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Tuesday, April 24, 2012

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Sinclair: Gold Could Gap Up to $3,000 Soon

Posted: 24 Apr 2012 05:37 AM PDT

Sinclair – Shorts Now Trapped & Gold Could Gap Up to $3,000

from kingworldnews.com:

On the heels of of the disclosure that China will buy oil from Iran using gold, legendary trader and investor, Jim Sinclair, told King World News that the massive paper gold shorts are now trapped and may see gold gap up to $3,000 if a vacuum in the physical market develops. Sinclair described this event as "historic." But first, here is what Sinclair had to say about the recent trading action in gold: "You have seen in the last month, a phenomena. If you have eyes in your head, you have to know when the gold banks enter into the gold market, offering more for sale than would be mined in the next five years, they are not in there to sell anything. They are in there to manipulate the price."

Jim Sinclair continues:
"Well, we've seen some V-bottoms during daily operations, where they (manipulators) have forced gold (down) and it just snapped right back. There is no question, it is a matter of record, that multiple central banks around the world have been significant buyers of a significant amount of gold in the last two months.

Keep on reading @ kingworldnews.com

Eurozone Crisis: Back on the Front Burner

Posted: 24 Apr 2012 05:34 AM PDT

Welcome back,
Your dreams were your ticket out
Welcome back,
To that same old place you laughed about…

- "Welcome Back Kotter"

This week kicked off with more political crisis in Europe.

I know, we've heard all we can stand on Europe… but now things are getting serious again (hence the market's non-trivial reaction on Monday). It's a good time to revisit the basics of the situation.

In France, Nicolas Sarkozy lost the first election round to a socialist, even as the far-right party saw a historic showing; in the Netherlands, a budget crisis led to resignation. Both these items are directly related to the eurozone crisis, and a growing disgust on the part of the populace in respect to current policies.

Some quick recaps:

  • Le Pen Shocks France as Far Right Hits Historic Heights (France 24)
  • French Elections: How Democracy Could Destroy the Euro (Time)
  • Dutch Prime Minister Resigns (WSJ)

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Economist 2010 Redux

What is happening in Europe right now can roughly be described as a fiscal war between Germany and the periphery countries.

  • Germany, the "deep pocket of Europe" (to use a Soros phrase), wants strict austerity, harsh budget cuts, and all-around "fiscal discipline" for the struggling periphery countries. The shared credit card was abused; now Germany wants spending privileges harshly cut back (if not outright revoked).
  • Meanwhile the periphery countries — Spain et al — are sinking into deflationary downward spiral, headed for deep recession or worse. Citizens of these countries (now add France) are saying "give us room to breathe." Germany is saying "nein!"

What's worse, too much austerity can actually accelerate fiscal collapse.

This happens when government cutbacks and tax hikes lead to business closures and revenue declines.

Imagine a barber dependent on government employees coming into his barbershop; the government employees get laid off, the barbershop goes under, and the tax base declines further.

This problem is especially serious in heavily government-supported economies (like those in Europe). Government spending cannot simply be "withdrawn" without entrepeneurial dynamism to replace it, or the economy shrinks.

So, at a certain point in the spiral, "austerity" (budget cuts etc) actually accelerates the problem: If cutbacks lead to revenue declines, the remaining government debt burden becomes larger than before (relative to debtors' ability to repay).

So, in a very real way, by demanding harsh cuts and minimal stimulus at such a delicate time, Germany is asking Spain, Greece et al to commit fiscal suicide. In the struggling periphery countries, that is the increasing perception of both government leaders and citizens.

But what else is Germany to do? Via the UK Telegraph, Germans are already 1) "boiling mad" over back-door bailout payments, and 2) dealing with "the lowest unemployment in 20 years and an incipient housing boom."

This leads to another age-old problem — one that critics hammered on long before the euro was even introduced. It is very hard to have functional currency union when various economies in that union are operating at vastly different temperatures.

Imagine you have multiple pots on the stove, but only one knob to set all the burners at once. One pot is extremely hot and close to boiling over. Three other pots are ice cold and desperately in need of more heat. But you only have one burner knob, i.e. one monetary policy, that sets them all. What do you do?

It's not a trick question. There isn't any good answer. Which is why many euro skeptics (including yours truly) thought the project would be doomed to failure from the very start.

Markets are convulsing over Europe once again — welcome back crisis — because it is becoming newly apparent just how deadly serious this problem is. Someone is going to have to budge. Either Germany relents and cuts the periphery countries some slack, or one or more periphery countries leaves the eurozone and the experiment goes down in flames.

Spain ultimately gets a massive bailout — courtesy of Germany — or an exit visa, with all the fiscal horror that entails. France, too, is now feeling a similar form of political pressure. Notice how it keeps spreading?

In a recent Le Monde interview, George Soros — "The Man Who Broke the Bank of England" and a guy who knows a thing or two about currencies — articulated his belief that Germany is quietly seeding the crisis by being pig-headed (emphasis mine):

"The introduction of the euro has led to divergence instead of bringing about convergence.

"The most fragile countries of the eurozone have discovered that they are in a Third World situation, as if they were indebted in a foreign currency, with a crucial effect that there is a real risk of default.

"Trying to make them respect rules that don't work just makes matters worse. Sadly, the authorities don't understand this.

"Mario Draghi has launched extraordinary measures with his €1 trillion injection of liquidity through three-year loans. But the effect of this operation has been broken by the counter-attack of the Bundesbank.

"Watching the growth of the ECB's balance sheet, the Bundesbank has realised that it risks heavy losses if the euro blows up and is therefore opposed to the (LTRO) policy. Let us hope that this does not become a self-fulfilling prophesy."

Soros Le Monde interview, via UK Telegraph

Jens Weidmann, the head of the Bundesbank, of course flatly denies the self-fulfilling prophecy bit. "What we are doing is… preserving the stability foundation of the monetary union," he says. "I am deeply convinced that the monetary union can only survive if the euro remains a stable currency."

Sure, of course. How else would one expect Germany to respond?

It's an ugly and dangerous situation because nobody wins and something will have to give. Again, either Germany is going to cave and write some big checks, or the Soros "self-fulfilling prophecy" will come about and the whole show will implode.

The Sarkozy loss in the first round was a big deal because of the "Democracy Destroys the Euro" argument. The current crop of pro-euro leaders (like Sarkozy) are being threatened by anti-euro challengers who stand with an angry populace in opposition to more austerity policies.

A gradual shift in political climate — with pro-euro leaders getting tossed out and hardline euro-skeptics voted in — could thus be enough for a critical mass of players to tell Germany to take their austerity and shove it.

And what happens after that, when all this sturm und drang hits a climax?

Does Germany cave in the face of full-on rebellion and a fiscal nightmare scenario?

Or does Spain turn into a country-sized Lehman Brothers — the scenario where everyone figures "oh they'll get bailed out, they HAVE to…" and then they don't?

Does the euro go into freefall and the $USD skyrocket? Or does a new "core" euro emerge, causing the reverse?

Nobody knows, really, and that's why the market is so freaked out.

Funny old world innit,

JS (jack@mercenarytrader.com)

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The Silver Reverse Bubble of 2012

Posted: 24 Apr 2012 05:32 AM PDT

from silverseek.com:

n late 2008, when silver was massacred in the futures pit and saw its price fall from over $20 to under $10, I told my readers at that time that silver entered into a "reverse bubble". I know it sounds odd, but let me re-visit the concept.

As you know by now, a "bubble" is when an asset reaches an unsustainably high level due to artificially stimulated demand. In 2004, I wrote that housing was entering a historic bubble because government policies such as excessively (artificially) cheap credit inflated the price of real estate to nose-bleed levels. The real estate mania was everywhere in 2004-2006 as buyers were going berserk.

At the time, I had done a seminar with my favorite real estate expert (David Corsi…look him up!) entitled "Housing Bubble Profits" and detailed my bearish rationale for why I thought that housing was entering a dangerous phase and that real estate investors and speculators would get hammered. The bottom line is that when an asset (real estate, stocks, whatever) gets bid up to high levels artificially (a level way above its' true market price), the next step will be a painful plunge. I go into greater detail in prior essays on the anatomy of a bubble.

Keep on reading @ silverseek.com

Silver ETP Holdings Slump by Most in More Than Four Years

Posted: 24 Apr 2012 05:30 AM PDT

from bloomberg.com:

ilver holdings in exchange-traded products slumped by $626.9 million as prices traded near a three-month low and exchange stockpiles climbed, underscoring concern a global economic slowdown may curb demand.
Assets in ETPs lost 3.6 percent yesterday, the biggest one- day drop since January 2008. Silver dropped as much as 3.8 percent to $30.48 an ounce yesterday, the lowest price since Jan. 20, and traded at $30.9325 by 1:35 p.m. in London today.

emand for silver fell in 2011 for the first year in four as Europe's debt crisis sapped industrial use of the metal found in solar panels and photography, Thomson Reuters GFMS said in a report on April 19. The decline in ETP assets yesterday drove holdings to the lowest level since August.
"The price drop drives fund selling and that in turn drives prices even lower," said Sun Yonggang, an analyst at Everbright Futures Co., a unit of China's largest state-owned investment group. "Silver isn't holding up as well as gold because it is still primarily an industrial metal."
Gold holdings in ETPs have advanced 1.6 percent year this, according to data tracked by Bloomberg, and are at 2,394.2 metric tons. That's within 0.7 percent of the all-time high set in March. Silver ETP holdings, which dropped 4.5 percent in 2011, were 17,017.9 tons yesterday.

Industrial Use
Manufacturing in the euro area and China is contracting, separate reports showed yesterday, boosting demand for the dollar as a haven. Silver and gold often trade inversely to the U.S. currency.
Total silver demand fell 3.2 percent to 1.04 billion ounces in 2011, the first decline since 2007, according to the report from GFMS, which was published by the Washington-based Silver Institute. Industrial consumption slipped 2.7 percent to 486.5 million ounces, according to the report.

Keep on reading @ bloomberg.com

12 Countries Buy Lots of Gold in March

Posted: 24 Apr 2012 05:28 AM PDT

from mineweb.com:

According to the latest IMF statistics at least 12 countries are known to have increased their gold reserves in March indicating the continuation of a trend now going back more than two years, and one which has been on its own a substantial supporter of the higher gold prices seen over the period. Overall Central Banks appear to have purchased no less than 58 tonnes in the month, which could suggest an acceleration in their increases in holdings if buying at this rate continues throughout the year.
While the majority of these countries only raised their reserves by a very small amount, there were indeed some quite significant purchases – notably from Mexico, which increased its holdings by 16.81 tonnes to a total of 122.58 tonnes; Russia with purchases of 16.55 tonnes giving it total reserves now of 895.75 tonnes; Turkey with 11.48 tonnes taking it to 209.6 tonnes in its reserves. Argentina bought 7 tonnes taking its holdings to 61.74 tonnes, Kazakhstan with 4.3 tonnes – up to 96.16 tonnes and Ukraine with 1.18 tonnes bringing its holding to 29.21 tonnes. A further half dozen countries raised their holdings by increments of less than a tonne.
This, of course, only shows the figures for those nations which are, one assumes, wholly transparent in reporting their gold holdings. There have been some quite sharp 'upwards adjustments' in the past from some countries which have been less open in their reporting – notably China which is assumed by most observers to be building its gold reserves strongly over the three years since it last announced an upgrade in its holdings.

Keep on reading @ mineweb.com

FATCA: Big Brother Goes Global

Posted: 24 Apr 2012 05:23 AM PDT

from financialsense.com:

It's not riots in central cities, a collapse of food supplies or other essential infrastructure, a terrorist attack, or even the growing U.S. police state.

All of these threats are real, but all of them can be dealt with successfully through intelligent planning. For instance, by keeping a substantial store of food on hand in your home and not residing in or near a big city, you can mitigate the first two threats. And by leaving the United States and setting up residence in a country that actually respects civil liberties, you can reduce your vulnerability to the long arm of Uncle Sam.

No, what concerns me the most is that just like people, governments often imitate each other. And when it comes to tax collection, governments around the world are looking very intently at the United States, still the world's largest economy and by far its most influential country. They see a country that has successfully forced every low-tax jurisdiction in the world to end any real semblance of bank secrecy, at least with respect to tax. Every major low-tax jurisdiction has agreed to turn over banking information on U.S. citizens and permanent residents to the IRS so that the agency can impose taxes and penalties on unreported accounts or income.

Keep on reading @ financialsense.com

Gary Wagner on Kitco News

Posted: 24 Apr 2012 05:21 AM PDT

Gary Wagner talks metals with Daniella cam bone on Kitco News.

from kitconews:

~TVR

SilverFuturist: The WRONG silver vision!!!

Posted: 24 Apr 2012 05:20 AM PDT

A tiny % of investors betting BIG on silver while most investors own none is NUTS!
Most investors owning a tiny % of silver is RATIONAL but that has not happened!

The tone of these anti-gold articles is that if you invest in gold, you will invest BIG and get BURNED!

http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/

DISCLAIMER: The change of gold/silver falling in the next few months is high. The chance of gold/silver exploding of the next few years is also high!

from silverfuturist:

~TVR

Is gold still cheap?

Posted: 24 Apr 2012 05:18 AM PDT

from news.goldseek.com:

We addressed the above question last year and arrived at the answer: no, gold left bargain territory long ago. We remain bullish on gold not because we think gold is still cheap, but because we expect it to get a lot more expensive.

This isn't a "greater fool" game that we are playing, in that our belief that gold will become a lot more expensive over the years ahead isn't based on the expectation that people will be silly enough to pay a much higher valuation in the future for an asset that is already over-valued today. It is, instead, a position based on the observation that the world's most important central banks and governments remain committed to a course that ends in catastrophe for their economies and currencies. To put it another way, gold may well be expensive relative to the current economic backdrop, but it is cheap relative to what the economic backdrop will be 5 years from now if the current policy course is maintained. And at this stage there are no signs that the current policy course will not be maintained.

Evidence that gold is no longer in the bargain basement is provided by the following long-term monthly chart of the gold/commodity ratio. Relative to commodities in general, gold hit a 50-year high late last year. In fact, last December's peak in the gold/commodity ratio could have been an all-time high. This tells us that the gold market has fully discounted the bad policies of the past several years. As an aside, it also tells us that the fabled gold market manipulators are doing a lousy job and should be fired (gold's excellent performance over any reasonable investment timeframe is no doubt why promoters of gold-suppression theories tend to focus on timeframes that could only be of interest to daytraders).

Keep on reading @ news.goldseek.com

Krugerrand Premiums Fall on Scandal of 2011 Proofs

Posted: 24 Apr 2012 05:16 AM PDT

from silvervigilante.com:

V has heard through the grapevine that bids and asks are down on Krugerrands from some of the biggest distributors in the country. This after it was recently revealed that the 2011 gold Krugerrand Proof was under specification on Actual Gold Weight. According the anonymous source, Krands are being bought by large distributors at only $11 over spot price, which is low for such a popular bullion coin. The premium on the coin has dropped as well from this distributor and signals a possible flight from the Krugerrand by institutional investors and individual. Read More Here.

Further to the media statement issued by the South African Reserve Bank (Bank) on 8 December 2011 regarding technical issues within the operations of the SA Mint Company (SA Mint), investigations into the matter have revealed that some of the proof Krugerrand coins casted between April 2011 and May 2011may not meet all the required quality specifications.

Based on information that there had been fluctuations in assay results in the production process starting from April 2010, a conservative approach was adopted to analyse results from 01 April 2010 until 31 October 2011, the latter date being one on which new quality control measures were introduced. The extended period was adopted merely as a precaution.

Keep on reading @ silvervigilante.com

Jim Rickards: The Hidden Role of Gold at the IMF

Posted: 24 Apr 2012 05:14 AM PDT

from caseyresearch.com:

All was quiet both price wise and volume wise during Far East trading during their Monday, but moments after London opened yesterday morning, the bid disappeared and the gold price dropped ten bucks in about fifteen minutes.

From there it flat-lined up until about lunchtime local time…and then headed lower once again. The low price tick [$1,622.10 spot] came right at the Comex open in New York at 8:20 a.m. Eastern time.

From there it worked its way slowly higher…and closed at $1,638.30 spot…down $4.10 on the day…and about $16 off of its low. Net volume wasn't overly heavy at around 112,000 contracts.

Keep on reading @ caseyresearch.com

Russia& Mexico Both Buy $1 Billion of Gold in March

Posted: 24 Apr 2012 05:13 AM PDT

from goldcore.com:

The perfect storm trifecta of bad political and economic news yesterday out of France, Holland and Germany led to risk off and falls in many markets. Gold performed well and was resilient considering the sell off seen in equity markets.

Dutch Prime Minister Mark Rutte speaks in parliament today after tendering his Cabinet's resignation to break a deadlock over further austerity.

French President Nicolas Sarkozy and Francois Hollande will face off in a 2nd round ballot on May 6th and the prospect of Hollande taking power is making European markets jittery.

The euro region has government debt at 87.2% of GDP last year, which is the highest since the start of the euro in 1999.

Manufacturing data from Europe and China contracted in data released yesterday showing how economic conditions appear to be deteriorating.

Keep on reading @ goldcore.com

Superheroes of Central Banking

Posted: 24 Apr 2012 05:11 AM PDT

from news.goldseek.com:

Eccentric yes, but central bankers are a long way from playboy billionaire geniuses with hidden superpowers…

SO CENTRAL BANKERS still can't leap tall buildings in a single bound then.

"Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the US economy," confessed US Fed chairman Ben Bernanke last October. "There's a limit to what monetary policy can hope to achieve," agreed the Bank of England's Mervyn King the following month. "Monetary policy cannot do everything," sighed the ECB's Mario Draghi, speaking to the Financial Times in December.

Okay, so these guys are a long way from that "group of remarkable people" brought together by Samuel L.Jackson's growl "to fight the battles we never could" in the new Marvel Avengers movie. But couldn't they at least wear their underpants outside their trousers?

"Maintaining price stability and financial system stability are important goals of central banks," added Bank of Japan boss Masaaki Shirakawa at the start of this year, "but central banks are not able to solve all problems, especially in an economy characterized by zero interest rates and deleveraging."

Keep on reading @ news.goldseek.com

Navigating Gold Equities During the Weakest Quarter: Barry Allan

Posted: 24 Apr 2012 01:57 AM PDT

Russia and Mexico Both Buy Nearly $1 Billion Worth of Gold in March

Posted: 24 Apr 2012 01:51 AM PDT

gold.ie

Prices Rally, Netherlands "On Edge" of Downgrade

Posted: 24 Apr 2012 01:04 AM PDT

Gold prices rallied to $1,643 per ounce by Tuesday lunchtime in London – 1.2% up on yesterday's low, but still shy of where they closed last week – ahead of tomorrow's Federal Reserve decision and with euro zone concerns focusing on the Netherlands.

April 24th- Video Analysis of SP 500 Correction

Posted: 24 Apr 2012 12:00 AM PDT

At TheMarketTrendForecast.com I use a combination of Elliott Wave Theory and additional technical indicators to ferret out pivot highs and lows in the SP 500, Gold, and Silver for our subscribers. We give updates multiple times per week and try to help guide our members ahead of time so they are prepared to take advantage of market swings. We believe this is a Major 4th wave correction from the 1422 highs and will end up resolving to new highs once this is over. Below is our recent analysis:

Reviewing the SP 500 Action since the 1422 highs and where we are at… click the square box with the circle in it on the lower right of the video graphic box for high definition: Direct Link: CLICK HERE

Russia & Mexico Buy Gold Worth Nearly $1B in March

Posted: 23 Apr 2012 11:20 PM PDT

Gold has been trading mostly sideways in Asia and within a narrow eight point spread. In European trading it remains near the close seen in New York yesterday.

Morning Outlook from the Trade Desk 04/24/12

Posted: 23 Apr 2012 11:12 PM PDT

Silver took yesterdays news harder than gold, probably focusing more on the European manufacturing slowdown than the Sovereign debt issues. Dutch cabinet resigned because no agreement could be reached on an austerity program. Equities rallied today on better than expected bond action demand in Europe. Problems will continue. Focus again on the dollar. Would not buy gold unless we get a close above $1,650 and then only with tight stops. We saw volume pick up on larger orders yesterday. Volatility will do that for you and I believe volatility is far from over.

Gold & Silver in Period of Low Volatility & Disinterest

Posted: 23 Apr 2012 10:00 PM PDT

Gold and silver have been correcting multi-year advances. Because these are long-lasting, sustained corrections, the bottoms take time to develop. There are many fits and starts and as a result, most bottoms are not obvious until months after the fact.

