Markets Critical Forecast Signals, Gold Price Explosion to Come
Stock-Markets / Financial Markets 2014 Jan 31, 2014 - 09:46 AM GMTBy: DeepCaster_LLC
“U.S. Major markets will Implode, if Emerging Markets Implode.Jim Sinclair
Sinclair’s claim is correct, but the Markets’ recent Negative Reaction to Argentina’s Devaluation and Turkey’s Massive Rate Increase provides us one Superb Forecasting Signal.
Indeed, so far in 2014 the Markets have provided us with several Superb Forecast Signals in Key Sectors.
“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”John Templeton
John Templeton’s wise observation is Relevant given the Markets’ Euphoria on January 30, and that Euphoria provide yet another “Signal”.
But the Euphoria and the Risks and The Key Signals they provide Increase almost Daily. Indeed, (as if “Bail in” Threats to retirement and other accounts were not real enough already) we have earlier warned about the U.S. Government encouraging/forcing Citizen to “Invest” in depreciating U.S. Treasuries whose yield is well below the Real Inflation Rate.. Well, Consider President Obama’s State of the Union
“…the offer that the President of the United States floated last night…
…his new “MyRA” program. And the aim is simple – dupe unwitting Americans to plow their retirement savings into the US government’s shrinking coffers.”
“IRA Confiscation: it’s happening”
Simon Black, Sovereign Man, 1/29/14
This and other Signals provide us a Road Map for highly likely future performance for certain Key Sectors. Indeed, one Sector is Signaling it is ready to Reverse VERY SOON and make a very Major Move. Consider what the Signals tell us about the Sectors we cover.
We have a Buy Reco. aimed at Profiting from it posted on our website.
Every Investment or Trading Decision necessarily implies that two prior forecasts have been made: 1.) that the future economic and financial environment will be conducive to success and 2.) that the particular Investment or Trade is likely to be profitable in that environment.
Thus Quality Forecasting is essential to Investment and Trading Success.
We should be grateful.
The Friday, January 24, 2014 Equities sell-off was not so much about China’s weak Manufacturing survey, or the ongoing mixed earnings season, or the prospect of continued tapering (though those were factors).
Rather it had more to do with concern over how much Stress China would allow in its Shadow Banking System. China Credit Trust warned Investors that a 3 Billion Renminbi Trust Product might not be repaid when it matures January 31. China Credit is a Shadow Bank, a lender outside the Official Banking Sector. And many other Chinese Shadow Banks have looming Default Risk.
Loans by China’s Shadow Banks are estimated to total some $3 Trillion – fully one third of the Credit outstanding in China. And Defaults in That System could ripple throughout China and the World.
And since China, along with the USA, is widely regarded as an Engine of Future Growth, if it sneezes the whole world get an Economic Cold. This is probably why a Mysterious Entity (read Bank of China) just stepped in to guarantee much but not all of China’s Credit Trust’s Debt.
As the World’s second largest Economy and Massive Resource Consumer, a Sputtering China would have Ramifications throughout virtually every sector. Therefore note well that China’s manufacturing showed its first contraction in six months – yet another Critical Forecast Signal.
Jim Sinclair’s is thus correct to claim that “U.S. Major markets will Implode, if Emerging Markets Implode.”
Indeed, our Mid and Long Term Forecasts for a Major Market Crash in 2014 have been thus Far spot-on Correct.
Last week’s 600 Point drop in the Dow is the First Major Harbinger of The Great Crash we have been forecasting for Months. We are just seeing The Beginning of The Beginning.
Of course, Crashes very rarely occur all at once, which is one of several reasons we expect a short-lived Rally to begin in the next few days. In Bear Markets one must get in and out quickly to accommodate the Multiple Sharp Reversals.
In sum, regarding Equities in general, the maxim: “Buy and Hold rarely works anymore” will be proven true in 2014 once again.
Thus we reiterate:
Given the Negative Fundamentals and Technicals, e.g. the Equities rising Bearish wedge and the Negative Divergence between the NYSE A/D line and stock prices, a Major Move Down of The Great Crash could begin at any time. Indeed we recently recommended buying puts in one subsector because we expect it to Crash before the others, and very soon.
Regarding Gold as Safe Haven with Great Profit Potential during a Crash, consider that one Necessary Condition we earlier indicated for Gold’s Rallying is one or more Exogenous Events which emphasize its Importance as The Safe Haven Currency.
Last week we got several -- China’s Shadow Banks, heightened Risks reflected in the Equities market Mini-Crash, and Emerging Markets Currency Weakness including a Collapse of Argentina’s Peso.
So, mid and long-term Gold is headed for $3000 and eventually much higher, as we forecast, and Notwithstanding ongoing Cartel (Note 1) Attempts at Price Suppression. Very short term the Precious Metals Markets will continue to be Tricky.
The Physical Shortage is just too Critical. And Sonia Ghandi, head of India’s (the World’s 2nd largest Importer) Congress party recently criticized the Indian Governments Persecution of Gold Merchants via Multiple Tariffs. Moreover, Billionaire Eric Sprott recently demonstrated the Central Banks can not successfully continue their Gold Price Suppression Throughout 2014, because they are running out of Sufficient Physical Supplies.
Consider Jim Brown’s perceptive comments at Option Investor
“Don’t look now but the physical gold shortage is growing. Everyone knows that JP Morgan is one of the biggest gold holders on the planet. They store gold for themselves and others. On Thursday JPM reported the single largest withdrawal in history at -321,500 ounces. Actually that was a tie with December 13th, 2012 when exactly 321,500 ounces were also withdrawn. Registered god in JPM vaults has fallen to the lowest level in history at 87,000 ounces. Registered gold at all Comex warehouses has hit a new low at 400,000 ounces. Comex claims there is a huge 92 owners per registered ounce today. Registered ounces are available for delivery to settle futures contracts. In other words the registered ounces are all this is backing up the existing futures contracts. Since the majority of futures contracts are never held until the delivery date there are tens of thousands more contracts than actual gold. If everyone suddenly began delivery of the gold referenced by the futures contracts we would be in serious trouble.
“On January 17th there were roughly 500,000 registered ounces. At that time there were 111.6 owners per ounce. There are currently 41.309 million ounces being traced through futures contracts. This is ‘paper gold’ not real gold. Where else but America could we be trading 41 million ounces of futures against 500,000 registered ounces? Obviously if only a fraction of the holders of those futures contracts began demanding delivery the price of gold would be much higher.
We are currently seeing all-time lows in registered gold and all-time highs in claims against that gold. What is wrong with this picture?”
Option Investor
And China’s Imports are Massively Increasing.
“China's 2013 gold imports from Hong Kong more than doubled from the previous year to reach a record of more than 1,000 tonnes as a sharp fall in prices led to unprecedented demand.
China imported about 1,158.162 tonnes from Hong Kong, compared with 557.478 tonnes in 2012, overtaking India to become the world's biggest gold buyer.”
“China imports record gold volume from Hong Kong in 2013”
Reuters, 1/27/14
The Foregoing are Harbingers of Key Sectors’ impending major moves as well as the Gold Price Explosion to Come.
Best regards,
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