The British pound sterling is caught range-bound within the levels of 1.2485 and 1.2277.
However, amid this consolidation, price action is posting a bearish head and shoulders pattern as the minor neckline support level at 1.2423 holds prices from declining further.
If the current move higher fails to breakout convincingly, then a retest of the neckline support at 1.2423 could see a bearish move.
This puts the downside target to the lower end of the range at 1.2277.
Despite the decline, GBPUSD will likely remain range-bound within the said levels.
EUR/USD quotes continue to show a negative trend. The trading instrument has updated local lows. The single currency is under pressure after an unexpected decision of the Federal Constitutional Court of Germany, which may put into question the country’s participation in the ECB stimulus program. At the moment, the EUR/USD currency pair is consolidating in the range of 1.0815-1.0855. The euro has the potential for further decline against the greenback. We expect the publication of important statistics. Positions should be opened from key levels.
The Economic News Feed for 06.05.2020
– Indicators of economic activity in the Eurozone at 11:00 (GMT+3:00);
– Retail sales in the Eurozone at 12:00 (GMT+3:00);
– ADP nonfarm employment change at 15:15 (GMT+3:00).
Indicators signal the power of sellers: the price has fixed below 100 MA.
The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell EUR/USD.
Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.0815, 1.0785, 1.0760
Resistance levels: 1.0855, 1.0885, 1.0925
If the price fixes below 1.0815, a further drop in the EUR/USD currency pair is expected. The movement is tending to 1.0780-1.0750.
An alternative could be the growth of EUR/USD quotes to 1.0880-1.0920.
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.24408
Open: 1.24384
% chg. over the last day: -0.06
Day’s range: 1.24224 – 1.24507
52 wk range: 1.1466 – 1.3516
The GBP/USD currency pair is still being traded in a flat. There is no defined trend. Local support and resistance levels are 1.2425 and 1.2485, respectively. Financial market participants expect the Bank of England meeting, which will be held on Thursday, May 07. Today we recommend paying attention to the news feed on the US economy. Positions should be opened from key support and resistance levels.
At 11:30 (GMT+3:00), the UK construction PMI will be published.
Indicators do not give accurate signals: 50 MA has crossed 100 MA.
The MACD histogram has approached the 0 mark.
Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates the bullish sentiment.
Trading recommendations
Support levels: 1.2425, 1.2385, 1.2315
Resistance levels: 1.2485, 1.2515, 1.2570
If the price fixes below the support level of 1.2425, GBP/USD quotes are expected to fall. The movement is tending to 1.2380-1.2350.
An alternative could be the growth of the GBP/USD currency pair to 1.2530-1.2560.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.40862
Open: 1.40499
% chg. over the last day: -0.27
Day’s range: 1.40230 – 1.40776
52 wk range: 1.2949 – 1.4668
There is an ambiguous technical pattern on the USD/CAD currency pair. A trading instrument is consolidating. The loonie is testing the following key support and resistance levels: 1.4005 and 1.4075, respectively. Investors expect additional drivers. We recommend paying attention to the dynamics of “black gold” prices. Positions should be opened from key levels.
The news feed on Canada’s economy is calm.
Indicators do not give accurate signals: the price has fixed between 50 MA and 100 MA.
The MACD histogram has moved into the negative zone, which signals the power of sellers.
Stochastic Oscillator is near the oversold zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.4005, 1.3940
Resistance levels: 1.4075, 1.4115, 1.4150
If the price fixes below the support level of 1.4005, USD/CAD quotes are expected to fall. The movement is tending to 1.3960-1.3940.
An alternative could be the growth of the USD/CAD currency pair to 1.4100-1.4140.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 106.723
Open: 106.470
% chg. over the last day: -0.14
Day’s range: 106.207 – 106.618
52 wk range: 101.19 – 112.41
The USD/JPY currency pair has been declining. The trading instrument has set new local lows. USD/JPY quotes found support at the level of 106.20. The 106.45 mark is already a “mirror” resistance. The demand for “safe haven” currencies is still high. The yen has the potential for further growth against the US currency. We recommend paying attention to the dynamics of US government bonds yield. Positions should be opened from key levels.
Indicators signal the power of sellers: the price has fixed below 50 MA and 100 MA.
The MACD histogram is in the negative zone, indicating the bearish sentiment.
Stochastic Oscillator is in the neutral zone, the %K line has started crossing the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 106.20, 106.00
Resistance levels: 106.45, 106.60, 106.85
If the price fixes below 106.20, a further drop in USD/JPY quotes is expected. The movement is tending to 107.90-107.60.
An alternative could be the growth of the USD/JPY currency pair to 106.70-107.00.
On Wednesday, Gold traders will watch the ADP employment change in excitement.
After ADP data dropped to -27,000 in March, showing the first fall in private payrolls since September of 2017 with the report only including data through March 12th and thus not fully reflecting the impact of the coronavirus, analysts expect the ADP employment change to come in at -20 million.
Especially after initial jobless claims showing a number of over 30 million over the course of the last six weeks, this expectation seems to draw a more realistic picture of the current US employment situation, given the Corona lockdown.
Any number which comes in even worse could realistically trigger a next sharper leg up in the yellow metal, bringing the region around 1,750 USD back into focus in the days to come.
On the other hand, we’d again like to point out the bearish divergence in the RSI(14) on a daily time-frame (orange) which would be confirmed with a break below 1,660 USD and make a deeper corrective move as low as 1,630/35 USD possible.
Still, With that in mind, we keep our bullish take on Gold, favour Long engagements from a risk-reward perspective, but also from a purely technical perspective as long as we trade above 1,440/450 USD.
If we the short-term corrective move accelerates, a potential first target around 1,650 USD while a first target on the upside can be found around 1,800 USD:
Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between February 4, 2019, to May 5, 2020). Accessed: May 5, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, in 2019, it increased by 18.9%, meaning that after five years, it was up by 28%.
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US Northern Plains, Great Lakes, Ohio Valley and the Northeast are expected to be dominated by cold air front today as a high-pressure system moves away, according to a US Farm Report. And the northern Corn Belt area could see even colder air at the end of the week. The cold front could pose a risk to newly planted corn fields. A possible freeze/frost damage to planted crops is bullish for corn price.
By Jameel Ahmad, Global Head of Currency Strategy and Market Research at FXTM
The controversial German court ruling against the past use of eased policies (bond buying) from the European Central Bank has maintained a negative stance on Euro sentiment. Headlines that a new political row in Europe could eventually lead to a breakdown in the Euro are very premature, and it would take a number of other EU members to follow the path of the German court or even for Germany to threaten its own membership (even more unlikely) in order for a serious level of damage for the Euro to be in play.
For the meantime, the Euro has suffered against a few of its trading partners with both the EURUSD and EURJPY falling victim to the German court ruling.
The EURJPY has already declined to its lowest level since April 2017 on this development with further potential woes in the Euro threatening the EURJPY meeting levels not seen since 2016. The Daily and Weekly charts illustrate the negative state of momentum in play for the pair, with the Weekly candlestick low for week ending 16 April 2017 at 114.84 a level that can be met should the EURJPY fall below 115. It would take an acceleration in Euro fortunes to the downside for EURJPY to decline as far as 112.70 and perhaps even 114.40 should the situation for the Euro become far worse.
(EURJPY Weekly chart FXTM MT4)
The situation in the EURUSD also appears bleak and the Eurodollar in recent days has fallen through the potential scenario previously highlighted here. Further support that can potentially be found should EURUSD momentum remain lower can be seen at the Daily low of 23 April at 1.0755 and the 24 April low marginally above 1.0726.
(EURUSD Daily chart FXTM MT4)
Elsewhere the GBPUSD has maintained a very quiet stance throughout the trading week so far. One risk that traders could be on the potential lookout for is whether the confirmation that the UK has now suffered the second highest world fatalities to the coronavirus in the world and highest in Europe increases the probability that the governmental lockdown in the United Kingdom will be extended.
(GBPUSD Daily chart FXTM MT4)
If the GBPUSD does kick into a lower gear, possible support for the pair to find can be found at 1.2297 and 1.2204.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
In March 1967, for most of the adult population in North America, the most popular comedians were almost all television series personalities, such as Carol Burnett, Buddy Ebsen and Dick Van Dyke. These stars were the softcore comics enjoyed by the parents of the Boomer generation, whose appetite for laughter was sated by inoffensive gags, slapstick and one-liners.
For my crowd, however, the sanitized, Wonder Bread content of the ’60s could not survive the onslaught of underground, drug-fueled witticisms of people like Lenny Bruce, whose outrageous anti-establishment rants resulted in him being blacklisted from Hollywood and banned from television.
As the ’60s wore on, the underground mantle was passed on to comedians like George Carlin and Richard Pryor, who were able to present two completely different acts, with the heavily censored TV versions violently contrasted with their nightclub acts, which were obscene, politically charged and outright raw. Sitting in the high school cafeteria every Monday morning, my friends and I would always get into a critique of whichever corny stand-up comedian wound up as filler on the Ed Sullivan Show, where such notables as Bill Cosby and Godfrey Cambridge would appear regularly until their careers took off.
One such morning, after doubling over with laughter the previous evening for a solid 8-10 minutes, I asked if anyone had seen “this guy from New York called Rodney Dangerfield,” to which they all said “No.” I raved about his self-deprecating “schtick,” filled with one-liners like “I don’t get no respect. My son takes his mother to a father-and-son banquet!” or “My wife only has sex with me for a purpose. Last night it was to time an egg!” or my absolute favorite: “I drink too much. The last time I gave a urine sample it had an olive in it.” All were followed, at one time or another, with two words “No respect.”
Dangerfield’s show-stealing routine that night on Ed Sullivan was repeated again a month later, and on the following morning, my classmates absolutely chastised me, using descriptives for Rodney like “ridiculous,” “so unhip,” and “outright disgusting.” But to no one’s surprise, it could not deter me. For the next two decades, I never missed a chance to see him perform, his live show insanely off-color and riddled with four-letter words, but never with one shred of political satire or innuendo. The crescendo performance of Dangerfield’s career was as nouveau-riche businessman Al Czervik in “Caddyshack,” where he dominated every scene with lines like, “He called me a baboon; he thinks I’m his wife!” and “Last time a saw a mouth like that it had a hook in it!” He got a lot of respect in that film and deserved it.
Whenever I look at the gold market these days, the only words that come to mind are “no respect.” Trillions of international currency units created out of thin air to rescue the global bull market in stocks, with Wall Street and Main Street the main recipients. What is interesting is that since the Fear-Greed Index hit the famous “1” mark in mid-March, when the Fed announced intentions to buy every single security found in all hedge fund portfolios regardless of name or location, including junk bonds, stocks and exchange-traded funds (ETFs), the evidence shows that they actually have not purchased any of the said securities, as the chart below would confirm.
Once again, the brain surgeons over at the Fed talked a good game but that is all it was a game designed to stem the panic that was threatening to (and did) derail the bull market. I believe that what happened by the end of the week was that Wall Street suddenly woke up to the realization that the Fed had shifted loyalties from Wall Street to Main Street, largely due to the public perception that they were, once again, exactly as happened in 2008, being picked over by the bailout kings in favor of foreign banks and elitist-owned corporate America.
Whether or not the Fed was “politicized” after mid-March is a moot point; the S&P 500 stopped dead in its tracks a hair below the 200 daily moving average (dma) at 297.47. It also reversed just after the April 29 Federal Open Market Committee (FOMC) testimony by newly appointed hero and soon-to-be-announced “Man of the Year” for 2020, Jerome Powell, the “serial printer of last resort,” whose remarks were focused primarily on Main Street as opposed to Wall Street. This, in an important election year, is good for the incumbent and not so good for political donations from the white gloves gang in New York.
