Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19
Central Banks’ Gold Buying and Repatriation Spree - 28th Nov 19
Another Precious Metals’ Reversal Coming Right Up! - 28th Nov 19
Stock Market 100% Measured Moves May Signal A Top - 28th Nov 19
Don’t Look for Investing Advice in the Media - 28th Nov 19
Why You Should Buy Trailer Park Stocks - 28th Nov 19
Will YouGov General Election Forecast 2019 be as Wrong as their REAL Forecast was for 2017? - 28th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

US Dollar and SP 500 Rally Fizzling Out? Gold Breaks Five Month Downtrend

Stock-Markets / Financial Markets 2014 Dec 10, 2014 - 11:00 AM GMT

By: Jeb_Handwerger

Stock-Markets

In a recent article I wrote, "Gold and silver could gap higher by the end of 2014 and the top notch juniors could skyrocket." I expected a breakout at $1205. It appears gold may be breaking that downtrend today.


For a couple of years metals were knocked out of favor and now oil is on its knees with a major three month deflationary selloff that came out of nowhere. This black swan may be due to increasing tensions between the West and East.

Japan and Europe are turning on the printing presses to prevent deflation causing investors to flock to US dollars and the S&P500. Don't be so quick to chase them into the overbought markets.

The Fed needs to see more inflation and a cheaper dollar before raising rates. Once investors wake up and realize The Fed can't tighten in this environment, the dollar parabolic rise will pop. Once the dollar rally fizzles out investors should once again return to the beaten down junior gold and silver sector which is testing 2008 Credit Crisis All Time Lows.

Remember we are in tax loss selling season and the time to buy discounted junior resource stocks is over the next 3 weeks. Since we are at such a low base the January effect could be quite powerful.

Cash is now king as other nations are following Europe and Japan beginning a major fiat currency war. The Russian Ruble is crashing and now the Russian economy is entering a major recession possible depression. What we are seeing with increasing tensions between the West and Russia and China and Japan are trade wars.

History shows that these policies lead to economic crashes which the metals and oil may be forecasting. These deflations could be followed by hyperinflations as governments resort to currency devaluations through quantitative easing.

Consumers in the US may be excited to see gas prices under $2 and their inflated retirement accounts, however these low prices could cause a ripple effect throughout the entire global economy.

We could be on the verge of the next major worldwide banking crisis especially in resource rich countries such as Russia, Canada and Australia. Major banks have been loaning out billions to oil and gas producers for production, construction and exploration. If we do not see a quick v shaped recovery expect the global unemployment rate to once again spike as well.

The US may be forced once again to resort to Quantitative Easing in 2015 to prevent this runaway US dollar price spike. Its the Fed policy to promote inflation and a stable dollar. A strong dollar moving parabolically higher could be a major challenge to US banks sitting on bad real estate and energy loans.

This could cause banks to stop lending and begin a massive deleveraging similar to 2008. Remember don't fight the Fed who want asset prices to remain moving higher. They will try all attempts to prevent a runaway US dollar through competitive devaluation.

Notice the Canadian Venture is now testing 2008 lows while the S&P500 has broken way above pre Credit Crisis 2007 Highs. Since 2011, we have seen a decoupling between the S&P500 and the TSX Venture. For the past decade the two indices moved together. This changed in 2011 when the US began to slow down QE while the rest of the world accelerated it. This may have caused a historic decoupling not seen since the Dot Com Bubble in the late 90′s. If the Venture returned to previous 2007 levels and comparable ratios to the S&P500 then the TSX Venture could be trading at multiples of its current valuation.

Learn from market history and don't be a fool chasing the latest fads and promos. Do not believe this time is different and that this historic decoupling between the S&P500 and the TSX Venture will last forever. Remember that everything is cyclical. Markets revert back to the historic mean. This means that now may be the time to continue building positions in selecting high quality and experienced junior mining companies trading at historic lows. Be careful of buying US large caps at extremely high premiums right now or shorting junior miners or precious metals. It may be time to start taking profits in the large caps and accumulate high quality and well financed juniors. This is not a time to panic and sell your junior miners for pennies on the dollar. You could mistakenly sell your shares right before a major discovery.

By Jeb Handwerger

Disclosure: Author owns no stocks mentioned.

http://goldstocktrades.com

© 2014 Copyright Jeb Handwerger - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules