This is probably not the type of article anyone who owns precious metal stocks would like to read, but here it is. The analysis presented today illustrates short-term and mid-term outlooks up front, with the Elliott Wave count indicating the longer-term trend expected over the next 5-7 years. I am not really going to provide much information on investment strategies around this analysis, but if one connects the dots, it should reveal a crystal clear picture.
Michael A. Robinson writes: When Minghao, a 12-year old Chinese boy, was playing soccer earlier this year, the seemingly healthy player had no idea he was on the cusp of devastating news.
During the game, he headed the ball; it was a simple maneuver regularly seen throughout any match. The next day Minghao (a pseudonym) woke up stiff, sore, and with a severe aching in his neck.
Any doubts about why I own gold as an investment were dispelled last Saturday by the maestro himself: former Fed Chair Alan Greenspan. It’s not because Greenspan said he thinks the price of gold will rise – I don’t need his investment advice; it’s that he shed light on how the Fed works in ways no other former Fed Chair has ever dared to articulate. All investors should pay attention to this. Let me explain.
In this Weekend Report I want to shows you what I think is the most important chart on the planet right now. I know many of you won’t agree with this statement because there are a lot of important charts out there that are talking to us right now. This just my opinion based on the most recent price action that this chart exhibited on the recent plunge in the month of October. The chart I’m referring to this the long term monthly chart for the Dow Jones Industrial Average.
Before we get to the present charts I would like to show you a Weekend Report from January 2013. The signs that a new Bull market in US Stocks was beginning were there, almost 2 years ago. Even I am surprised how this has evolved exactly as described. http://rambus1.com/?p=9469
Last month in these pages, I wrote:
Patrick de la Chevardière, CFO of Total SA (which is France’s largest energy company), has publicly announced that Total is looking to finance its share in the $27-billion Yamal LNG project using euros, yuan, Russian rubles, and any other currency but US dollars.
“The effect of US sanctions was that Yamal LNG will be prevented from raising any dollar financings,” Patrick de la Chevardière stated in London at a news briefing.
Cheap oil prices and the economic prosperity they bring can make politicians and investors look smarter than they are. In this interview with The Mining Report, Stansberry Research Editor Matt Badiali shares the secrets for finding underappreciated commodities and companies before they become overpriced, and names his favorites.
The Mining Report: You have said that Hillary Clinton could go down in history as one of the best presidents ever. Why?
Sen. Tom Coburn (R-OK) released his annual Wastebook this past week. It contains a laundry list of doozies. The U.S. government’s gold-plating operations included $190,000 to study compost digested by worms, $297 million for the purchase of an unused mega blimp, and $1 million on a Virginia bus stop where only 15 people can huddle under a half-baked roof. These questionable (read: absurd) expenditures only represent the tip of the iceberg.
The long-awaited audit of the Corporate Commercial Bank’s (KTB’s) assets has been released by the Bulgarian National Bank (BNB). In its wake, a debate has arisen about the future of the KTB: Should it be recapitalized? And if KTB is recapitalized, should the Bulgarian or the European authorities be responsible? However, it is clear from the results of the audit that, once the obscurity of the technocratic arguments is stripped away, there can be no debate. KTB should be liquidated as soon as possible, and whatever proceeds can be obtained in liquidation should be used to reimburse guarantees to depositors paid from the Bulgarian Deposit Insurance Fund (BDIF).
Michael A. Robinson writes: On Oct. 15, I told you that the best time to cash out of the market is… never.
And just four days later, The Wall Street Journal ran an investing column that came to the same basic conclusion.
Citing an “enormous body of academic research,” the Journal concluded investors should always have some money in stocks.
To the point: no speculative positions.
Bitcoin companies are already working on various issues regarding regulatory compliance. Arthur Levitt, a former SEC chairman, is now advising two Bitcoin-related companies, we read on the Wall Street Journal Website:
Arthur Levitt, the longest-serving chairman of the Securities and Exchange Commission, is joining the advisory boards of two bitcoin-focused companies.
The by-election for the South Yorkshire Police and Crime Commissioner in the wake of the resignation of Shaun Wright is to be held this Thursday, and which has started to galvanise the mainstream press into swallowing UKIP propaganda that they actually stand a chance of winning the by-election all on the basis of one message centred around the Rotherham child sex abuse scandal as illustrated by the poster vans that are doing the rounds in Rotherham area.
Europe had hundreds of inspectors check 130 banks for a year in that stress test. Who do you think picked up the tab for that? And what did Europe’s taxpayers get in return? As I’m looking right now, they got falling stocks and 3 Italian banks in which trading was halted. What was the ECB’s goal with the tests again?
Oh right, to restore confidence in the markets … Well, with WTI oil falling fast below $80, I think we can now confidently say the Boys of Brussels are either not up to the job, or they’re letting the whole caboodle rapidly drift south on purpose. Probably a bit of both.
Editor’s note: With permission, the following article was adapted from the October 2014 issue of The Elliott Wave Financial Forecast, a publication of Elliott Wave International, the world’s largest market forecasting firm. You may review an extended version of the article for free here.
In February, The Elliott Wave Financial Forecast discussed the great boom in New York City’s residential real estate and its keen resemblance to what happened in 1929, when the demand for luxury housing also spiked to previously unseen heights. At 133 East 80th Street, we found this plaque commemorating the earlier era’s brick-and-mortar monuments to a Supercycle degree peak in social mood.
China is looking at investing in infrastructure in India. That’s the best idea I’ve heard in a long time.
China has overinvested — like 12 to 15 years of future urban migration out — with 27% of home vacancies in cities. India has underinvested in everything. The roads are terrible, electricity is nearly non-existent in rural areas and it’s shoddy at best in urban sectors. Water and sewer services are not up to snuff and there are slums everywhere.
The American Association of Individual Investors survey (AAII) has a good record in signaling important lows. Despite the previous week’s large sell-off the survey showed optimism at a six-week high (the survey was completed prior to the Friday rally). That aberration should have been corrected last week. Instead, last week’s numbers show optimism surging and pessimism plunging again – implying that the 10/15/14 low was not an “important” low (the “buy the dips” mentality was stronger than any fear created by the market drop).
Generally, the real interest rates are negatively correlated with the gold price, i.e. the rising interest rates adversely impact the yellow metal. Based on this adverse relationship between real interest rates and price of gold, Elfenbein built a model for the price of gold. According to it, whenever the dollar’s real short-term interest rate is below 2%, gold rallies, and whenever the real short-term rate is above 2%, the price of gold falls. Another rule of thumb is that gold moves eight times stronger than the difference between real interest rates and 2%. If the model is correct, the Fed’s future interest rates hike may be detrimental for the price of gold. However, there are many objections to the use of such a simple model, and generally to the adverse relationship between gold and real interest rates.
Central Banks and the Business Cycle
I like it when someone besides a few financial bloggers takes the gloves off and starts asking some hard-hitting questions.
Trading position (short-term; our opinion): No positions.
On Friday, crude oil lost 0.68% as concerns over a global oversupply continued to weigh. Additionally, soft U.S. housing data pushed the commodity below $82 per barrel. Will we see another test of the strength of the psychologically important level of $80?