As for gold, I have the distinct impression that after the normal first-of-month institutional flows are spent with a distinctly newfound bullish bias toward gold and the miners, a more meaningful correction, not unlike 2009, could get rolling. On Friday morning (May 1), the flows have taken gold and the miners from deeply negative on the opening to positive on the session, which suggests that the generalists have made the move to own precious metals. Since the generalists tend to be late to the party, it is bearish near term but undoubtedly bullish longer term, as global allocations are less than 0.5% and at the end of 2011, they were nearly 5%.
Having navigated through numerous bull and bear markets with varying degrees of success (and failure), the key to survival is once again found in the preaching of the late Richard Russell, who always claimed that “the winner in a bear market is he or she that loses the least.” In bull markets, the victory lap specialists always make the mistake of confusing bull markets with brains, and it is this misplaced complacency that arrives as your arch enemy. Hubris is the harbinger of failure and one way to sidestep that trap is to keep preservation of capital as your primary objective in times like these.
I always keep a large cash position in place, and certainly until the evidence clearly indicates that the global economy can recover. Even the gold and silver markets, as ridiculously undervalued in U.S. dollar terms as they are, cannot withstand the impact of a deflationary wave that totally swamps the efforts of the Fed and its money-printing brethren around the globe. Safety over stardust; caution over calamity; modesty over hubris. . .
Speaking of “no respect,” I always know when gold is in trouble because my trusty canine compadre “Fido” is usually not to be found within a hundred feet of me and my sailing quote monitors and Jim Cramer dartboards. The only dog in history truly clairvoyant, he gives me a hint that gold is due to bottom when I see him peering into the den to see if it is “safe,” sniffing the floor in search of broken shards of wine bottle glass and or ill-targeted beer tankards.
Well, this week I went out to his tool shed “hiding hole,” forgetting that I was wearing my virus-preventing surgical mask (made from an old hockey sock and some tie-downs) and when he saw me approaching, he went into full “attack mode,” chasing me to within one arse-bite of an outcome as I scampered through the garage door to the sounds of primal growls and gnashing fangs.
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.
Disclosure: 1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. 2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Michael Ballanger Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.
Notwithstanding the Fed’s seemingly limitless ability to create money to throw at the stock market, which has caused it to rally in recent weeks in the face of a dead economy and apocalyptic jobs data and earnings, etc., all the charts we are going to look at here point to another severe downleg soon.
My attention was drawn to a bearish Rising Wedge completing in the London FTSE index by a colleague in England. So I took a look at it, and sure enough it is. So, I thought I’d take a look at a couple of other European indices, the CAC 40 in France and the German DAX Composite, which showed a very similar picture. Their charts are shown below and as you will see, they are both very bearish, and point to a break lower soon leading to a severe decline.
You will recall that we were thrown somewhat a week or two ago, when the main U.S. indices, the Dow Jones Industrials and the S&P500 index, broke down from their bearish Rising Wedges but then didn’t follow through, and instead rose to new highs for the rally from the March lows, which caused us to dump our Puts and then bide our time to see what transpired. The sharp drop at the end of the month this past Friday jolted me into action and prompted me to hunt around in a quest for greater clarity regarding what is going on, and it has turned out to be a rewarding search.
While it’s not exactly clear what is going on with the main U.S. indices, the picture becomes much clearer when we look at the broader but much less used Wilshire 5000 index. Take a look at this first of all it’s a 5-month chart for the Wilshire 5000 that reveals that it didn’t break down from its Rising Wedge about 10 days ago, unlike the Dow Industrials and the S&P500 index, but it did last Friday, which happened to be the end of the month, by a significant margin. This is regarded as an ominous development that probably marks the start of the second major downleg of this bear market. We can also see that the countertrend rally got stopped by the important resistance level shown.
Now take a look at this. The following chart shows that the breakdown from the Wedge happened just two days after the Wilshire 5000 had arrived at an upper range Fibonacci target at a retracement level of 61.8% of the preceding first leg down of the bear market. This is normally as far as a retracement following the first leg down of a bear market gets, and the same happened following the Tech bubble peak in 2000 and the start of the 20072008 meltdown.
