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As of latest reporting, George Soros is the #7 largest holder of the GLD ETF... just an FYI.
Same guy who made billions betting on "paper currencies"...
If he's the #7 holder on the ETF which is out in the open, wonder what he's doing behind the scenes or how many traders or minions he has working/trading/investing for him?
Also note JP Morgan, while long-known to be manipulating the SILVER market actually started getting into it, not to mention they have the COPPER market cornered at this point as it continues to hit all-time record highs. I'm starting to get the feeling that JPM is going to be positioned on the next breakout in silver, imagine if they were using short derivatives or even unraveling their trades on the move from 16 to 31, exactly what will happen next if they get on the other end of the spectrum...? 26 to... ???
Give the silver and gold markets, 2 weeks maximum from this point on. Gold had recently bottomed out on what was it's 38.2% time-based retracement from the major August-December move. And according to Mr Fibonacci's math, time's almost up for the next wave to occur. George Soros, Henry Paulson, the banks, they know what's next in this story...
***Wells Fargo CFO leaves!***, some significant selling pressure recently... note, WFC is bigger then BAC... if something fishy is going on here and it unravels... well we saw what happened in 2008 when one of the big banks "collapsed" or should I say was "allowed" to collapse in Bear Stears...
a CFO leaving a MAJOR bank is never a good sign folks!
Technically, note bearish divergence in the RSI and MACD (guiding lower over the past month or two):
Given the way his chart works out, he's basically predicting silver to be at his target in 4-5 weeks from now, sound about right?
I'm still waiting for speculative buying in gold, I just haven't seen it yet, we're nowhere near the point of selling.
The current pullback may be over or may last a few more weeks at most, come the end of this year, these prices will look very cheap.
***FLASHBACK $GOLD AT $420 THE OUNCE***
Check out the post I'm responding to, this is just after the time I had an epiphany and realized how manipulated our financial system was and realized gold was real money (and decided to become vocal about it to friends, relatives, strangers, whomever!).
Particularly interesting were my price targets on gold and the timeline I gave, it was literally flawless. Yeah I'm tooting my own horn and yeah a lot of people saw this coming, but it's not too late to protect your assets and get out of a failing dollar that returns putrid interest rates of 5% at best.
This post was made back in 2004, at the time of the post, gold was trading at just under $420. Now all my price targets were hit with precision, such as "5+ years at $1,000+ as worthless paper currencies collapse." Back then I viewed $GOLD hitting $1,000+ as currencies, particulary the U.S. dollar, the "world's reserve currency collapsing. Well since that price target has already happened, we've been forewarned the U.S. dollar is collapsing, anyone with a brain understands that since the archaic relic of gold has been viewed as money for exchange of goods and services since biblical times.
Now my next prediction/question is even more concerning... and that is...
"Is OPEC going to continue to collect worthless U.S. paper currency or debt for payment???"
There was a meeting last year of very prominent figures and it didn't include the United States. Strong rumors have surfaced that oil-rich nations of the middle east and major trading partners are working on a currency alternative to the U.S. dollar that will be backed by gold and silver! Something such as this would destroy the dollar overnight! It would no longer back the largest dollar-denominated traded commodity in the world! Who would accept the U.S. dollar for oil when you could accept gold and silver! Ask yourself, is this another reason why we've seen the big rises in gold and silver over the past 5 months? Is "smart money" or "in the know" money accumulating as much gold and silver as they can without blowing the cover off of their operations? Is this why China no longer is exporting silver and gold?
Asian nations have already pulled out of supporting our debt sales, which is now why we've become a banana republic buying our own debt while maintaining artificially low interest rates. Our debt level is now at 14 TRILLION dollars. If gold and silver still were priced at a 16:1 ratio and based on the current "money supply" - what would their real price be? I think it'd be a number that we couldn't even imagine, so I'm not even going to touch that.
