Interesting Days

109
Thu, Aug 20, 2015 - 11:21am

It seems that the entire investing world has caught on to the "disinflation bias" theme as stocks are sagging and bonds and rallying. The metals have moved up smartly again this morning and are once again poised to achieve breakout closes. Will they? Can they??

In spite of the continued nonsensical "analysis" that Fed rates hikes are right around the corner, the economic news today was once again lousy. Check out these three headlines from ZH:

So, with Mother Fellen still so insistent that rates hikes are necessary, global markets are anticipating the attendant disinflation/deflation that rate hikes would bring. Eventually...perhaps by the conclusion of the next FOMC on September 17...the "markets" will finally realize just how entirely full of crap she and the rest of the world's central bankers are. Rate hikes aren't next, more easing is next! The only solution that central banks offer is liquidity/cash/money-printing/QE...whatever you want to call it. As this reality takes hold, expect a surging rally in all commodities as we head into Q4.

The only question can be found in just how far stuff falls before this realization takes hold. Crude to $35? Copper to $2.20 or even $2.00? The S&P to 1850?

All I know is that it is very encouraging to see the metals rebounding so consistently. As we've been discussing, these rebounds are not in a straight line UP and both metals are certainly encountering stiff resistance along the way...BUT...their resilience in the face of all this other selling is something to behold and respect.

Overnight, gold surged through $1130 and $1140, eclipsing the 50-day MA ($1139) along the way. It is now pressed up against stout, important and critical resistance near $1150. As we've stated repeatedly over the past two weeks, the key now is two consecutive closes back above this important old support level. IF GOLD CAN ACCOMPLISH THIS, the Sunday Night Massacre of late July can be viewed as a false breakdown and reversal. This would...for good reason...put some real fear into the hearts of the smarty-pant, momo-chasing shorts that as of last week were still short a near-record amount of paper contracts on the Comex. I have a high in the Dec15 of $1151 and a last of $1149. Let's see what the rest of the day brings.

Again, IF we can continue to move forward from here, a move through the red downtrend arrow on the charts below would foreshadow a move to 80 and 00. Still not much to get excited about but at least back to even on the year and more than 0 off of the July lows.

In silver, we're pretty much right back to where we were last Friday, prior to the deliberate, manipulative raid that drive price back down almost 90¢ in two days. Earlier today, the Sep15 silver hit a high of .56. Not surprisingly, I have a last back below .50 at .47. Silver is back above its 50-day, however, which currently can be found near .28.

And now, too, silver is at a crossroads. IF it can accomplish two consecutive closes back above .50 (though, as you can see on the chart below, a case could be made for .40 instead), the false breakdown and reversal would be confirmed and silver could set its sights on .20 and even .00. But first, it needs a solid surge through .50. Can it do it??

The HUI has officially closed the gap on the chart near 128, left over from the open om July 20. With a last of nearly 131, the index is UP a remarkable 25% from the lows just two weeks ago! Do you now see why we keep such close track of the RSI and MACD levels? They were both so extremely "oversold" that a bounce was inevitable and now we've seen it. Again, the question is, what happens next? First and foremost, the index needs to hold above 130. We DO NOT want to see it fall back today or tomorrow and close back below 128. This would embolden the share bears who would likely resume their naked shorting into the neutralized technicals. So, just as in gold and silver, let's watch very closely to see what happens next.

Lastly, on Monday's podcast, we discussed the disinflation bias building for this week and the idea that S&P 2105 might be ripe for another fall. Well here it is, Thursday, and I have a last of 2054. Fifty S&P points is pretty sweet for anyone gambling! Now the question becomes, will we soon see "V"-reversal #19 since last October? Last Wednesday, when we predicted the most recent "V" #18, the intraday low was 2052. Who knows? Maybe this time, it's straight into the toilet? Maybe not. Those willing to gamble on "V" #19 might want to hold their noses, lay some chips on the table, cross their fingers and look away.

Amazingly, I have lasts of precisely $1150 and $15.50 so I think I'll stop here as the timing couldn't be more perfect. Stay safe out there and good luck!

TF

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  109 Comments

Aug 20, 2015 - 11:52am

What next?

From a larger perspective, I am torn between expecting these markets and the economy to collapse in September versus continuing to limp along as powered by lies, manipulations and deception shoveled out by the PTB through the mainstream media. These people have deep pockets and full control of what hte sheep know and understand.
Someday, things will collapse. But will the PTB manage that collapse slowly and transform the world economies into their desired shape? Or will things get out of hand with depression and war breaking out all over the world.

There is evidence to support both views and for me, the "balance scale of persuasion" has not tipped. We cannot know for sure what or when--but we all do "believe" something. Too often our "beliefs" are founded on limited evidence at best, and false evidence in many cases.