If we now compare the Wilshire charts above with the S&P500 index chart we realize that the breakdown by the latter about 10 days ago was a false breakdown, inasmuch as, as we have just seen, the Wilshire did not break down at that time.
If we see another heavy drop in the broad stock market shortly, it is of course reasonable to presume that it will coincide with a strong rally in the dollar, so how does that look now? On the following 5-month chart for the dollar index, which has the S&P500 index placed above and gold below for direct comparison, there are several very important points to observe. The first is that when the market tanked into mid-March, the dollar soared just as we would expect it to and as happened in 2008. Then it dropped back sharply later in March as the market rebounded, but it has since been tracking sideways in a trading range marking time as the stock market continued to ascend to complete its relief rally. Right now it is at the support at the bottom of this range where a doji candle formed on Friday suggesting that it is about to start higher again. If the market now proceeds to tank in a second major downwave then we can expect the dollar to soar again, bust out of the top of the current range and probably exceed its mid-March highs.
If the dollar soars then commodities are likely to take another broadside, just as in the first half of March, and just as in 2008, and gold and silver are unlikely to be sparedthe Gold Miners Bullish Percent Index is now at an extreme reading of 92% bullish. Copper in particular looks like it will get crushed by another downwave that should take it to new bear market lows by a wide margin.
Originally posted on CliveMaund.com at 4.35 pm EDT on 2nd May 2020.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
Disclosure: 1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. 2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Charts provided by the author.
CliveMaund.com Disclosure: The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
Most resource sector writers (including me) have for a long time been “wrong” about gold and silver.
When they ran from $250 and $5 an ounce, respectively, to $1,920 and $49 in 2011, those who listened, acted, and sold a bit did quite well. We argued the “longer time bullish case” as these metals dropped into their final cyclical bear market graves in late 2015.
But that was then… and this is now.
What we DID get right was that when the Big Turn finally came, it would change directions so swiftly and violently that anyone waiting for “the bottom” would miss it, as rising premiums more than offset declining prices.
Now in the first half of 2020 it seems that, like the broken clock we’re sometimes accused of being – we are getting it right. Really right!
Speaking for my colleague David Morgan and myself, I can say unreservedly that I don’t intend to ride this bull down into another multi-year trough when it finally gives up the ghost – three, five or more years hence.
In fact, we feel so strongly about this that we wrote a book on how to avoid doing just that, discussing how to employing every skill we’ve learned to extract as much profit as possible. “How to Make – and Keep – Big Profits from the Coming Gold and Silver Shock-Wave” tilts the odds sharply in favor of anyone who acts upon its distilled wisdom.
Forcing the Hoover Dam through a Garden Hose
Over the last few months, the tenor and strength of the metals’ market has changed in a big way.
We’re not going back to the corrosive experience that seemed normal in the last decade.
Expect gold and silver to move irregularly higher in violent impulse moves, followed by broad sideways corrective action that stores energy for the next burst higher.
Doug Casey uses the analogy that the effect of buyers rushing into gold and silver will be like trying to force the output of the Hoover Dam through a garden hose.
Market sentiment has fundamentally changed. If you keep waiting and hoping for a return to last year’s prices with low premiums and plentiful supply, that’s what you’ll be doing… waiting and hoping.
A New Day for Gold and Silver Has Dawned!
The gold and silver markets have fundamentally changed. Plan to change with it.
Expect bouts of amped up investment desire leading to recurrent shortages and steep premiums. To run with this trend, institute a regular program of adding to your holdings.
Nick Barisheff spells the math out this way, saying, “Globally, there are around $350T of financial assets – in stocks and bonds. If just 5% moved into gold, that would be $3.5T. But there’s only around $1.5T of above ground investible grade (London Good Delivery bars) gold totals! So, “Who you gonna’ call?”
Holding just fiat currency offers “reward-free risk.”
Don’t do what I did in 1977.
In 1977, as a young man with limited financial savvy, I ran across a few ounces of gold (at $165/ounce x 3 = $495) that I didn’t remember acquiring.