Data, Jobs, European Worries

Posted: 23 Apr 2012 09:36 PM PDT

A look at the markets and what it all means, as of day close April 19.

Dow Jones Industrial Average: Closed at 12,964.10 -68.65 after poor factory data, jobs reports and European worries knocked back the shares.  Spain had a bond auction today and fear was running high. The IMF and friends swapped paper around and called it success, which is not true, but it was advertised that way. Most were happy the event at least did not cause a crash.  We've had a tech triple top followed by mild selling from 13,250 high to support at 12,750. Then shares did a rebound with the 20-day moving average at 13,012.43 being resistance. New support is the 50-day average at 12,936.93. These trading results signal  stocks are propped-up and that Friday should probably close out near 13,000 even. We see churning in a choppy range with no firm direction of trend. As we near the end of April, better definition should be apparent. This market is basically sideways in chop and is not conducive for short term trading.

S&P 500 Index: Closed at 1376.92 -8.22 with traders holding price within the rising channels. Support is 1371.16 on the 50 day moving average with resistance being the 20-day moving average at 1,385.72. Momentum has been selling but firmed-up to move sideways on this Thursday. Volume was above normal by 115%. While we cannot prove it, I think the S&P's got some propping help on this day to guard against a crash in Spain-Europe. Expect a close on Friday near 1375-1385 support and resistance.

S&P 100 Index: Closed at 625.29 -4.54 on 110% of normal volume and flattening momentum after being in a selling mode. Like the other stock indexes, the S&P 100 has support on the 50 day average at 622.75. Resistance is 630.03 on the 20-day moving average. Price remains in the center of the up-trending trading range channel. For Friday, look for a tight trading range supported by 620 with a high near today's close at 625 before the weekend.

Nasdaq 100 Index: Closed at 2686.82 -29.82 on more sharply, falling momentum and 111% of normal volume. The close was in the bottom of the trading range today signaling more selling tomorrow. This stock index is the leader and is weaker than the others. This tells me next week could be a mild sell-off week but probably not more than support at 2600; worse case. Anything is possible of course and with one more day of trading this week, it can go either way tomorrow. If the 50-day moving average breaks on Friday or Monday at 2658.38, price can drop quickly to 2600-2500 support. We are overdue for a stock's correction. I expect a mild one over the next few trading days but with a possible up-trend April 25-30. I do not think stocks are through buying for the spring cycle despite all this chart toppy action. However, we remain in a weaker selling cycle for shares with the bonds being supported and rising.

30-Year Bonds: Closed at 142.22 +0.92 on rising momentum after completion of being over-sold. Price is above all moving averages with support being 140.00-141.50. New resistance is 142.50 nearby after Europe sold bonds and the Euroland weakness supported the US Dollar, Treasury Bonds, and Bills. With anticipated stock behavior the bonds are near an interim peak price and a stall.  Previously, we were trading in a fairly tight channel from 140.00 to 142.50 for several weeks. Expect price to stay in that channel again through May and perhaps even into part of June.

XAU: Closed at 165.68 -0.28 on based-bottomed momentum along with the metal-to-shares-ratio. The XAU is now at its lowest point of 2011 and 2012. The good news is it appears to finally have found serious support. Precious metals have been negative but not markedly so. But, the shares have been hit a lot harder. The negative exaggeration of prices in the shares is due to leverage and the fact that investors have been so very discouraged over this protracted, longer selling cycle. Some have given up in disgust and sold everything. This is usually the point at which we see a pivot reversal and a price rebound rally. Look for the XAU price to trade between 160 and170 for several more days. The precious metals have to rally first and then the shares will follow a few trading days later.  Expect sideways trading in chop for a few more days.

Gold: Closed at 1642.30 +0.70 on flat momentum but with a chart pattern showing a bullish, inverted head and shoulders. Gold can trade in a mild, tepid pattern over the next 60 days with a little up-rally at the end of this month. The only thing that could move it strongly now is some very nasty news from Europe. However, next week is an Indian holiday when citizens and gold buyers-sellers in India get out and trade and buy gold heavily…several tons usually. The gold fabrication dealers were on strike against a later withdrawn tax proposal some days ago.  They are back at work and ready for the larger push next week; we shall see.  Let's hope they get busy and add 100-150 points to the price. However, we think something more modest and mild could be in store.