All I can say is, the paper game is up, all the countries around the world are now printing up their own debt and money to cover up their own debt, it's a circus, all of Europe, even Asia doing it. Interest rates globally do not represent the annual rising cost of essential goods and services and the gig is up. Social Security payments the same as last year? Really, I mean seriously folks, who here believes there was no inflation.
I think it's game over for the paper printers, and game on for a gold/silver backed currency to develop and the signs are all around us that it's coming, and coming very soon.
I'm really confident the day is coming soon where oil is going to be traded heavily in a currency other then U.S. dollars. Also, we're going to see a gold/silver backed currency within this decade, we may even see the Federal Reserve Bank collapse into its own footprint with Step 1 being "Audit the Fed." When you can just type 0's into a computer and hit enter to facilitate monetary transactions between you and your buddies, you know something's wrong. It'll be interesting to see what the Federal Reserve's books really do look like. Where does 14 trillion in debt wind up? And how much gold is really in "Fort Knox?" We know the silver's gone... but do we still have any gold?
$1,000 gold was a sign of end game, that's why it took several times to finally break. Now here we are at 1383 gold with many forecasters calling for gold to hit 1650+ this year.
This move is FAR from over. This is signaling the end of the Federal Reserve bank and a return to constitutionally-sound currency. I just hope the United States are the ones who move to that currency first...
Well gold was at the price you quote of $800 for literally 2 days, having taken a month to double in price which obviously indicated a bubble as that kind of action was previously unheard of in $GOLD and still is to this day!
Now if gold were to double in a month's time from now until February, yeah that's going to be an obvious indication of a bubble. Or if silver triples in a months' time, yeah that's obviously a bubble.
Right now, we're not close to a bubble. Not only would I expect to see inflation-adjusted prices to be met, even if it's based off of the doctored government/federal reserve bank numbers, but I'd also expect to see the gold:silver ratio much close to the historical 16:1 then the current ratio of over 46!
This is one of the reasons why silver has had gains over 5 times larger then gold during this recent run. You're witnessing the unwinding of historically cheap silver prices in relation to both gold and money supply/expansion. The 16:1 ratio is further supported by the consumption of silver versus the collection of gold as well as the above-ground supplies available of each. A common reference point I've been seeing is 10:1. Some people are even saying that there's more gold then silver above ground, I won't go that far, but what I know from the history of gold:silver backed currency, it was always around a historical norm of 16:1 and I suspect it will be again close to that number when the "bubble" either tops out or we once again find ourselves using constitutional-money.
Either way, I think it's pretty said that the COMEX warehouse holds more silver then the U.S. Treasury.
Dow 11,333 Oil 121 Gold 1881
Is China Behind the Big Silver Short?
Check it out here: http://seekingalpha.com/article/243617-is-china-behind-the-big-silver-short?source=yahoo --- Full article below >>>>>
It is well known that the Chinese have been accumulating gold for at least a decade, and presumably silver as well, gold primarily for its monetary value, and silver for both its monetary and industrial value. In April of 2009, the Chinese Central Bank announced that it had secretly acquired 454 tons of gold bullion over the previous six years, supposedly all from Chinese domestic production, increasing their total stock from 600 metric tons to 1054 metric tons, and making them the fifth largest holder of gold bullion in the world. Quoting Dow Jones Newswire, April 24, 2009:
The new figure leaves China as the fifth biggest holder of gold after the U.S, Germany, France and Italy. Including Switzerland's 1,040 tons, six countries and the IMF now have gold holdings of more than 1,000 tons.
I find these numbers most curious and suspicious. The reputed 454 tons that the Chinese central bank claims to have acquired between 2003 and mid 2009 is just enough to put the Chinese ahead of the Swiss, (1054 tons to 1040 tons) making China the world’s fifth largest holder of gold bullion by just 14 tons. I would wager they have a lot more gold stockpiled than that.
This also begs several other questions: Why would the Chinese make this announcement at that particular point in time if their aim was secrecy in gold accumulation? If they admitted publically to holding 1054 tons, how much more do they really have? Was this alleged 454 tons all actually acquired from domestic sources or were they also buying through straw buyers on the Hong Kong exchange? And if they are secretly accumulating gold, are they also accumulating silver on the sly?