I do not wish to deal in "belief" about the future. I want to develop a view that is based in probabilities of certain directional change, a view that offers choices for action as events unfold--actions that are flexible and do not force my family into a corner. I am all ears to hear more evidence and probable arguments supporting either option (or other scenarios I have not considered).


We have invested in metals, still hold some real estate--though we are trying our best to sell out. We have stored food for a worst case scenario, and secured land where we can get serious about gardening. We are still learning to garden in our back yard., but this home has poor soil and harsh weather. We have a couple of options for moving out of town if rioting develops. but I plan to stay put as long as my employer stays solvent and compensates my services adequately.

There seems to be contrary "beliefs" this morning on whether we are breaking out or getting ready for a spanking. One minute I am tempted to put on a JNUG position, the next I am looking at JDST. I did tighten up my stop on SGDM (primary long-term position). It's probably best to trade nothing until a breakout is confirmed above these levels. I should simply stack and prep, but my 403b money has to be put somewhere...

silver66
Aug 20, 2015 - 11:57am

Where the F%$k is Zman

why is he not here today.....hmmmmmm

Something to think about

Gold is not about getting wealthy, it is about not being poor

Silver66

Aug 20, 2015 - 11:58am

Hmmm. You think there might

Hmmm. You think there might be a little capping at $1150??

heathbr
Aug 20, 2015 - 12:07pm
SS121
Aug 20, 2015 - 12:15pm

Dr Jerome - A post request Sir

From your earlier post (What next?)-

I want to develop a view that is based in probabilities of certain directional change, a view that offers choices for action as events unfold--actions that are flexible and do not force my family into a corner. I am all ears to hear more evidence and probable arguments...

The request is for you to please write a post about Silver ...with the only minor stipulation being that you always maintain the distinction between Physical Silver the monetary metal and fiat "silver" such as stocks, options, charts etc., ...however you prefer to maintain the distinction.

silver10sguy Doctor J
Aug 20, 2015 - 12:18pm

Well said Dr Jerome

Thank you for your thoughts which I agree with 100%. It is difficult to weigh how much of a collapse is coming and to what degree and shape our world will take. Perhaps Dr Jerome and others can help with one of my observations. We know that our perceptions and beliefs are being managed by the media and elites with lies and manipulation. It occurred to me just the other day that there is regular television programming on Dooms Day Prepping. Why would the powers that be want this type of television shows helping others to prepare for challenging times? My first thought was that doomsday prepping gets people into spending time, money, and efforts into storing food, water, weapons, and other survival needs. Prepping could reduce people's efforts to buy financial assets that get destroyed in a stock market collapse of massive proportions. Perhaps the elites think they can control the level of collapsing economies enough to buy up everything the middle class will lose. If everyone thinks we are headed to a Mad Max scenario the elites will scoop up everything. Anyway, that was one observation that gives me pause for thought. However, I am still buying up the guns, grub, and gold if the SHTF.

2c piece
Aug 20, 2015 - 12:40pm

kenmasters675

You got your wish. $15.55 last.

realitybiter
Aug 20, 2015 - 12:41pm

Inflation

is never going to be recognized until all the horses are out of the barn. "things" - all things, have a commodity value and a monetary value. Again, mankind has used all sorts of things to store wealth. Homes, cinder blocks, gold, oil.... As the world realizes, slowly, then rapidly, that the ponzi is really a ponzi it will look at the very basics of life as money. In prison they use cigarettes. Banks? no. stocks of business? no. dollar bills? no. Today with the so called disinflation bias on, things are all up. Monetary value over economic commodity value. As Stockman says, we have deformed the economy. Healthcare and education are so overpriced it is a joke.....and "things" with great value are given away for nearly free. Junk silver is unavailable on the day when folks really are thinking about it. Better 10 years early than a second late. BTW, dia:gld Blew through the 200 dma.....very bullish for gold. 1151,2......and counting. follow through is everything.

Heart's Yours
Aug 20, 2015 - 12:47pm

philharmonics vs maples

JM Bullion has one ounce silver Austrian Philharmonics for $2.29 above spot in any quantity. Provident has one ounce silver Maples for $2.89 over in quantities of 500 (a 60 cent per ounce difference). Is a Maple worth 60 cents more per ounce to you than a Philharmonic? If so, why? I generally buy Maples or Eagles, but wonder if the Philharmonic might be a doable option as a government issued one ounce silver coin for less money (60 cents per ounce). Thoughts?

infometron
Aug 20, 2015 - 12:49pm

CNBC just recommended gold stocks as a 'safety trade'

Could the tide be turning...?

Roger Waters - The Tide Is Turning

Edit: I can't call 'em CNBS when they are giving good advice

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