Silver: Closed at 31.76 just above nearby price support at 31.48. Price is under all the moving averages, which is negative. However, all three of those higher averages are only $1 to $2 away from the close. Technically, there appears to be some gradual improvement at the momentum lows as they are higher, and  a new bull parabolic price base appears to be forming.  Yet, the price is stuck in a very wide, down-trending channel from over one year ago. We remain longer term bullish but it could take until next fall to get out of this malaise. Expect more sideways trading ahead.

US Dollar: Closed at 79.56 -0.01 with todays price only one tick above the 20-day average (new support) at 79.55. The dollar trading range is 78.47 to 80.00 for now. That high of 80.00 is major resistance but we see two bullish signals telling us the price is going up. (1) We have an inverted head and shoulders and (2) a pronounced parabolic bullish bottom; with both patterns now complete. The price is in a very tight and small continuation triangle formed over the last ten days.  Soon the dollar will have to sell off or rise in a new rally. We see a rally coming with higher resistance at 80.00 and 80.50 to 81.50. A rising dollar is negative for commodities as it makes them more expensive for foreign buyers of these markets. Also, the dollar could move into a third option, and that is more sideways choppy trading. Instead, with precious metals looking for a breakout, the dollar would probably be a mild seller with new and lower support at 78.50.

Crude Oil: Closed at 102.72 -0.06 on selling but supporting momentum. The 20- and 50-day averages are just above the price close. The close is supported by a lower channel trading line and the 200-day moving average further below at 98.60.  Considering the global economy, oil is weak on demand. Reserves are adequate and natural gas is way over-supplied. Middle Eastern conflict does not seem imminent. USA refiners cannot earn much money and some refineries continue to close. The very large continuation triangle is a set-up for a major move very soon. We think that move is down and some analysts have said the floor is going to be $80.  While that is possible, we are not sure as it depends upon Europe and other unknown factors. On the other hand the entire chart is one huge bullish double-bottomed inverted head and shoulders pattern. We could get a selling drop first on the seasonal cycles followed by a massive breakout on inflation and other problems later this year. There is so much manipulation and interference in these markets directional forecasts are becoming exceeding difficult.  Expect more sideways choppy trading for the next two sessions.

CRB: Closed at 299.30 +0.15 on sharply falling momentum and a price close under all moving averages. However, support and resistance at 300 is very strong. Should the price drop to 290-295 it would produce a massive, wide double bottom, which is bullish. The trading range was small and tight today signaling the price would rather go sideways in new chop rather than buy or sell for Friday.  –Traderrog


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Jim Rogers on when to buy Gold, Chinese Bubbles and Fake Good News

Posted: 23 Apr 2012 09:24 PM PDT

Jim Rogers on when to buy Gold, Chinese Bubbles and Fake Good News

This interview was posted over at the hardassetinvestor.com website last week...and I thank Randall Reinwasser for sending it along.  The link is here.

The Spanish Dilemma: Euro's Fate Hinges on Austerity in Madrid

Posted: 23 Apr 2012 09:24 PM PDT

The Spanish Dilemma: Euro's Fate Hinges on Austerity in Madrid

Spain in recent days has taken center stage in the euro crisis. The country's banks are threatened with collapse and the government in Madrid has not been successful in efforts to get the national budget under control. Will the country be forced to request aid from the euro bailout fund?

Everything is going according to plan, no reason to worry, the threat has been contained. When Europe's monetary watchdogs resort to such catch phrases, investors and politicians alike know that the situation is serious.

read more

Gold & Silver Market Morning, April 24 2012

Posted: 23 Apr 2012 09:00 PM PDT

Bud Conrad: “Interest Rates, Nowhere To Go But Up”

Posted: 23 Apr 2012 08:44 PM PDT

Bud Conrad: The Federal budget deficit will drive our financial future.

