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The Precious Metals Tsunami
A Relief Rally For The U.S. Dollar As 'Safe' Alternatives Get Expensive
4 Buy And 4 Sell Ideas By Cramer
10 Undervalued, Oversold Financial Stocks Offering Good Value
Never Be Fooled By A Price Pause In Precious Metals Prices
Central banks and the gold price
The Decline of Manufacturing in America: The Role of Government Neglect
China's Gold Reserves
Wikileaks – China's Shadow Gold Buying Spree
Ron Paul: Federal Reserve admits they have no gold
Silver Futurist – Warning for silver investors
Bob Chapman – Economic Pain For Upholding A Broken System
WATCH – Precious Metals vs. The Dow Jones
Sky's the limit for precious metals now, Eric Sprott tells King World News

Posted: 11 Sep 2011 05:41 AM PDT

By: Goldrunner

www.GoldrunnerFractalAnalysis.com

A tsunami doesn't start with a bang, but with a whimper. The first sign is a little hump in the water way out in the distance that is barely notable. Anyone who catches a glimpse of it simply continues to expect the day to be the same as the last many days – calm and beautiful waters along the shore. This is the point where we are, today in the Precious Metals (PM) sector. Many have seen the little roll of water out in the distance as Gold edged up in the first move of a more parabolic slope, yet most investors are mired in the same expectations of yesterday – a return for Gold to correct down into a lower base.
As far as the PM Bull goes, the vast majority of investors are still sitting on their hands – eyes glued to the television – as the global economic mess unwinds driving the Precious Metals from a little bump on the horizon to a 15 foot wall that will engulf them. As with all tsunamis, the vast majority of investors will pause in wonder over the growing wave as it comes closer, but they will not take action until the PM wall is 15 feet high and coming right at them. In reality, that huge PM wave will represent an unseen wave of devaluation of everything they own so eventually, like all tsunamis, the majority of investors will react – all at the same time. Those late-comers to the PM sector will grab charts of Gold, of Silver, and of the PM stocks to see that so far in this PM bull prices have tended to correct back to the mean, so they will decide to wait for a steep correction to get in. Yet, they won't get a steep correction to their liking and will be forced to "chase" as the Gold parabola continues to accelerate to the upside. It was much the same in the late 1970s.
As mentioned within the chart of the HUI Index below, we have now reached the inflection point where Gold has busted up and out of the rising channel that Gold has traded in since early 2009. As Gold takes a more parabolic route above the cost level of the Gold miners, we expect the Gold producers as represented by the HUI Index, to bust up and through the stiff resistance of its own channel line as represented by the pink line in the chart below. This is how the real PM stock bull presented in the late 70's at the same fractal time and price relationship. We had anticipated the last important HUI double bottom at around the 100-week exponential moving average, and the price has now broken out to the upside confirmed by break-outs in the RSI and the MACD with all the moving averages turning up. It just doesn't get any better than this!

