Thursday, January 15, 2015

Blow Off Tops and Washed Out Bottoms, Is the Gold Rally Finally Here?

Sometimes you don't need a road map to see where things are going. I snipped this paragraph from a CNN piece on the Swiss National Bank's decision to let it's currency trade freely after imposing a peg on it some 3 years ago.

The snip:

However, in an effort to ensure investors don't get too excited about swapping euros or dollars for francs, the central bank also slashed interest rates to -0.75%, down from -0.25%.
"It's like a tax on people holding money in Swiss francs," said Simon Smith, the chief economist at FxPro in London.

Instant haircut for swiss savers.

You want real currency price discovery? There it is. The shit is so worthless, we are going to charge you three quarters of a point just to hold it. Think about how outrageous that is. Swiss currency is trash. They want people to remove money from the bank.

Two months ago, I noted that silver traded down to 14.12. I bought nearly 100 ounces which averaged my overall holdings price down to about 21.00. That bottom was so low that silver immediately rallied nearly 25% and it is holding around 17. Gold rallied off the 1150 lows and it is up nearly 100 bucks.

The gold bull is back, Bill F says so.

Wait until the European Central Bank announces their QE program in less than 10 days.

The DJIA's blow off top occurred just over the 18,000 level. Without QE, the market simply cannot rally further. They have squeezed every last ounce of credibility out of the "buy the dip" theme. Commodities are all down- even cattle futures are starting to deteriorate. Dr. Copper is toast. Housing starts are down as well. Without a consumer feeling confident in "make believe equity" and buying worthless shit with Helocs- I don't know where any potential rally can come from. Last but not least, the oil bust is wiping out capital expenditures, market caps, equity, and jobs. The first oil patch bankruptcy was announced earlier this week.

I am liking this year a lot thus far.

You can't put money in the bank, you can't buy bonds paying less than 2%, you can't buy equities that have topped out after a 6 year, QE induced rally. You can't go long commodities or even currencies since we all know where they are headed.

What does that leave? Gold and silver.

I read a report earlier this week that said that all of the known gold in the world will have been mined in 20 years. Gold is a finite resource. We are well beyond "peak gold and silver" as all of the major miners are desperately mining and looking for new assets.

The bottoms are in for now and I see nothing to impede their rise. Gold 1300 this month. Silver 18.00 this month. I feel confident buying at these levels. I might even buy a little platinum while I sit back and watch the currency wars fireworks take place. Hopefully, the 3 and 1/2 year bear market is finally over in the precious metals markets now that the central banks have loaded up on gold.

Not coincidentally these past two weeks- the dollar fell against the yen and the Swiss franc. However, we have the European Central Bank announcing their own QE program later this month- so we'll see if that announcement has already been priced in.

I think it has.


Fredd said...

I have a somewhat different take. The world is still a shaky place, and the dollar is the only sound bet going. And with interest rates at almost nothing, CD's and bonds are not the place to put your dollars to work. What else is left? Real estate? Nah. Not yet.

That leaves equities. And only equities. You mention commodities tanking, and that includes gold, silver and oil, commodities all. I see gold bottoming at around $900 an ounce, it'll take a year or two, but it will get there. Silver has nowhere to go but down as well, simply based on demand which isn't really there currently. Remember these gold bugs insisting two years ago that gold, while sitting at $1800/ounce was a bargain since it was a slam dunk to hit $3000 and ounce? How'd that work out for you gold guys? I triple shorted the stuff when it was around that price, and cashed in at $1300/ounce. Good enough. I am now buying oil, it should be near the bottom, give or take.

How's that for betting about 180 degrees from your bets. Time will tell, Brian.

Brian said...

I'll tell you what Fredd. Gold is trading at 1267 this a.m. and I sense a wager. Here is my wager. I will bet that gold hits 1567 before it hits 967. Loser delivers to the the winner- 5 ounces of pure .999 silver.

I like putting my money where my mouth is and I am amenable to increasing the wager if you'd like. Of course it would be a gentlemen's wager and you will be on the honor system. What sayeth ye?


Jim at Asylum Watch said...

You don't think there is a QE4 in the offing, Brian?

Brian said...

No. They just won't raise rates, they can't or our 18T debt will go supernova. It will be ZIRP forever just like Japan.

Stealth QE will occur everywhere else as everyone tries to devalue their currency. Next up, the European Cental Bank's QE experiment.

Can you imagine Jim if they tried QE4?? Maybe they could buy all of us an Obamacare policy each year.

Fredd said...

Brian: as much as I think my assessment is closer to what will happen in the future than your assessment, I am not really a betting kind of guy. Not even on sports. Only bragging rights are at stake here. Additionally, watching gold sit at around between $1200 and $1400 an ounce takes two years of my time, and counting. The time span on this bet could take a lifetime. Or I could win next week when a mountain of gold is discovered in Namibia and gold goes to $0.65 an ounce. Betting on commodities: only Hillary Clinton can win doing that. Nobody else. I of course will keep an eye on gold, as I have since I cashed in my short play a few years ago.

Brian said...

Well Fredd- I think we both know nobody is going to have to wait years. In fact, I think gold marches right through 1300 this week. The gold bear is over- just as the equity bull market is over. The real question I have for you is- where are you going to go that all of your investment classes are toast? Gonna seek out sub 3% returns on bonds or hope that the stock market breaks thru 19,000? Are you gonna rely on hopium?

Instead of bashing precious metals maybe you ought to consider the possibility that you are wrong.

Compleat Patriot said...

Faith in fiat always astonishes me. You got this nailed Brian. The fiat currency will die soon. Remember though, we cannot eat gold or silver.

Anonymous said...

I think it may be a bottom as well, but... fear to catch a falling knife... hope you're correct...
let's see what happens with crude oil...that could very interesting....

Fredd said...

You gloom and doom preppers are ready for the worst. But you miss the boat when the worst never comes to pass.

Brian said...

The worst has happened already. All they have managed thus far is to ruin the markets and inflate them with fake money. The real consequences have yet to be felt- but they will Fredd. In the meantime your statement made me think of this. You may have a terminal case.

The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This may result in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations.

The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It can result in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

In emergency services we prepare for disasters- you might say its in my programming.

Compleat Patriot said...

Freddy boy, I openly prepared for the 2008-2010 financial chaos in which Brian is a witness and I had several friends calling me nuts prior of that unfinished crash lose it all, businesses houses, some even died over it. One had the balls to apologize for his stupid accusations of myself being a silly "prepper." As an owner of multiple businesses and real properties I'm still standing here because I learned to prepare for anything and everything I ventured into whether it be business or pleasure.

The history of fiat speaks for itself.

"The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well."---This is the fking truth.

"Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. "---Thats is the fking truth

Strangely enough from that historical record we discover that the creators of the fiat currency were large holders of intrinsic metals, and of course of other highly valued real commodities.

Suggest you study the complete Banking Money Power History of the u.s from 1778 to 1899.. then to 1933 - 2015. Suggest you read the real 1930 Geneva Convention Books...

Scroll down and click on the real 1930 Geneva Convention Books;

Compleat Patriot said...

Brian, what do you think about the long history of the value of intrinsic metals when not compared to fiat currency's where the silver ounce was considered one dollar, and the gold ounce was twenty dollars? If the global currency does fail, and I believe it certainly will eventually, who is to say real commodities values will not come crashing back down to that longest held historical real value. {The other side of the metals world I've contemplated} Ignoring oil of course because if the collapse scenario I expect takes place oil will be out it for a time before a reset takes place. I still believe food and water are the most important real wealth we can hold during these times. As you know, I have enough water coming out the ground up here to keep my hydrated until my piston gives out, a pond with thousands of fish, and of course dry goods put away ten years worth of rainy days. Along with that garden that feeds me for six months every year. There might be some economic strife gloom but by gawd I'll eat mighty fine until these unprepared bastards that cannot see past their own faces come and take it away for the greater good of themselves..

Brian said...

Interesting. I have always felt that there are only two ways out for fiat. Default or hyperinflate.
Default means our creditors bankers will not get theirs nor will the big sovereign states like China, Japan. It might even bring about WWIII.

So I think all they can do is to try and hyper inflate away our debt. This is something I am well versed on having read history and no less than 1000 pieces of work not the least of which is FOFOA's blog on gold and thinking like a giant. Credibility is instantly inferred because what the anonymous writer writes- is true on its face.

One of the great schemes of the last 6 years was the refinancing of our 18T dollar debt from 30 year treasuries down to shorter terms like the 1,5, and 10 year- they did this because the interest yields were far less than the 4-5% they were forced to pay on the 30. Last time I checked- we were refinancing 1/2 or 9 trillion of debt each year. So they are in a situation where they are running out of capacity to pay- meaning any significant rise in bond yields will trigger a hyperinflationary event. That is precisely why I have not refinanced because I know rates can only go lower as we enter the deflation period which started 3.5 years ago when gold and silver led the way down. The entire commodity complex is rapidly coming down and oddly- gold and silver are now going back up. Not only is this exactly correct in terms of my deflation then hyperinflation theory but we are significantly closer.

A few years ago I wrote this scenario out as, "most likely" on the Helium website under economics. The piece was attacked and my credibility challenged. Unfortunately like you- I lacked the universally accepted and largely bullshit academic credentials although I am vastly interested in the world of economics and I eat up everything I can read- so my essay was summarily dismissed by the credentialed staff. Helium did not last, it died as it should have. I am still here, this economic disaster is still here, and I'll be damned if there isn't millions of people like Fredd ridiculing people like us. That's ok- those roles have always been available on the theater of the ages and somebody has to fill them.

Gold and silver will be priceless again. Predicting when seems pretty useless at this point.

You will survive quite nicely. When they come for you- I hope they bring a lot of people, ammo, and guns. It will be a lot like Ruby Ridge only this time the other side will lose. Molon Labe!

Compleat Patriot said...

No Ruby here. They can have it. I'll harm no man fooled by lying political lawyers handing out ink on paper wordage terms justifying their theft and removal of myself for their benefit as is obviously shaping up to take place here in this country to all independent thinkers capable of self determining their own futures via responsible thoughtful preparations for ones own self sustainable future. No doubt a Freddy will be leading the charge up this hill.. The fraudulent actions will be on their hands and heads not mine when judgment comes for them..

Anonymous said...

Gold is money and everything else is credit/debt.

J.P. Morgan circa 1913

Compleat Patriot said...

“The Chess Master”
Please note how this article ends
Monday, January 19, 2015
Crisis Point: Putin, The West, and the Game Being Played
James Holbrooks
Activist Post

“None of this is news to anyone even half-assedly paying attention to geopolitics. But here’s the thing…
They can’t stop.
The West needs war. It’s doomed without it. The central banking scam upon which its power is rooted has reached its absolute limit. And with Russia and the other BRICS nations’ New Development Bank emerging as a serious threat to their global dominance, the solution has been nail-bitingly clear to Western oligarchs for quite some time. War—in particular, a world war with those countries who would dare turn from the dollar—would reset the books.
The problem, as earlier stated, is that The Chessmaster sees this as clearly as anyone. He’s studied the board and is three moves ahead of his enemy. The West is simply outclassed, and they know it. But they can’t stop. War is an imperative. And so they inevitably resort to the method employed by thieves and liars throughout the ages—they cheat.”~James Holbrooks

Brian said...

Gawd I hope not. Disguising another banker war as a real war. Maybe we should conscript all bankers first, Ivy League students, 2nd. That would put an end to it.