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Financial news I consider important, with my opinion, which is worth as much as you paid for it.
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Sunday, January 26, 2014

Gold at a Crossroad

Gold on a long term trend and trend down for the last year is at a crossroads.
Many including myself, are optimistic that the downtrend is behind us.
But we cannot know for sure until a few months of a trend change is behind us.

Below is a long term view of gold price, and how gold came down to the long term trend line up and bounced off it upwards.  It maybe a 'dead cat bounce', or a trend change.

For your info see below, I have to run and plan to do a GDX/GDJ chart later.

Friday, January 24, 2014

The Great Unwinding is starting in 2014

In Sept 2008-March 2009 the world decided to double down on all problems and have the world banks and governments go all in to prevent an epic economic collapse.  For now, I'll steer clear of political debate if this should have occurred, lets assume the world was better off to act.

What I can say for certainty is what brought the economic catastrophe was NOT corrected, and this is the greatest sin since March 2009.  The world pissed away about 5 years that could have been used to fix the social economic order, instead we doubled, tripled down.     In hindsight, maybe thats all the world is capable of doing, keeping the same dance a moving until the song must change.

So here we are, lets take a look of signs of the Great Unwinding is starting to happen.

1) Countries currencies are destabilizing, with Argentina and Venezuela leading the way, Turkey looking to follow.
2) Greece after years of oppression is ready for fundamental change its only a matter of demographics as 45% hit below poverty line.
3) Various stock markets are hitting into trouble as Brazil plummets, US market hitting resistance,
4) HSBC, a very large Chinese Bank, is restricting withdrawals, not a sign of financial confidence for what is supposedly a global economic leading country....
5) US is bracing for a fundamental shift in retail, to last for potentially a decade of employment decline.
6) Banks in Germany, France, Spain, and others face a 1 trillion dollar reserve shortfall.
7) Back in 2008 I posted how China and India would squeeze USA of resources, with Oil as a key concern.  China is positioning to secure oil globally while USA uses local, temporary, fraking to cover the shortfall.
8) Global tensions are mounting, with various points of contention that could cause a catalyst for global tensions to flare, right now Japan and China are key contenders for sparking escalation.
9) In general, currency volatility is higher so far in 2014, with it expected to continue....
10) Gold on verge of possible break out, while not a sign of doom, it may be an indicator of economic sentiment change.

So while none of above really proves anything, we are opening 2014 with a heck of a bang!

Sunday, January 19, 2014

Conspiracy diagram

I wrote once before about conspiracy, and what I think about them.
This diagram is very appropriate, as to I want to write a post about problems in gold price fixing being uncovered, more on that later.

For now, enjoy this conspiracy diagram.

Saturday, January 18, 2014

Greece, Ireland, Portugal, Spain, what is wrong

The Euro is a way for the 'richer' countries to extract value from the poorer countries.
It isn't a normal fiat currency.

Nigel Farage gives a nice speech to describe the situation that has been created.

Monday, January 13, 2014

Gold about to break up, india continues to lighten resitrctions

Gold is set to break out to the upside finally this week.
I can't tell right now if it has, but as of Sunday night gold is moving up.
Lets take a look at a longer term Gold chart.

This is good for gold bugs, and if I can ignore the global economy, it in itself is not bad.
It is simply one resource going up, about to possibly break up changing a down trend to an up trend.
Nothing spectacular, but a time to be on the right side of a trade, if it can break out upwards.

Lets look at some other assets, like Oil
Oil has outright flatlined, which is fantastic for every american, and the western world.
The vast majority of this is from fracking, which is an environmental disaster, but has catapulted USA production. Unfortunately the half life of fracking is crazy short compared to normal oil wells.  Which means when all the easy fracking is done, the pressure should shoot oil up, sealing the deal on the next leg down.  I cant tell if thats next month, or 5 years from now, but it will happen.  Anyway in near term, nothing to see here.

Lets take a look at overall S&P 500.