REVIEW OF OUR EXPECATIONS TO DATE

A major bottom for the PM stock indices is now firmly in place as we laid out for subscribers to our service (see here for subscription details) early in the week of August 8th based on the fractal relationship to 1979.
Price and the technical Indicator readings continue to track the 1970's PM stocks up into new highs with much higher prices to go. In fact, we expect this run to be the first, and smallest, of 3 momentum runs to come for the PM stock indices. The mid-900s appear to be a realistic target for the HUI Index into year-end, or into early 2012.
A break-out to new highs with a successful re-test now appears to be in place for the PM stock indices. We have reached the point in the cycle where leverage returns to the PM stocks with a vengeance exactly like the late 1970s charts.
Our expectation that a "high level consolidation" for Gold is enough to start the early momentum break-out and run for the PM stock indices at this point appears to be on target. That expectation was based upon the fact that the price of Gold is now much higher than the cost of production for the Gold producers and higher than the price of Gold that caused an increase in the earnings for the last quarter since the PM stock indices are dominated by large cap gold producers.
Gold moving to a new high early this week negates the probability of new lows for this correction but fuels massive volatility in price as many try to see a "double top" based on the past metrics of the current Gold bull. The metrics for Gold's historic bull market have now changed, and expectations for a double top will likely morph into what will eventually be seen as one of the biggest momentum runs for Gold in history that mimics the 70's Gold charts that we have provided for our subscribers (sign up here).
The fundamentals for Gold are off the charts on a world-wide basis at this time, yet many focus on the past metrics of this current Gold bull to fear a sharp drop in Gold. They will continue to worry all the way up, and will be surprised by the rise in the price of Gold that leaves the past metrics in the dust as most nations ramp up the printing presses to stave off dismal economies.
The only true reflection of the degree of dollar devaluation at hand is seen in the Gold chart as the US Dollar is massively devalued against Gold. The Dollar Index will generally drift lower like the late 1970s since it is a pricing scheme where the US Dollar is "priced" against a basket of other paper currencies that are also being aggressively devalued. As the dollar is continually devalued so is everything else that you own that is denominated in dollars. We believe that the best way to protect yourself and the buying power of your savings is via PM investments of all kinds- owning Gold, Silver, and the PM stocks.
The big funds who have been long Gold and short the PM stocks need great volatility in the Gold price at this time to try to reverse that trade if Gold is not going to trade lower. The short covering in the large cap Gold stocks pushes the PM stock indices up to new highs as Gold consolidates. We suspect that another sharp move higher in Gold is on our door step- one that will accelerate the Gold and Silver stock short-covering, driving the PM stock indices higher in a momentum run as shorts are forced to cover into higher prices.
Silver will lag Gold to some extent in this time-frame since we have already seen the analogous first parabolic leg up in Silver. Nevertheless, we expect to see Silver run back to new highs in a similar multiple topping process as we have shown in the fractal charts for Silver in 1979 and in 2006. Thus, we retain the $52 to $56 price objectives for Silver in that multiple topping process with the potential for Silver to spike up into the low 60s as put forth in our article entitled Goldrunner: The "GOLDEN PARABOLA" & "SILVER ROCKET" Update article posted last week posted on this site and here as well.
It just doesn't get any better than this since it appears that we have finally reached the early part of the "cycle sweet spot" for investing in the PM stocks per the 70's Charts. As we have noted, we expect the large cap Gold producers to out-perform along with the mid-tier producers and near-producers. The usual sub-sector rotations will eventually begin as we saw back in the fractal period 2002.
The large cap Gold stocks and the producing, or near-producing, mid-tier Gold stocks, should lead the way for this momentum leg higher. Silver should run up to new highs to fulfill our earlier expectations per the 2006 secondary fractal Silver Chart. $52 to $56 should be achievable for silver, with $58 to $62 as real possibilities.
There is a good possibility that we will need to raise our targets for Gold for this momentum run as put forth in our article last week entitled Goldrunner: The "GOLDEN PARABOLA" & "SILVER ROCKET" Update article posted last week on this site and here as well, but we will wait to see how the next run upward in Gold to the expected $2250 level plays out to see the price structure in comparison to the 1970s. $3,000 Gold, or higher, might be in play for this run depending on how the price of Gold moves over the next month, or so.
Big money is coming into the large cap PM stocks as seen by "volume leading price." This is very different from what we have mostly seen to date in this PM stock bull – all except for a few momentum runs over the last decade.

Summary

The mid-900s appear to be a realistic target for the HUI Index into year-end, or into early 2012.
$52 to $56 should be achievable for silver, with $58 to $62 as real possibilities.
The next run upward in Gold suggests the $2250 level followed by $2500 with the potential for $3,000, or a bit higher, now on the radar screen.

