Investor Opportunity Knocks via Financial Market Realities
Stock-Markets / Financial Markets 2013 Aug 31, 2013 - 02:53 AM GMTBy: DeepCaster_LLC
“ Gold/US$ has had a material seller stopping its advances each day, and yesterday that seller was strongly evident at the $1430-1435 level.
“We suspect that after a day or two of correction following that selling, the bulls will again gather their forces and trump the seller at $1430-1435. It may have to wait until next week, however, when the gold dealing desks are back at fuller staff.”
The Gartman Letter 08/29/2013
Even Dennis Gartman, not known to be a Gold Partisan, can recognize Investment-Significant Market Realities when he sees them:
- Gold is now launching into a Bull Trend, but a
- “material seller” has been “stopping its advances each day”
While he has not been so candid in identifying that “Material Seller” as The Cartel (Note 1) as Deepcaster and others have long ago, he does usefully make the point that:
- Gold, even though launching into a Bull Ttend is still vulnerable to Takedown by that “Material Seller”
But the Takeaway Market Reality from all this is that it provides an Opportunity – we know Gold is going higher, so use the Takedowns as a Buying Opportunity.
But John Brimelow notes another Key Reality – that Gold surges UP are Driven by Investors Buying and Taking Delivery of Physical.
“Considering the disruption in the Asian physical markets this will take Western leadership if it is to happen so soon.”
JBGI, 08/29/2013
Therefore, it is essential to Monitor Physical Buying as Deepcaster does in order to Buy at Opportune times.
And that Physical Buying may well notstart as early as next week (1st week of September) because the Asian Markets – the prime source of demand for physical – have been temporarily disrupted by the weak paper and Tariffs in India and temporarily weak currency and tariffs in India and weakening demand in China. Bottom line Reality: We may expect a few down days in early September which should be regarded as an excellent Buying Opportunity.
Another most important Market Reality and Opportunity has been identified many weeks ago by Deepcaster and several other independent commentators --- interest rates have begun to Trend Higher with the interest rate on the US 10 year shooting up over 100 basic points recently, Astute Trader Dan Norcini’s comments on the consequences of this Trend
“Here is all one needs to know to explain why gold did what it did today:
The new home sales number showed the steepest drop in three years! Any questions?
What that translated to is very simple - Death to the Tapering! Long Live the QE Kings!
If that rotten July number was not bad enough, the insult to injury was the downward revision to the June number.
My view on this is simple - I have been posting charts of the Ten Year Treasury Note yield for some time now and have been remarking that it keeps pushing higher and higher and is closing in on that 3% mark. There is no way that rising interest rates in an environment in which salaries/wages are stagnant and job creation consists mainly of part time jobs is NOT GOING TO IMPACT HOUSING SALES.
I feel like I have been beating a dead horse but I repeat - the FED cannot be pleased with what has been going on in the Treasury markets because this entire phony "recovery" is predicated on one thing and one thing alone - CHEAP MONEY. Take that away and there is nothing else to support it.
The other side note to this is that these rising rates are going to significantly impact the US Federal Governments borrowing costs. When the national debt is over $17 trillion-gazillion-bazillion-whatever, and rising, even small rises in interest rates will have a significant impact to the nation's bottom line.
Bottom line - rising interest rates are a pox on the nation and on the economy and the Fed knows it.”
“Weak Housing Number Propels Gold Higher”
Dan Norcini, traderdannorcini.blogspot.com, 8/23/13
Much of The Mainstream Financial Media has long encouraged a disconnect between underlying Economic, Financial and Market Realities and their Reportage and Forecasts.
Such a Policy of Disinformation and Spin was again undercut last week when the Release of a very Weak “New Home Sales” number gave the lie to the Fiction Propagated by the Mainstream Financial Media that “The Housing Market is Recovering”. And it was undercut again this week by a horrible July Durable Goods number which fell 7.3%.
Dan Norcini’s comment about why Gold launched up on 8/23 is Spot-on. [Since then Gold’s upward momentum has been bolstered by the USA’s publicized intention of attacking Syria but then reduced by the Realization that such an attack might not happen after all.] But the Mainstream Financial News Media Spin has been that the Economy is recovering and this Fiction has been supported by Bogus Official Statistics, (Note 1) while QE has, until now, boosted the Equities Markets artificially.
In order to protect Investors and provide Profit Opportunities, Deepcaster’s Goal always is to make its Forecasts and Investment Recommendation based on such underlying Realities as the foregoing rather than Mainstream Financial Media-Spin/Fictions.
Regarding Equities, for example, the Plain Truth is that while The Fed (and other Central Banks’) QE can artificially levitate Equities for a while (as they have been for most of 2013) the underlying Fundamentals eventually Trump the Levitation.
And so the lousy Fundamentals – e.g. stagnant wages, and persistent high unemployment and Negative GDP “Growth” per Shadowstats.com (Note 1) and recent lousy numbers out of the Housing Market – are now beginning to Trump the Fiction that The Economy is Recovering. But at some point (see our Forecasts) QE becomes ineffective in suppressing Interest Rates or Boosting the Equities Markets … and Equities Crash and The Bond Bubble Bursts.
It is important to reiterate that the Equities Market has been levitating solely on Fed provided QE. Trailing four-quarter earnings for the S&P 500 is $99.60 Y.O.Y. an increase of just 1%! But during that time the S&P Index is up 25% with a trailing P.E. of 16.9, 10% above the historical average. Earnings clearly do not support these Equities Indices levels, and the “Sell” signals now dominating the Technicals reflect that Reality.
