ll just put it on the tab!
Results
from the European stress tests were also released Friday
and apparently only 8 banks failed the stress tests. To be honest that high number shocks
me as none would fail as they’d get bailed out!
The
test results say the banks would have only a shortfall of $2.5 billion Euros.
So
far in the good old US of A two banks have failed this week alone to join this years
list of biggest losers.
This while the US is apparently recovering even though we had a
horrible jobs numbers and several other bad economic numbers this past
week. The markets are shaking it
off though which means they’re very strong at the moment.
It
doesn't matter why they are strong, they are. Just try and ignore the noise and
focus on charts and long-term trends.
At least that’s how I’ve been making money
and it’s still working so I have to stick with it.
China’s
GDP rose 9.5% year over year for Q2 and
that number continues to astound me.
I’m
torn as to where to put this next item, is it headline worthy or best saved
for the laugh of the week section.
I settled on a happy medium, right in the middle.
It’s
an absolute must to watch this video several times as Ben Bernanke ponders the
question of is gold money before replying, no.
Ben
knows gold is money, he just can’t admit it. Basic economic principles have never
changed at their core but the powers that be are sure trying their best to
change it but they will fail although they’re doing a stellar job of
postponing the re-emergence of basic economics where a sound currency has to
be backed by something rather than being able to be created out of thin air.
Gold
has to back money in order to keep it from going worthless. It’s happened every single time
an unbacked currency has been used. We’re really no smarter today
than in the past we just think we are, as did those past leaders who’ve
seen their fiat currencies fail.
You
can’t just create wealth, you have to earn it.
Last
weeks news story which was
patently a lie regarding Russia selling their gold saw many rebuttals
this week as it should be.
It
really irks me when a supposedly respected news organization fabricates such
lies. We are all human and make
mistakes, god knows I make my fair share, but to go out of your way to
fabricate such garbage annoys me to no end.
The
World Gold Council said this week that
the first half of 2011 has seen more gold buying by central banks than all of
2010. Ignore the bearish
propaganda. Gold and silver are
perhaps the easiest and greatest long term trend trade you’ll ever
see. As always I have to admit my
bias towards the physical bullion as my preferred method to ride this trend.
Venezuela
has limited gold companies to exporting only 50% of their production. So the question is what will happen to
the other 50%? While the article
didn’t mention it I can assure you the Venezuelan central bank will be
buying as much of it as they can afford.
I
have to apologize for the shortness of the free weekend letters as of
late. It’s been very busy
during the weeks and by the time the weekend rolls around I’m exhausted.
I
hope nonetheless, you do find some value and good tidbits
within it.
Until
next week take care and thank you for reading.
Warren Bevan
www.preciousmetalstockreview.com
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