Given the position for gold, near its lows, the likelihood of support holding above a 50% retracement, the 1219-1220 area, is not in keeping with the character of a down trending market. For sure, buying rallies, expecting yet a higher rally has not worked in gold, to which we can attest from a few trades some time back. Time is on the side of longs who are best served being on the sidelines, for now.
Tag: monetary policy
This microdocumentary video examines in detail 4 major booms in the last 100 years and explains how monetary policy and interest rate manipulation has led to the inevitable bust.
A stagnant job market and poorly disguised inflation is the “new normal” for Americans. Forget about sending the kids to college – it’s going to be a struggle for many families just to make ends meet. Those who don’t own gold and silver will see their dollar savings and quality of life diminish at a faster and faster rate.
Gold prices are still low compared to debt as shown by the gold to population adjusted national debt ratio from the past 44 years. National debt is increasing rapidly, population is increasing slowly, and the gold to population adjusted national debt ratio seems likely to increase substantially from here. Hence gold prices will rally much higher, thanks to massive increases in debt, more currency in circulation, “money printing,” investor demand, higher energy prices, various worries and wars, and Asian demand.
In his weekly market review, Frank Holmes of the USFunds.com nicely summarizes for gold investors this week’s strengths, weaknesses, opportunities and threats in the gold market. Gold closed the week at $1,280.08, down $24.75 per ounce (-1.90%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell 3.08%. The U.S. Trade-Weighted Dollar Index rose 1.08% for the week.
The end is nearer and nearer, just not in sight, but for those who can exercise even a minimal amount of foresight, taking self-direction has never been more important. The charts give no indication of panic by those in control of the PM market through the use of derivatives. The fact that China is endeavoring to become the next gold trade center, in control of a legitimate pricing mechanism has done nothing to alter the chart read. Gold has almost disappeared from the headlines this past week, and the fact that it cannot make a move out of its protracted trading ranges explains why. There is nothing apparent over which one can be enthused for the prospects of higher prices, but one must always be prepared for events when they do happen.
Contrary to popular belief, rising rates are no threat to gold. This metal soared in the 1970s during the last secular rising-rate environment as stocks and bonds got hit. Gold powered higher again in the 2000s with both short and long rates far higher than today’s levels. And gold surged during the only major modern rate-hike cycle seen a decade ago, when the Fed more than quintupled short rates.
Investors should consider gold and gold exposure as an alternative asset class and as part of an overall portfolio. I would recommend that investors average their investment over time instead of buying all at once. The gold price is volatile and it’s very difficult to get the low points. Averaging over time when the price dips can help financially and mentally even out the ups and downs. Consider gold as a very long-term investment, not just a two- or three-year investment.
Eventually we’ll have a collapse or deflationary bust in asset markets. That’s inevitable. Printing money can postpone such a collapse but eventually the bust will occur. Every inflation, whether consumer price inflation or asset inflation, eventually comes to an end. I hold physical gold for the reason that one day I may not be able to remit money from one country to another. I don’t know when this final systemic collapse that I am foreseeing will occur but all I can say is that in monetary, inflationary times, when inflation is measured properly, in real terms: stocks usually don’t do particularly well but gold does.
In the end, this is really simple. The Bank of Japan wants investors and economic agents to believe that it is “doing something” that has the power to alter the country’s economic and financial course. That has never been the case, and it certainly is not now with a measure of “stimulus” in a manner already fully saturated with prior “stimulus.” And it doesn’t take any monetary expertise or specialized training to see this. Simple common sense will do. There is no Greenspan put, only an irrational fear of the Greenspan put. If the Federal Reserve or the Bank of Japan had any real power, we wouldn’t need to argue about whether there is a real recovery or not.
As we have finally arrived in the magic year 2014, in which almost every economic and business cycle is trending down, it seems that things are perfectly lining up for a melt down. If it would have been true that the debt crisis was contained (like our political leaders try to make us believe), then there is a huge divergence with recent trends. This article looks at six different trends which are lining up for an historic sell off in the markets. As readers observe, we stay as factual as possible.
The Chinese central bank People Bank Of China concludes their latest monetary policy report with several actions, one of which being: “The diversity of participants on the gold market will be promoted,
The Fed can’t give free lunches to banks forever—here’s what will happen when it stops.
With a global competition in currency debasements, with limitless monetary stimulus, with decreasing effects of monetary expansion, with a conscious infringement of the monetary rules, it should be clear that there is hardly a way back for our leaders. Given this outlook, we believe it is a matter of “when,” not “if” the next collapse occurs.
One of the consequences of Japan’s currency debasement is now starting to show its ugly head: the cheaper Yen may be intended to stimulate exports but it simultaneously makes imports more expensive.