From Jim Puplava and Financial Sense:

Jim welcomes back Bud Conrad, Chief Economist at Casey Research. Bud sees large and growing demands for credit from the federal government, which will require the Fed to continue to create a large and growing supply. This will lead to debasement of the dollar, higher inflation, and higher interest rates, all long-term negatives for the US economy. As government debt grows, the interest to be paid grows as well. If rates rise, the scenario becomes much worse.

Much More @ FinancialSense.com 

Clive Maund: Silver Market Update – 4.23.12

Posted: 23 Apr 2012 08:43 PM PDT

from silverseek.com:
Is silver becoming a bearmarket, or is a bottom pattern completing that will lead to a major new uptrend soon? That is the big conundrum facing investors and speculators in the sector and in this update it will become apparent that the situation must resolve itself with a decisive move soon, one way or the other.

It is very hard to call the direction of the breakout and next big move, because on the one hand a Head-and-Shoulders bottom pattern appears to be completing in silver (and a Head-and-Shouders continuation pattern in gold) but on the other it looks like the dollar's larger uptrend may be about to resume. The situation is extremely finely balanced and the market appears to be waiting on critical fundamental developments – we know that the general background situation is hugely inflationary due to all the money printing in Europe and the US and elsewhere, which is of course a strongly bullish influence on Precious Metals, but at the same time the sovereign debt crisis in Europe is bubbling up again and threatening to derail the frail and stimulus induced economic recovery, and if it does and they fail to quickly regain control of the situation markets can be expected to tank. The current state of unstable equilibrium in the markets regarding these 2 major conflicting infuences is the reason for the standoff of recent weeks, and those who are familiar with "Catastrophe Theory" will readily understand why this is situation that break either way, probably depending on whether the European crisis can be contained.

Just because you don't know which way a market is going to break doesn't mean that you can't position yourself to either protect your holdings in the event of a move against you, or to make substantial gains when the market does finally show its hand. For as we will soon see with a big move likely imminent after a tightening standoff, support and resistance are nearby and well defined, enabling us to set close stops, and this is actually one of those rare times when more experienced traders can position themselves to benefit from an upcoming big move by means of straddle options etc, which do not require a judgement on which direction the move will be in.

The 2-year chart for silver still looks moderately positive with a large Head-and-Shoulders bottom looking like it has formed following the descent from the peak last September. Support is close at hand with the price looking like it is now marking out the Right Shoulder low - if it is we are clearly at a good entry point here. In contrast to gold, silver's moving averages are in bearish alignment as a result of its having fallen much more in percentage terms from its highs. The MACD indicator shows silver to be a little oversold.

CLICK IMAGE FOR LARGER VIEW

The more pessimistic scenario is that the apparent Head-and-Shoulders bottom is a phoney and that silver will go on to break below the 2 support levels shown and head towards the lower boundary of the downtrend in force from last April – May, and possibly breach the lower boundary of the channel. This is a development that we can expect to ensue if the dollar index breaks out above 80 to embark on another substantial upleg. The MACD indicator shown at the bottom of the chart reveals a momentum breakdown that increases the risk of such a move.

The 6-month chart for silver shows that it has found support at and above $31 in recent weeks, but it has been put under increasing pressure from the falling downtrend line shown that has forced this morning's breakdown, although the breakdown is as yet not decisive and the immediate outlook will depend on how silver closes today. The Head-and-Shoulders bottom pattern will remain a viable scenario even if it drops down to its Left Shoulder lows shown on the 2-year chart which occurred early last October at about $28.50, but if it continues below that it will spoil the pattern.

CLICK IMAGE FOR LARGER VIEW

Resolution of the pattern completing in silver will depend very much on which way the dollar index breaks from its Triangle. The outlook for the dollar is discussed in the parallel Gold Market update to which you are referred, but in summary the prospects for the dollar depend on whether the debt situation in Europe gets out of control and eclipses the otherwise strongly bullish (for Precious Metals) massive money creation in Europe, the US and eslewhere.

Ron Paul Wins Iowa and Minnesota!

Posted: 23 Apr 2012 06:48 PM PDT

Ron Paul has been drawing thousands of supporters to his campaign speeches, like yesterday in Philadelphia or earlier this month at UCLA. With Romney lucky to bring out a few hundred supporters, how on earth is he the clear leader for the GOP nomination???

We keep hearing that Ron Paul hasn't won any states, but [...]

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