To keep abreast of daily developments in what is happening with physical gold and silver, various PM indices and specific gold and silver mining and royalty stocks please subscribe to our service here. To read more of public access articles please go here.
For the moment………………..Goldrunner (Sunday 09-11-11) goldrunner44@aol.com
Please understand that the above is just the opinion of a small fish in a large sea. None of the above is intended as investment advice, but merely an opinion of the potential of what might be. Simply put: the above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. In the interest of full disclosure, GOLDRUNNER is personally invested in the Precious Metals sector including various Precious Metals and other individual stocks. GOLDRUNNER reserves the right to modify or eliminate any or all positions at any point in time.

A Relief Rally For The U.S. Dollar As 'Safe' Alternatives Get Expensive

Posted: 11 Sep 2011 02:14 AM PDT

By Dr. Duru:

It took a whole month before the dollar finally launched into the relief rally I thought would soon follow the S&P's downgrade of U.S. government debt. Even after the Swiss franc's rein as a "safety" currency ended a few days later – first with a threat and then the implementation of a currency peg – the dollar continued to drift lower.

A fresh run on the euro that has sent currency traders scurrying for the dollar instead of the franc has sent the dollar index soaring nearly straight up. In just eight days, the dollar index has gone from scratching at three-year lows to an important breakout.

[Click all images to enlarge]

The U.S. dollar index breaks out

As I have stated before, the 200-day moving average (DMA) has been an important line of support and resistance for the dollar index for year. During its steady descent from 2002 to

Complete Story »

4 Buy And 4 Sell Ideas By Cramer

Posted: 11 Sep 2011 12:17 AM PDT

By Osman Gulseven:

Jim Cramer is one of the most entertaining and respectable stock pickers in the market. While I enjoy the way he presents his shows, I hardly catch up with him as he makes his suggestions so fast. In the week's last Lightning Round program, he made eight calls, four of them bullish and the other four bearish. I have investigated all of these stock mentions from a fundamental perspective, adding my O-Metrix Grading System where applicable. Here is a fundamental analysis of these stocks from Cramer's Lightning Round :

Stock Name	Ticker	Cramer's Suggestion	O-Metrix Score	My Take
MAKO Surgical	MAKO	Sell Some and Hold the Rest	N/A	Sell
Insituform Technologies	INSU	Avoid	8.01	Buy
Broadridge Financial	BR	Buy	4.25	Buy
Eastman Kodak	EK	Avoid	N/A	Sell
Alcoa	AA	Buy	-	Buy
Coach	COH	Buy	5.14	Long-Term Buy
iShares Silver Trust	SLV	Avoid	N/A	Avoid
SPDR Gold Trust	GLD	Buy	N/A

Complete Story »

10 Undervalued, Oversold Financial Stocks Offering Good Value

Posted: 11 Sep 2011 12:07 AM PDT

By Follow My Alpha:

The Price/Sales Ratio is a well known price-multiple valuation metric. This ratio shows investors how much the investment world values every dollar of a firm's sales. A lower ratio signifies more potential investment opportunity. Given the market uncertainty related to financial companies we thought that this would be an interesting metric to use when looking for potential opportunities within the space.

We ran a screen for Financial Stocks with a P/S Ratio of 1 or less. From this narrowed pool we then screened for firms that were at least 20% below their 52-Week High.

The Forward P/BV Ratio ranks the firms highest to lowest:

1. Citigroup Inc. (C)

Sector	Financial Services
Industry	Banks - Global
Market Cap	$78,026M
Beta	2.65

The company offers consumer and corporate financial services around the world. The firm's P/S Ratio is 1. C is 48.08% below its 52-Week High. The short interest was 1.90% as

Complete Story »

Never Be Fooled By A Price Pause In Precious Metals Prices

Posted: 10 Sep 2011 11:00 PM PDT

"The gold currency broke down because one country after another began to disregard the rules. At the same time, the international order crumbled because the prevailing liberal economic order of the last century and the beginning of the 20thcentury began to give way to a more and more socialist, interventionist, or even collectivist order. The new politics killed a currency order which was based on free markets and personal freedom." -Ferdinand Lips from Golden Insights complied by James U. Blanchard lll.