Similarly, the prospects for a Great Launch Up in Gold and Silver and the Quality Miners Prices improve every week. Gold has convincingly closed above the $1400/oz. level and Silver has convincingly cleared $24/oz.
Gold’s bust out above the upper Boundary of its Bullish declining Expanding Wedge, is a Bullish Signal.
However, other Key Technicals indicate that Gold will not be in a confirmed bull market until it decisively clears $1500 and Silver $28/oz. Repeated closes above the 38.2% Fibonacci retracement at 1414 and then the 61.8% Retracement at $1510ish would add Momentum as well. And although they are looking peppy, the Miners need to clear 280 basis the HUI to clearly signal “Bull”.
So while now is still an excellent time to purchase Physical Gold and Silver and Quality Miners, we do still expect temporarily successful Cartel Takedown Attempts.
The Reality is the increasing demand for Physical is squeezing the shorts, and Paper Precious Metal Prices, and The Cartel.
As well, the decreasing likelihood of Tapering any time soon (or the continuation Tapering if once begun) due to lousy Real Economic Numbers (e.g. the recent drop in Home Sales) and the Mideast and the Upcoming Budget and Debt Ceiling Battles in the U.S. Congress. Means that Inflationary Money printing is likely to continue, thus futher bolstering Gold and Silver Prices.
All this explains the spikes up in price we are seeing and will increasingly see. It is a war between the Big Cartel Banks (to protect their Fiat Currencies and Treasury Securities) and Savvy Investors of all stripes who know Gold and Silver are Real Money.
In sum, though increasingly it looks as if the bottom is in and the Great Launch up for Gold and Silver and the Miners has begun, do expect Great Price Volatility and more Cartel Price Takedown attempts.
As well (considering the 10 yr. yield was bouncing around 100 basis Points lower just a few months ago) the Weakening of long-dated U.S. Treasuries has began and should continue for months as it eventually Morphs into a Bursting.
As this happens interest rates for all loan transactions should rise dramatically which will greatly constrain lending. And that will likely be one Catalyst for our Forecast Equities Crash (see our Forecast Timing). This is but one reason The Fed has no choice but to continue QE in some form (or to reinstate it, if temporary reduced) and to continue it until Price Hyperinflation and/or other factors are reflected in the collapse of the $US… Thus, when continuing QE (i.e. Bond Buying) no longer serves to support Treasuries, i.e. to suppress Interest Rates, that will also be a signal that a Financial Collapse is impending, because that will signal The Fed has lost control of the Bond Market. Such has not happened yet but we expect it will. N.B. We have already seen the beginning, with the 10-year yield rocketing up from 1.7% to 2.9%ish recently.
Significantly, Egon von Greyerz of Matterhorn Asset Management contends that the United States’ “falsification” of GDP, Inflation, and employment numbers is a sign that the U.S. Dollar is beginning to lose its World’s Reserve Currency status. (See Shadowstats.com for the Real Numbers. Note 1)
We agree. If all were healthy with the Economy, Markets, and U.S. Dollar, what need would there be to falsify the numbers?!
Finally consider Crude Oil.
War in the Mideast and continued Central Bank Money Printing and Crude Oil’s Status as Safe Haven Asset is not only keeping a floor under the Oil Price, but also boosting it.
While The Civil War in Syria is Tragically Quite Serious, it does not Threaten Oil Supplies much unless it widens.
The Civil War in Egypt has the Potential to Disrupt Oil Supplies and thus Spike prices, if it Threatens the Suez Canal.
Nonetheless, absent a Market Crash or other Major Deflationary Event, we can expect QE generated Monetary Inflation to keep WTI Crude Prices at or above $100 bbl.
As the yields on long-dated U.S. Treasuries (and thus interest rates in general) increase, this will signal increasing Price Inflation resulting from the past and ongoing QE Price Inflation. And of course this will mean (and has already meant) increasing Crude Oil Price Inflation, a sure Killer for Economic Health. In sum, Crude Oil trading above $100/bbl is not solely a result of Mideast Conflict. Indeed, given the Tightness of Crude Supplies Worldwide, the Primary Cause is arguably tight supplies.
In addition to tight supply, the recent elevated (over $100/bbl) Oil Price can be explained by considering the following as well as the Wider Mideast War Threat: that Equities and Bonds are artificially elevated, Fiat Currencies are losing Purchasing Power due to ongoing QE, and many Commodities Prices are depressed until just now due primarily to China’s slowdown, and Paper Gold & Silver Prices are depressed by The Cartel, and long-term rates are headed up.
Therefore, only Crude Oil has been recently seen as a reliable store of value to many sophisticated Investors. Thus it is not surprising to us that WTI Crude has approached the $110 level recently notwithstanding the Economic slowdown. Part of this strength is due also to QE-generated Real Price Inflation, and to recently reported above-ground supply drawdowns.
Because Crude is essential, with relatively high inelasticity of demand, and because it gets used up, it is not as easily subject to price manipulation though, for sure, its Price is manipulated. Thus a spiking Crude Price provides yet another Signal that Hyperinflation is impending and thus that a Financial Crash is likely to be coming within 18 months or so, and likely sooner than later.
Consideration of the foregoing Market Realities provides Opportunities for Profit and Wealth Protection Savvy Investors.
Best regards,
www.deepcaster.com
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