Holly heck batman, thats a great run up,  Lets project forward this run, and see where this goes.

Now here is the rub, there is absolutely no reason why we CANT have the nice multi year rally in stocks for next 3 years, resulting in a 35% gain from here, at about 10% per year.

Really, I mean that, there is no reason why this can't happen or do even better!
But here is the rub, we have a few facts that causes concern.

1) USA and global banks are based on a debt based system.  Japan is by far leading in this debt.  Until Japan falls, the thought is America is OK.  Japan  is the canary in the coal mine.  Again, America could run into troubles BEFORE Jaapan, just conventional wisdom says Japan is first on the critical list.

2) USA investors are at a 27 year high for bullish outlook.  Again, there is no reason why we can't get to 100 year bullish outlook among investors. But a 27 year high on bullish outlook is starting to stretch the statistical envelope.
3) Jobs just simply....suck.  This is a strange one. I think in 20 years there will be 50% unemployment.  Sure there maybe many considered employed reducing this number, but many will be jobs the government 'creates' through BS work.  Think of person a digging a ditch, person b filling in a ditch, alternating days.  While this may seem like work, its really just non-vent work.  In immediate future, there is no denying, new jobs blow for average pay and overall full time employment.
4) Federal reserve bank chair has changed to Yeltsin.  Make no mistake, I think the fed will always ease money constraints to promote growth.  But Yeltsin is new, before her decade reign can begin, she may need to 'show toughness'.  The parabolic growth in stocks probably needs a good punch in the gut to show she means business.  Not long after that happens and she is reamed through the press, she will step in line with bernanke and resume the growth.  Bottom line is we have no clue if/how the fed changes, but we do know there is a new sheriff in town.
5) USD may be in trouble...but not yet!
The doom of USD has been in the air since nixon pulled off gold standard.  Its pretty easy to say that doom of USD is over-hyped.  But that's not to say USD can't have trouble ahead.  While ther is no clear direciton, USD is looking like at a cross roads soon.

What I can tell from facts above is gold is POSSIBLY about to break up.  The overall market is looking toppish, both from graph and from a new sheriff in town, yeltsin.

India is lifting restrictions on gold, I think that will pop gold up.

Anything in marijuana stocks may explode up as USA starts to legalize drugs.  The stocks rallied and since crashed, may be a good time to buy some lottery tickets.

I REALLY Do not like stocks like Priceline, Amazon, and a bunch of other stocks with a 4 year drive straight up here.  Proceed with caution.

this is shaping up to be an interesting week. Good luck to you.

Monday, January 6, 2014

Gold Breakout soon - India is BACK!

My thesis for gold has always been about demand, not currency gold bugs.  Gold as a currency is as insane as it gets, and I am not a supporter.

The thesis was and is, as India and China get richer, the 2.5 billion people there will consume more resources & gold.  In addition, ALL RESOURCES will get constricted as the USA, a vast consumer of resources, gets pinched with inflation on resource prices.  I choose gold simply because it seems like a more direct play, and it does have the 'bonus' of gold bugs behind it.

Well today my friend John sent me an email about how India is moving to lift Gold import restrictions.  India placed these restrictions back in September 2013 in post 'Gold has anything changed'.

The irony is gold was falling, not rising in price when India did this, and China immediately picked up the gold buying slack preventing gold from falling significantly farther.

Once this comes to pass, I have a hard time seeing how gold can go down in price the next 11 months.  Everyone should be well positioned now in ETF's GDX & GDXJ

Thursday, January 2, 2014

Gold Breakout?

Gold closed on Tuesday the 31st at about 1205, this morning it hit about 1228.  This indicates a trend change, but we cannot know if the trend has actually changed until a few days has passed.  Usually out of a bottom the greatest gains are during a trend change.

This combined with my post on Tuesday GDX call option activity , is a decent sign that gold bottom may finally be in.  Of course no one can know if the bottom is in until looking back 60 days.

Good luck!