Since China has been continually accumulating dollars for years as the unintended consequence of its large continual trade deficit with the US, they are always looking for new outlets to unload or invest them other than buying more US Treasuries and Agencies, with which they are already overloaded.
Using their excess dollar reserves to stockpile strategic, monetary, and industrial commodities as a hedge against dollar inflation is clearly a wise strategy, even before the advent of QE1 and QE2. We can already see the effects of this stockpiling on commodity prices, most notably copper and rare earths, which are at record levels. The Chinese have also offered to bail out failing European economies with their excess dollars, among them Greece and Portugal.
As reported by Bloomberg on October 19, 2010, Chinese silver exports declined 60% in the first eight months of this year. There could be several reasons for this: increased investment demand by the Chinese public, hoarding for industrial use by Chinese businesses, and accumulation by the Chinese Central Bank. China is now the world’s third largest silver miner after Mexico and Peru, and the world’s largest refiner of silver. There have been rumors that Chinese silver exports may be reduced to zero in 2011. Although they are now the world’s biggest gold producer, China exports no gold, and increased their gold imports by nearly 500% in the first ten months of 2010, according to Bloomberg.
Silver is a crucial material input for many high tech goods produced in China, and the Chinese government economists are surely wise enough to see that it will continue to get scarcer and more expensive in the coming years. They will be needing a ready supply of silver to dominate the world market in flat panel TV's, cell phones, computers, hybrid car batteries, solar collectors, and many more products too numerous to mention.
The respected silver authority, Ted Butler, speculates in his recent December 21st article, “A Show Stopper,” that the Chinese are behind the big concentrated short position in COMEX silver, which is currently about 300 million ounces among the eight largest commercial traders (and 500 million ounces total). The biggest single short position in COMEX silver in 2010, presumably held by JP Morgan (JPM), has been as high as 35% to 40% of total short interest according to CFTC commissioner Bart Chilton. This is a staggering concentration, obviously intended to suppress the price of silver, and has gone on continuously for several years at similar levels.
Butler goes on to say “that would not appear to make sense” and “It will go down as the single dumbest trade in history.” But I believe that Butler has underestimated the Chinese.
What if the Chinese were going long buying silver on the COMEX and taking delivery, draining silver inventories, while simultaneously shorting silver on the COMEX and settling those contracts in cash or rolling them forward?
Even if they took a loss on all their shorts, they would still be steadily accumulating physical metal, and the net result would be that they would be steadily and covertly acquiring physical silver at a higher than market price, but still keeping the market price suppressed to their own industrial producers, while at the same time propping up the weak currencies of the world’s buyers of Chinese exports in developed countries.
Only about 2% of COMEX silver contracts are actually settled by physical delivery, and the rest are settled for cash or rolled over. All the Chinese would have to do is take delivery on a greater quantity of physical metal from their longs than was demanded to close out their short positions, and they would be constantly accumulating physical silver without ever spiking the COMEX silver price.
Ted Butler also says in his article that he was “rocked” to discover at the recent December CFTC hearing on silver position limits that the CME/COMEX, not the CFTC, has, up until now been making all the decisions on whether short positions in excess of the current very high position limits on the COMEX qualified for the exemption as true production hedges. Basically, the COMEX has been self regulating, a clear conflict of interest. This apparently will be changing soon.
It has been suggested that the Chinese could simply use their massive buying power to go long COMEX silver and accumulate all they want by spiking the price (cornering the market), shutting out most other buyers. They certainly have sufficient dollar reserves to do this, but this would drive up the price of silver to Chinese domestic industry as well, thus raising the price of Chinese exports and cutting profits of Chinese producers and exporters.
Also, if the Chinese were to drive up the price of silver by directly buying large quantities on world markets, they would crash the dollar, the euro, etc, reducing their own exports in the process.
So far, the US government and their pawn, the CFTC, have been happy to look the other way on these manipulative, concentrated silver positions since they prop up the dollar and prevent the price of silver going to the stratosphere, but have completely neglected the consequences: a worldwide silver shortage, and allowing the Chinese to dominate the future market in high tech goods. So don’t be expecting anything substantive to come out of next month’s CFTC hearings as far as putting into place a realistic, enforceable limit on concentrated silver positions.
What does this mean for silver investors?
Get yourself some physical silver and take possession if you want any certainty of cashing in before the paper silver derivatives become worthless.
If the Chinese are playing both the long and short sides of COMEX futures as I theorize, then it explains:
* Why the massive silver price suppression scheme has been able to go on for years
* Where the rapidly vanishing silver inventory is going
* Who is taking the big losses on the short side if not JP Morgan and the bullion shorting banks
* How much higher the true unmanipulated price of silver should be compared to the current market price
Decades of market manipulation has made silver the most underpriced commodity in history. Be thankful that you have realized this in time to capitalize. Looks like China very well could be the Big Silver Short, and I suspect they’re not as dumb as Ted Butler thinks.
Disclosure: Author long PMs
Backatcha rogue!
It wouldn't make sense if a stock traded 7 times it's outstanding and total share would it? It'd essentially be carrying a market cap. 7x more then we thought, but why is this kind of trading allowed in silver? I'm also being conservative with my number, add in the swaps, derivatives, leases, etc. etc. etc...
Thought the housing bubble was bad? Wait until we find a top in the gold and silver bubble, think Zimbabwe, or Weimar-style...
Why do we now have to buy our own bonds to artificially suppress interest rates?
China is no dummy.
No offense flota but I'll take this guys word for it over yours...
"The CEO of Barrick Gold, the world’s biggest gold miner, says his company is expanding digging operations as central banks increase gold purchases."
You pick the one year gold was in a bubble. Not to mention gold traded above 800 not even for a month, not even a few weeks, but only for a few days! That's really an accurate comparison. Why not use the average price of gold in any other year? Cause it nullifies your message. How about using the last year gold was fixed at $35 and before it began freely trading? No you pick the one time in known history it was in a bubble that lasted a few days, comedy at its finest.
I'd have to be stupid, naive, and gullible to believe the bull**** that comes out in your postings.
That's why they're not going to follow the law and there won't be position limits set up by the end of next month!
http://theusdaily.com/articles/viewarticle.jsp?id=1292236&type=home
What happened at the COMEX (Silver) warehouse yesterday:
"It looks like World War III hit the silver Comex warehouse.
There were no deposits of silver but there were huge withdrawals.
The dealer reported two huge withdrawals:
Dealer no 1 had a withdrawal of 446,851 oz and
Dealer no 2 had a withdrawal of 44,783 oz for a total of 491,634 oz.
The customer had withdrawals of 122,405 oz."
http://harveyorgan.blogspot.com/2010/12/silver-and-gold-continue-to-rise.html
Really? The QE is creating inflation? Man you're genius, as far as inflation, it's global, all paper currencies are proving that gold and silver are the number 1 currency in the world.
Not if the asian ninja's keep buying at the bid and take January settlement (Will the Comex vaults be emptied, where will the silver come from?) - Last time I saw, the outstanding contracts were about 6 or 7 times more then the actual silver in the vaults... how is that possible? Is that the definition of naked short? Is it fair for JPM to sell short because they are a custodian of SLV? That wouldn't make too much sense if COMEX defaulted, especially to the SLV shareholders because JPM can't legally transfer SLV to the COMEX, can they?
Who really owns our lawmakers when the law isn't going to be followed?
http://www.huffingtonpost.com/raymond-j-learsy/oil-over-90barrel--time-t_b_801451.html
That's called a hedge against their massive silver short.
http://finance.yahoo.com/news/Cafferty-Faucher-LLP-Files-bw-269549129.html?x=0&.v=1
You see the news Friday, the CFTC held off on making capping position limits. Keep in mind that JPM is now also rumored to be controlling 80-90% of the copper market... and who knows how much of the silver market they still control even though they claim to have covered much of their shorts and that they will "never" have that many again... they seem to have been covered since they are a custodian on the SLV vaults, what a mess!
Good post Bob, hope all is well, where do you see silver headed in short-term? Are we witnessing history here and a return to a gold standard as well as the historical gold/silver ratio?
November 2010 Silver Eagle Bullion Coin Sales Hit 4.26 Million Record
American Silver Eagle bullion coins sprinted out US Mint doors in November 2010. Prior sales records were shattered left, right and center.
More @ http://www.coinnews.net/2010/12/04/november-2010-silver-eagle-bullion-coin-sales-hit-4-26-million-record/
J.P. Morgan Getting Squeezed In Silver Market? (SLV, JPM)
Scott Rubin,
SFGate December 5, 2010 04:00 AM
It is widely known that J.P. Morgan (NYSE: JPM) holds a giant short position in silver. Furthermore, some observers are accusing the bank of acting as an agent for the Federal Reserve in the market - every tick higher in the price of silver undermines confidence in the U.S. Dollar. A lower silver price helps keep the relative appeal of the U.S. dollar and other fiat currencies high.
By selling massive amounts of paper silver in the futures market, JPM has been able to suppress the price of the precious metal. It is believed that these short positions are naked (i.e. they are not backed by any physical silver). In fact, reports indicate that JPM is short more paper silver than physically exists in the world.
An article by Max Keiser which appeared in the Guardian on December 2, 2010 claims that the size of the short position is 3.3 billion ounces of silver.
In recent days, rumors have been swirling on the internet that JPM's massive short position is about to blow up in their face in the form of an almighty short squeeze and potential COMEX default as large traders demand physical delivery of silver that COMEX does not have in their vaults.
J.P. Morgan is currently under investigation by the CFTC for allegedly manipulating the price of silver. The investigation into the bank can be traced back to November 2009 when London metals trader and whistleblower Andrew Maguire contacted the CFTC to report market manipulation prior to it actually occurring.
Maguire had been told by J.P. Morgan commodity traders that the bank was manipulating the price of silver and subsequently reported this to the CFTC. He also gave the CFTC two days' notice about an impending silver manipulation that would take place around the Nonfarm payrolls number on February 5, 2010.
The manipulation played out EXACTLY as Maguire had predicted. You can find the emails between Maguire and Ramirez here. Shortly after this information came to light, the whistleblower was involved in a bizarre hit and run accident in London which caused him and his wife to be hospitalized.
The price of silver has absolutely exploded in recent months as these reports have surfaced and it is clear that blood is in the water. The predator (J.P. Morgan) has now become the prey. Every tick higher in the price of silver brings more pressure on the bank to cover their short position. This in turn puts more upward pressure on the silver price.
It is not clear if JPM has been actively trying to reduce their exposure or not - but something is definitely going on. The price of the widely traded iShares Silver Trust ETF (NYSE: SLV), which tracks the spot price of the precious metal, has exploded in recent months.
On August 23rd, the SLV closed at $17.61. The ETF closed on Friday at $28.60 and the price of silver is now trading at 30 year highs. Over the last three months, SLV is up over 47%.
In the overnight futures session on Sunday night, silver is currently trading 2.27% higher at $29.935. SOMETHING IS GOING ON. Making matters worse for JPM is the fact that a viral campaign (Crash JP Morgue Video) to buy physical silver and "crash" the bank is now spreading like wildfire on the internet. Just Google Crash J.P. Morgan Buy Silver.
Furthermore, it appears that significant physical silver shortages are developing in the marketplace and the metal is being sold well over spot where it is available. Shortly after popular financial blog ZeroHedge posted the "Crash The JP Morgue" video (linked to above), the website which created the video, goldsilvergold.com, reported that it was sold out of inventory and will not be taking new orders until December 6.
