As the eurozone spins out of control and Britain considers leaving the European Union, this is a good time to recall some of the debates that led up to the current mess. Here’s Margaret Thatcher being extraordinarily prescient about the common currency and European integration.
It’s safe to say that many in Britain are glad that Thatcher and her intellectual successors opposed "a federal Europe" — and that a growing number of Italians, Greeks and Spaniards wish they’d had Thatchers of their own.
A little over six months ago the owners of the Baha Mar, a $3.5 billion Bahamian resort, filed for bankruptcy. Shoddy construction from the China State Construction Company led to delays resulting from leaking plumbing, porous Chinese concrete and large cracks at critical stress points. The doomed project even led to the death of two Chinese workers. Although the building is 97% complete, the structural deficiencies make it uninhabitable. Given the Chinese proclivity to build ghost towns, it makes you wonder if their construction crews are accustomed to erecting buildings that are never intended to be occupied.
“When you have zero money for so long, the marginal benefits you get through consumption greatly diminish – but there’s one thing that doesn’t diminish, which is unintended consequences.” – Stanley Druckenmiller
Something happened on the way to negative interest rates. Something unexpected. Gold and silver demand went through the roof. The first two months of business at USAGOLD were reminiscent of the 2009 run to gold. In London, where people have the additional concern of a potential exit from the European Union, investors were lining up around the block to purchase precious metals, and reports were circulating that “Some London banks are placing unusually large orders for physical gold.” For the first two months of the year, the U.S. Mint reported gold coin sales running double what they were for the same period in 2015.
Even though Gold did not continue higher this week, sentiment still seems to be dangerously elevated. Talk of $2,000 Gold and a new bull market has become common, and Gold seems ripe for a fall, at least in the short term. Don’t misinterpret my point – I see the evidence that a new bull market trend is developing, but that’s in the intermediate term. Shorter term, the current rally is approaching its limits.
The FBI tells us that its demand for a back door into the iPhone is all about fighting terrorism, and that it is essential to break in just this one time to find out more about the San Bernardino attack last December. But the truth is they had long sought a way to break Apple’s iPhone encryption and, like 9/11 and the PATRTIOT Act, a mass murder provided just the pretext needed. After all, they say, if we are going to be protected from terrorism we have to give up a little of our privacy and liberty. Never mind that government spying on us has not prevented one terrorist attack.
Steen Jakobsen, Saxo Bank CIO and chief economist, emailed a chart of gold last week with his comments on what the chart means. I meant to comment on his comments at the time, but will do so now.
What will the price of silver be in 2021? You can find articles suggesting the price of silver will be over $1,000 and under $10. Perhaps this is the wrong question.
A better approach: The global financial system is increasingly unstable and fragile, more so than in 2008. The important question is: How will governments, central banks and financial systems respond to the ongoing crisis? Future prices for silver are dependent upon the answer to that question. I suggest three possible scenarios.
The credit card market continues to be inundated with introductory interest-free deals, but behind the scenes the latest research from Moneyfacts.co.uk can reveal that the average purchase rate on all credit cards has hit an all-time high of 21.6% APR*.
Cardholders with a high interest credit card may not be fully aware of how much they pay over the long term or how much they could save by switching to a better deal. For instance, sticking with a high interest card could mean that it will take almost four years to clear a debt of as little as £1,000.
A string of senior tories have been making insidious statements declaring that a vote by the British people to LEAVE in the forthcoming EU Referendum does not necessarily mean that the Tory elite would take Britain out of the EU, instead statements have been made that it would be just used as a bargaining chip in future negotiations ahead of a SECOND referendum, and what if Britain votes to LEAVE again, will there be a third, fourth, fifth until the Tory elite get the result they want?
Last week, I was doing what most traders were doing, being swayed by the momentum indicators. Last time we saw the momentum indicators where they are now we pulled back a little and then continued on up. That was early October 2015. The problem is, the current e-wave formation has an irregular bottom that formed after the February 8 low and that was on February 11, which suggests a move below the last low of SPX 1810 and soon. And here we have the astros confirming along with the very short term momentum indicators agreeing.
In the latest Gold and Silver Market updates, posted last weekend, the view was expressed that an intermediate top was forming gold and silver, not a bull Flag as some were suggesting, and the latest COT data not only confirms this view, but suggests that a severe drop is imminent, and it already started in silver on Friday. Fortunately we exited most of our long positions in the sector, many at a handsome profit, over the past 2 weeks, having spotted the danger.
The latest 1-year chart for gold is – or should be – alarming for those still long the sector. It shows gold churning having hit a target after a parabolic slingshot move that resulted in it becoming heavily overbought. Now it is vulnerable to a reaction which the latest COTs suggest will be heavy. Breakdown from the parabola will likely lead to a dramatic plunge.
Current Position of the Market
SPX: Long-term trend – Severe correction underway.
SPX: Intermediate trend – Next down-phase close at hand.
Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discuss longer market trends.
At this point the manipulations are getting ridiculous.
“Someone” decided to step in a prop up stocks yesterday. How do we know it was a market prop and not real investors?
There were several “tells.”
The Fed Vice-Chair has begun laying the groundwork for NIRP.
The US Federal Reserve is obsessed with market reactions to its policies. Because of this, anytime the Fed plans to announce a major change in policy, it preps the markets via numerous leaks and hints… oftentimes for months in advance.
Since October 1, Israel extrajudicially executed well over one Palestinian on average daily, numbers approaching 200 murders, including women and children – defenseless victims of its killing machine.
Washington provides full support and encouragement. Reports indicate Obama increased US aid to Israel this year by $800 million – a $4 billion US taxpayer handout. Israel wants more annually, claiming nonexistent security threats.
Gold has just generated a long term buy signal. This is exact;y what should happen if the 8 year cycle low is complete. I’ve been saying the 8 year cycle low has to occur along with a yearly cycle low, and we got a yearly cycle low in December.
On Friday, the United States rejected a draft resolution by Russia that was intended to prevent a Turkish invasion of Syria. Moscow had called for an emergency meeting of the United Nations Security Council (UNSC) to address its growing concern that Turkey is planning to send thousands of ground troops and armored vehicles it has massed on its southern border, into Syria to protect Turkish-backed militants and to block the Kurdish militia, the YPG, from establishing a contiguous state in northern Syria. Moscow’s one-page resolution was a thoroughly-straightforward document aimed at preventing a massive escalation in a conflict that has already claimed the lives of 250, 000 and left the country in ruins.
The market started the week at SPX 1918. After a gap up opening on Monday the market rallied to SPX 1947. After that it pulled back, aided by two gap down openings, to SPX 1891 by Wednesday. Then helped by two gap up openings the market rallied to SPX 1963 by Friday, and ended the week at 1948. For the week the SPX/DOW gained 1.55%, the NDX/NAZ gained 1.80%, and the DJ World index gained 0.90%. Economic reports for the week were neutral. On the uptick: Q4 GDP, durable goods, the FHFA, personal income/spending, the PCE, and existing home sales. On the downtick: Case-Shiller, consumer confidence/sentiment, new home sales, the WLEI, GDPn, plus weekly jobless claims increased. Next week’s reports are highlighted by the FED’s Beige book, the ISM’s and monthly Payrolls. Best to your week!
Last week we noted that the odds favored more upside in precious metals before a larger correction would begin. While that view remains on track, we want to note the renewed strength in the US Dollar which could provide immediate resistance to higher levels in Gold and gold stocks.
The chart below plots the weekly candles for the US$ index and the net speculative position in the US$ index. The US$ index closed back above its 200-day moving average (97) and remains well above its 400-day (or 80-week moving average).
Applying market logic:
We often state that the market is replete with logic, even for those who do not know how or do not like to look at charts to explain the markets. Charts that explain developing market activity have been superior to all fundamental analysis over the last several years. For us, that statement would include for as long as charts have been maintained, starting with Japan’s rice market, a few hundred years ago.
Most market participants have some [unrequited] need to have fundamentals be the driving force behind their market comprehension. [See the stock market top from 2008 and the ongoing follow-up by fundamentalists who were unable to comprehend how their world of value investing had just been turned upside down. As an aside, charts were flashing a major sell signal after the top but well before the collapse]. We digress…not really. The point is valid.