The very long trend remains intact. Current stalling is just a Labor Day pause. Next week the metals will rock.

"Gold steadied "in limbo" above $1,800 an ounce in New York as investors speculated over whether economic growth is stalling. Reports yesterday showed U.S. business activity and factory orders expanded at a faster pace than economists forecast, while data this week may show U.S. manufacturing contracted for the first time in two years and employment slowed in August. The metal fell today as the dollar climbed to the highest level in almost two weeks versus the euro on concern that Europe's sovereign-debt crisis may worsen."

"Market participants continue to struggle for direction" and trading volumes are subdued, Edel Tully, a London-based analyst at UBS AG, wrote in a report. "If the vacuum in data and news persists, gold is likely to remain in limbo for the rest of the week. We view the consolidation in gold, which is forming a base in the low $1,800s, as very healthy and necessary after recent violent price action." About 166,000 bullion contracts were traded on the Comex yesterday, down from about 441,000 on August 24, data on Bloomberg show. The stronger dollar may be pressuring gold today, Daniel Briesemann, an analyst at Commerzbank AG, said today by phone from Frankfurt.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up +28% this year, outperforming global stocks, commodities and Treasuries.

Exchange-traded-product holdings were little changed at 2,144.5 metric tons yesterday, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on August 8. The U.S. Mint sold 112,000 ounces of American Eagle gold coins last month, up +74% from July and the most since January, its website showed. Silver coin sales advanced +24% to 3.68 million ounces. Silver for December delivery in New York fell -0.2% to $41.665 an ounce. Platinum for October delivery was down -0.5% at $1,847.50 an ounce. Palladium for December delivery slipped -1.7% to $777 an ounce. -Nicholas Larkin 9-1-11 Bloomberg.net

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Central banks and the gold price

Posted: 10 Sep 2011 10:15 PM PDT

Last week the Swiss National Bank suddenly announced that it was "no longer going to tolerate a EUR/CHF exchange rate below the minimum rate of CHF1.20". Just before the announcement the ...

The Decline of Manufacturing in America: The Role of Government Neglect

Posted: 10 Sep 2011 06:00 PM PDT

As I mentioned in a Labor Day post, I grew up in an America where manufacturing was still the backbone of the economy. I may be more aware of that than most in my age group by virtue of spending much of my childhood in small towns where the local paper mill was the biggest employer. Similarly, when I went to business school, many of my classmates had worked for major manufacturing firms, and the ones who had been in finance (for the most part, two year credit officer programs at major banks) weren't seen as having better backgrounds than their classmates.

While as other economies developed, the US share of global production was bound to decline, I'm disturbed by the assumption that labor costs are the sole determinant of success. My contacts is that it is an article of faith in Washington is that the US can be competitive only in finance (and presumably in commodities businesses like agriculture). This story line is terribly convenient, since it gives diseased, greedy, and incompetent American managers and policymakers a free pass.

The reason that the attitudes of policymakers matter is that, contrary to popular belief, we do not live in a mythical world of "free trade" but one of managed trade. Other advanced economies have either a formal or informal trade/economic strategy and seem to do better with it than we do? Australia, for instance, has had one of the best growth stories in the new millennium, and that was true even before it got an extra boost from the commodities boom. It also has a more clearly articulated competitive priorities than the US does. For instance, Australia's Commonwealth Scientific and Industrial Research Organisation funds applied research in ten areas, such as Climate Adaptation, Energy, Preventative Health, and Sustainable Agriculture. It's hard to say definitively how much of a difference these efforts make, but I'd hazard that they are meaningful. Australia's position in global wine production has been won on its wine technology, where it is a world leader, and not its terrior.