Another report indicates that JPM may really be on the ropes with their short silver position and are attempting to hedge themselves by buying $1.5 billion worth of copper. According to the Telegraph, the bank has bought "between 50% and 80%" of the 350,000 tonnes in reserve at the London Metal Exchange.
ZeroHedge opines that "JP Morgan is now intent on cornering the copper market, as the monopolist firm stretches its FRBNY-facilitated muscles in an attempt to stem the massive losses incurred via its silver short."
Readers who are interested in learning more about this story are encouraged to do follow up research and post comments. Those who wish to participate in squeezing the living daylights out of JPM, may want to consider buying physical silver, silver futures and SLV.
Keep a close eye on this market during the coming week...
LINK > http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/12/06/benzinga668905.DTL
So gold would decline indefinitely if the United States went through a deflationary period? Not that it isn't gaining value in all other currencies or anything... right? Only Americans are buying?... so sell it all now at $1318, huh?
Those ancient relics sure seem to be getting lots of buying, even from Russia, hmmm... why would Russia be buying so much $ GOLD?
Yes, because in a fiat monetary system, there will ALWAYS be inflation!
Exposure of corruption
Third Hindenburg Omen Confirmation
http://www.zerohedge.com/article/third-hindenburg-omen-confirmation
While today' might offer a temporary reversal/rally, do you really think with BAC at a 52-week low, we have a BULL market?
You are kidding, right?
Ron Paul Calls for Audit of US Gold Reserves : Kitco News Exclusive
http://www.kitco.com/reports/KitcoNews20100824DC.html
***BAC NEW 52-WEEK LOW***
Dow closed at 10,378.83, -265.42 or down -2.49% yesterday, may challenge 10,000 soon. Has a fanned out formation of higher highs and lower lows with declining volume on up-moves, yesterday seeemed to trigger a new downtrend after the top of the 5th wave was confirmed... BAC adding more confirmation that we're in a bear market right now ! >>>
They were, we'll see what happens over time. Of course it's a whole new ballgame when the printing presses around the world are all inflating to the point where the public can no longer monitor M3 expansion any longer.
It was done before Federal Reserve Bank Act, circa 1913 (christmas holiday passage).
A Dow Theory sell signal?
June 30, 2010, 4:29 p.m. EDT
By MarketWatch
ANNANDALE, Va. (MarketWatch) -- It's now official.
At least according to some interpretations of the venerable Dow Theory, a bear-market signal was generated at Wednesday's close, when both the Dow Jones Industrial Average delayed and the Dow Jones Transportation Average closed below their previous correction lows of early June.
This interpretation appears to be the one favored by two of the Dow Theorists tracked by the Hulbert Financial Digest: Jack Schannep, from TheDowTheory.com, and Richard Moroney, of Dow Theory Forecasts.
The third Dow Theorist that the Hulbert Financial Digest identified as having already turned bearish, and so today's action is mere confirmation of that bearish trend. He is Richard Russell, editor of Dow Theory Letters.
In addition to previously concluding that the Dow Theory was bearish, Russell also has indicated that he would view a Dow close below 9,800 as being bearish according to another technical analysis formation: the so-called head and shoulders. That occurred Wednesday, of course, with the Dow closing at the 9,774 level.
Earlier this week, Russell wrote that the breaking of the head-and-shoulders formation would have very bearish consequences: "All previous plans, scenarios and strategies will hit a stone wall. Wall Street and public sentiment will turn black-bearish. Consumers will head for the storm cellars, and, once in, they'll shut the door above them and lock it."
-- Mark Hulbert
LINK: http://www.marketwatch.com/story/dow-theory-sell-signal-at-thursdays-close-2010-06-30?link=kiosk
Correction in Q2 Will Become a Bear Market in Q3
By, DARYL MONTGOMERY
Jul 01, 2010
Stocks were in a correction in the second quarter. A head and shoulders top on the S&P 500 was confirmed on June 30th, which indicates further selling ahead. The first of the month trading indicator already confirmed a bear market in early June. A moving average cross will add additional confirmation by July 2nd.
