Video-June-20-2013-Archives-Daily-Show
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Fear And Loathing
Buy when there's blood in the streets, even if the blood is your own.
- Baron Rothschild (following the Panic of 1815 in Europe)
This is the time to pay close attention to technical indicators. The fundamentals are a mess, and it seems as if all the dots normally connected with their sister dots are now disconnected. But is it a time to think the end of making money in the gold and silver market is at hand? Hardly.
We can make money in gold and silver by picking the right spots.
Sir John Templeton, founder of the Templeton Group, had one guiding principle: buy into companies (or countries, since Templeton often invested in whole countries) when they hit the point of "maximum pessimism."
Determining whether we have hit that point in gold or have a ways to go is not a matter for fundamental analysis. Perhaps in the stock market one can factor in fundamentals, perhaps even in currency trading and some commodities that have particular utility in the economy, such as wheat or lumber or coffee. Gold, however, is a conceptual proxy for the pressures and activities in the entire world's economy.
Yes, it has some tangible use for jewelry, electronics and other industrial products, but those are miniscule compared to the amount of gold traded for conceptual reasons.
We think that the markets are all voting with their money today, fairly shouting at the Fed that if the economy is to be re-inflated, something better be done quickly. It seems though that Bernanke, who in May had been attacked for being unclear, is now being criticized for being too clear.
We are in the camp that says that if indeed the chairman has (inadvertently) talked down the prices of precious metals and equities, traders have strenuously overreacted.
Other markets - equities and commodities - have been seriously hammered today as well. The 10-year T-bond is showing strength, though, with its yield rising to 2.4% today. Predictions are it will go to 3 fairly soon. The yield is carried on the back of a stronger dollar. As precious traders we should also note that Treasury offers an inflation-protected bond, which is drawing a lot of interest at this particular juncture.
One developing overseas situation we should be watching is the economic turmoil rising in China, which is facing an enormous banking crisis that is hampering the lending of money to businesses and individuals. Some experts say China may be thrown into an actual depression if the situation isn't rectified pronto.
Meanwhile, what is a precious trader to do? There is blood in the streets without argument. But it's best to scoop up your bargains when technical signals are loud and clear.
Wishing you as always good trading,
Gary S. WagnerExecutive ProducerMarket Forecast:Yesterday: Since the end of last week we began to talk about strategies within the precious metals markets that included the writing of call options, and simply playing shorts in the market or selling the precious metals. For those who been writing call options the premium has deteriorated to a great extent giving your current investment profits. This may sound a little odd but it is much easier to me to understand the technical basis of today’s utter meltdown in both gold and silver then looking at the fundamentals. On a technical basis we have warned our subscribers that a break below 1360 could signal a test of the recent lows at 1320 and breaking below that would most certainly trigger massive stops and liquidations of long positions. Today’s video will look at in detail the scope and magnitude of today’s fall in the precious metals markets. Secondly on a technical basis we have been telling our subscribers for the last two weeks that silver was in an extremely vulnerable spot on a technical basis, without any support until the price point went below $20 per ounce. Such was the case today as we saw silver close well below that $20 benchmark. Although the strap is significant the rationale behind it is perplexing. It is not although the investment public at large was never warned or told that at some point the Federal Reserve would scale back in and its current monetary policy. In fact the Federal Reserve outlined benchmarks as well as significant indicators it would look at. Today’s sharply lower pricing is being blamed upon fears that the Federal Reserve will in fact begin to scale its US bond purchases. That is old news. What is not is is utter knee-jerk reaction to fax it will well planted with in the public’s mind. The big question is where precious metals will move from here. I will give you my take on that on today’s show. In gold there is not significant support or major support until 1192 which is a 61% retracement from the major rally which began in 2008. Is my current belief that there is probably more downside ahead but we need to let the dust settle and reevaluate the market after that. Video archives:http://thegoldforecast.com/video/april-2013-archives-daily-shows http://thegoldforecast.com/video/may-2013-archives-daily-shows
Market Sentiment: Bearish, lower prices very likely with major support at 1192
Silver has gone to our predicted support level below 20 dollars per ounce, however it will follow gold so look for lower prices here. Lastley look for an upside bounce simply due to short covering and could be a trap for bulls to re enter
From the week of 06.07. 2013 COT LINK See previous weeks in Historical Commitments of Traders Reports. |
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Gary S. Wagner - Executive Producer