Another example comes today in a story in the New York Times by Louis Uchitelle "Is Manufacturing Falling Off the Radar?" I have to say, it's late to be asking this question. The story is framed around the Veneer Corporation, a company that makes industrial machinery. Verneer would prefer to manufacture in the US, but its owners have had to move some of their production to China. The reason? Not cheaper labor, but government subsidies (and formal or informal local content requirements):

Vermeer earns nearly one-third of its annual revenue from exports — counting on the United States government for trade agreements, favorable currency arrangements and even white-knuckle diplomacy to make exports happen. In China, that wasn't enough. For several years, it had been running into competition from Chinese manufacturers of horizontal drills, supported by their government in the form of free land, tax breaks, cheap credit and other subsidies. With its share of the market falling precipitously, Vermeer in 2008 opened a plant in Beijing, taking a Chinese partner and drawing help for the venture from the Chinese…
A tipping point may already have been reached. Manufacturing's contribution to gross domestic product — roughly equivalent to national income — has declined to just 11.7 percent last year from as much as 28 percent in the 1950s…
It isn't that fewer autos or plastics or steel products or electronics are coming out of American factories… But other sectors of the economy have grown faster in recent decades, and that dynamic has reduced manufacturing's share.
In particular, the finance, insurance and real estate sectors — driven especially by investment banking and home sales — rose from less than 12 percent of G.D.P. in the mid-1950s to more than 20 percent before the onset of the financial crisis, and even now remain nearly that high. In China, in sharp contrast, manufacturing's share of national output is more than 25 percent. While the United States has a far larger economy — $14 trillion in G.D.P. versus China's $6 trillion — it has less factory production…
One reason may be that the nation's political leaders don't see manufacturing as a problem. Put another way, they don't necessarily regard making an engine, a computer or even a pair of scissors as having as much value as investment banking or retailing or a useful Web site.
"You have a culture within the elites of both political parties that says manufacturing does not matter, and industrial policy will do more harm than good," says Ronil Hira, an assistant professor of public policy at the Rochester Institute of Technology.

Why do those at the top of the food chain not like manufacturing? Let us count the reasons. It's physical. Plants are located where land is cheap. That usually means in the boonies. Powerful people do not hang out in the boonies. Production facilities are noisy, and often dirty and dangerous (my father knew people who were killed or had limbs ripped off in paper mills). Most of the employees are blue collar workers, while to get in the door at McKinsey, you had to be smart and well educated (even the secretarial jobs required high caliber types).

Some readers may react viscerally to the idea of having what amounts to industrial policy. Wake up and smell the coffee, we have it now, by default. As we have discussed, the financial services industry is so heavily subsidized as to not be credibly called private enterprise, save for its governance and compensation structures. Arms merchants benefit not only from government funded research and development, but also from the very long product lives assured by government contracts. Look at the subsidies big Pharma enjoys (and consider: the NIH is the biggest but far from the only source of government R&D dollars. The other big players are National Science Foundation, the National Aeronautics and Space Administration, the Environmental Protection Agency, the Veterans Administration, and other units in the Departments of Energy, Commerce, Defense, and Health and Human Services). While the chart is a tad dated, the basic picture has not changed since then:

The US has hesitated to push back within the WTO framework. It filed cases against China in certain areas (such as tires) only to have China file tit for tat cases against the US (such as poultry). There was a careful effort to keep the dollar amounts at issue in rough correspondence. The Department of Commerce at first seemed interested in, then declined to file cases against Chinese and Indonesian coated paper manufacturers (the particulars were different in each country, but the program was the same: large scale subsidies). Before Commerce made its decision, some source speculated that Obama would turn his back on the unions who were backing this suit rather than ruffle Wen Jiabao, who he was due to see at an upcoming G20 meeting.

There are no easy solutions to over 20 years of abandoning manufacturing to pursue a "knowledge economy" when there was no reason to treat this as an either/or decision. But misdiagnosis, via blaming the foot soldiers for the failings of the generals, is certain to keep the US from coming up with better courses of action.

China's Gold Reserves

Posted: 10 Sep 2011 12:58 PM PDT

China increases its gold reserves in order to kill two birds with one stone. The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Save Your ASSets First

Sunday, September 11, 2011

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