After Tuesday's sharp drop, it would be reasonable to have assumed that U.S stocks (NYSEArca: IWV) could have at least had a dead cat bounce. Not only didn't the cat bounce, but prices fell even further confirming a head and shoulders top on the S&P 500 (NYSEArca: SPY). Even worse, a more important sell signal will be given by Friday when the S&P's simple 50-day moving average falls below its 200-day. This is a classic bear market confirmation. The first of the month indicator already confirmed a bear market in early June.
While it looks like there's much worse to come for stocks, the second quarter was bad enough as is. The U.S. stock market was in a correction no matter how you measure it. For the quarter, the Dow was down 10% and the S&P 500 and Nasdaq were both down 12%. From their highs on April 26th to their lows on June 30th, the Dow, the S&P 500, the Nasdaq (NasdaqGS: ONEQ) and the small cap Russell 2000 (NYSEArca: IWM) were down 13.9%, 15.7%, 17.0% and 18.4% respectively. A market is in correction when it has dropped between 10% and 20% from its high.
A market has entered bear territory once it is down 20%. There is more than enough reason to think that this will be happening soon. Both the S&P 500 and Nasdaq hit their 2010 lows on June 30th. The Dow was only slightly above its low on June 8th. The S&P 500's head and shoulders topping formation indicates a possible additional drop of 20% (based on the work of market technician Thomas Bulkowski). This pattern was confirmed when the S&P 500 fell below 1040.78. Its low on the last day of the quarter was 1028.33. In an article on May 28th, I pointed out that this chart pattern was in formation. Well, now it has been confirmed and is providing one more piece of evidence of a market prone to selling.
U.S. stocks already started a bear trading pattern when the major indices sold off during the first four trading days of the month in both May and June. An article I wrote on June 6th detailed the specifics. The next confirmation will be the simple 50-day moving average crossing below the simple 200-day moving average. This will take place for the S&P 500 this Friday, if not today. The ultimate and final confirmation will be given when the 200-day moving averages for the major indices start heading down. They have been flattening out and trending sideways lately, so this too will be happening soon.
The technical picture for the major U.S. stock indices is not only negative, but is getting worse. The market is dropping just ahead of the sharp and sudden deterioration of the economy that is beginning to show up in a number of places. The upcoming bear market though is likely to move faster than the previous one that lasted 18 months from peak to trough. Traders will love the volatility. Investors should wait for the signs of a bottom, which will offer them many opportunities for major profits.
Disclosure: None
Daryl Montgomery
Organizer, New York Investing meetup
http://investing.meetup.com/21
LINK: http://www.etfguide.com/research/368/23/Correction-in-Q2-Will-Become-a-Bear-Market-in-Q3/
Gold ends $2 shy of May record, silver up 5%
June 7, 2010, 1:59 p.m. EDT
By Claudia Assis
SAN FRANCISCO (MarketWatch) -- Gold futures on Monday rose nearly 2% to end just a couple of dollars short of their May 12 record amid lingering concerns about the health of the world economy. Gold for August delivery, the most active contract, rose $23.10, or 1.9%, to settle at $1,240.80 an ounce. Silver for July delivery tracked gold to settle 5% up at $18.16 an ounce.
LINK>>> http://www.marketwatch.com/story/gold-ends-2-shy-of-may-record-silver-up-5-2010-06-07
Is Gold the Next Bubble?
by Brett Arends
Wednesday, May 26, 2010
It's been the amazing, runaway boom of the past decade. If you'd put your money into gold at the lows about 10 years ago, you'd have made a nearly 400% return. That's left pretty much everything else—stocks, China, let alone housing—in the dust.
But with gold now trading near record highs, the big $1,200-an-ounce question is obvious.
Is the gold rush over?
Some smart people wonder. "The time to buy gold was in 1999, not 2010," Harvard professor Niall Ferguson tells The Wall Street Journal—though he added that momentum might still drive it higher. Others will tell you that "the smart money got out of gold months ago." But then people have been saying that for years.
They could be right, of course: The future by definition is unknowable.
But if gold is a bubble, here's why it may not be over—and, indeed, may it may be about to go vertical.
First, the recent rise is deceptive. Yes, gold has risen from around $250 an ounce to $1,200. But that rise started at very depressed levels. Gold had been falling in price for two decades. In 2000-01, it was at the bottom of a very deep bear market. It had touched historic lows compared to consumer prices or other assets like shares. A lot of the past decade's boom has simply seen it recover toward longer-term averages.
Second, before we assume the gold bubble has hit its peak, let's see how it compares with the last two bubbles—the tech mania of the 1990s and the housing bubble that peaked in 2005-06.
The chart is below, and it's both an eye-opener and a spine-tingler.
It compares the rise in gold today with the rise of the Nasdaq in the 1990s and the Dow Jones index of home-building stocks in the 10 years leading up to 2005-06.
They look uncannily similar to me.
So far gold has followed the same path as the previous two bubbles. And if it continues along the same trajectory—a big if—gold today is only where the Nasdaq was in 1998 and housing in 2003.
In other words, just before those markets went into orbit.
Maybe the smart money is out of gold today. But how easily we forget that the smart money got out of these past bubbles way too early. The really smart money knows you make the most money in a bubble right at the end, when it goes manic.
There are other reasons to think that gold is still a long way from that point.
Like the futures market. It is predicting gold will rise by just a few percent a year over the next few years. That's less than you'd get from municipal bonds.
When the market thinks an investment is going to underperform munis, it's safe to say we are not in the midst of euphoria.
And take a look at the coverage of this industry. At the peak of a bubble, the Wall Street analysts covering a sector are usually all bullish. This time around? Far from it. Of the analysts covering gold-mining giant Barrick Gold (NYSE: , only about two-thirds are publicly bullish, according to Thomson Reuters. By Wall Street standards, that's very restrained. Among those covering Newmont Mining and Randgold Resources, it's about half.
And on an anecdotal level, this doesn't feel like the peak of a bubble. Taxi drivers and bartenders may be talking about gold. But they aren't yet handing out mining tips.
There is, of course, no guarantee gold will turn into another mania. But the fact that we now seem to live in Bubblonia—the land of perpetual bubbles—would suggest there is a current opening for the role. And in many ways, gold may be well cast.
It has a "This time is different" story line: The world's central banks are flooding the market with liquidity. That should inevitably devalue the currencies. Gold is the only "currency" they can't just print.
It has an army of true believers behind it, ready to claim each rise as a "victory" and to mock skeptics with the words "They just don't get it."
And it's easy to untether from reality. You can't value gold by traditional financial measures, as it generates no cash flow. So there's plenty of potential to value it by other means. Eyeballs, anyone?
Dylan Grice, a strategist at SG Securities in London, thinks global conditions today could unleash another gold boom like the one in the 1970s. Then, as now, the world lost confidence in the U.S. dollar as a store of value. Back then, central banks started hoarding gold instead. Today, he notes, they are net purchasers of gold for the first time since 1988.
And although gold has risen a long way, so has the U.S. money supply. Mr. Grice calculates that even at today's prices, the bullion that the U.S. government holds in places like Fort Knox is still only worth enough to back 15% of the U.S. monetary base. That is near a record low.
At the peak of the gold mania in 1979-80, gold prices rose so far that the backing exceeded 100%. How far would gold rise if that happened again? To around $6,300 an ounce, Mr. Grice says.
Once again: I am not saying gold is going into the stratosphere. I am saying there is a good case for saying it might.
Gold is a high-risk and potentially dangerous speculation. Anyone thinking of investing needs to do some serious thinking first.
Write to Brett Arends at brett.arends@wsj.com
LINK >>> http://finance.yahoo.com/banking-budgeting/article/109645/is-gold-the-next-bubble?mod=bb-budgeting&sec=topStories&pos=3&asset=e64fcd5fd7d38fec39d25c7df7113ff3&ccode=mp