Of course the idea of having this kind of money and not spending it on something meant that the coins burned a hole in my pocket, so I promptly went to the local coin shop and exchanged them for some of those infamous pieces of currency David Morgan has long referred to as “paper promises.”
I don’t even remember how I spent the cash. Had I held it for just another three years, its value would have tipped the scales at… $2,250!
The late Richard Russell, the most prolific and long-published newsletter writer of the modern area, once said: “Take your position in gold and gold shares and forget it. You don’t buy and sell your life insurance, and I feel the same way about gold.”
The Money Metals Coil Like a Crouching Tiger
Before it makes a big move, gold – and especially silver – likes to drop down, break obvious chart support lines cleaning out the weak hands, then quickly move to the upside. This coiling effect is like a crouching tiger. The release of energy is the pounce.
The chart below shows one of the most unusual, powerful and predictive technical chart signals, especially in a market which is quite liquid and seldom leaves gaps of any kind.
6-Month Silver Chart, Courtesy Jack Chan
The “island reversal” happens when the price (in this case down) drops so quickly that no trading takes place, then reverses, and does the same thing in the other direction!
Usually these “islands” are of one or two days duration. The SLV chart nearby created a one-week island. Prices that don’t “fill” these gaps quickly can remain open for months or years, attesting to the coming move’s potential power!
“Mr. Gold”, Jim Sinclair, says:
The manipulators of paper gold can temporarily do anything… (But) do you really believe that fiat paper will maintain, and therefore store the value of what you have? Sorry, it simply will not. As such GOLD is your savings account. End of story!
Jim Rickards gets it right:
Because it (The Fed) can’t stomach the consequences of withdrawing much of the stimulus it has injected, the Fed will be unable to defend the value of the U.S. dollar through interest rate hikes and balance sheet reductions. And by “dollar” I’m referring to its exchange rate against real money: gold. This adds up to what’s likely to become the most bullish environment for investors in gold and silver in history… You can think of gold as a form of cash… but with a free option on higher prices relative to dollars.
If you haven’t bought some (or enough) yet, start now. As it rises in value by several times, resist the temptation to let it “burn a hole in your pocket” too soon.
When you decide to sell a portion, hold some in reserve, perhaps indefinitely. After all, its greatest value is to be looked upon as insurance!
The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.
It seems that science has been taking a beating lately. From decades of denial by the tobacco industry that smoking causes cancer to more recent attempts to use the COVID-19 pandemic to score political points, a presumption seems to have taken root that it is okay to seek and speak the truth only when it suits personal interest.
In times like these, we urgently need leaders who know what they are talking about and whose commitment to truth exceeds their loyalty to party or person – among them, the sort of people long known as scientists (“those who know,” the literal meaning of scientist). COVID-19 is a kind of plague, but so is ignorance, and only by addressing the latter can society tackle the former.
This year marks what is believed by many to be the 800th birthday of an especially courageous truth seeker, the English polymath Roger Bacon. Though other scientists came before him, his breadth of study has led many to call him “the first scientist.” Were he alive today, Bacon would likely be pursuing the truth about such matters as the coronavirus and its effects on society, as well as the need for personal and political virtues to overcome it.
Roger Bacon’s pursuit of the truth
Because Bacon lived so long ago, we know more about his ideas than his life. Born in Somerset, England, his family appears to have been well off, and he studied and taught at two of Europe’s oldest universities, beginning at Oxford. After earning his master of arts degree, he accepted an invitation to teach at the University of Paris for about a decade before eventually returning to Oxford.
Bacon was one of those remarkable human beings who seem to know just about everything. An expert on the thought of the ancient philosopher Aristotle, he also taught mathematics, astronomy, music, optics, alchemy (a forerunner of chemistry), moral philosophy and theology. Because of the depth and breadth of learning reflected in his Opus Majus (“Great Work”), composed at the Pope’s request to describe his studies, he became known as Doctor Mirabilis or “Wonderful Teacher.”
Artist Jan Verhas illustrated Roger Bacon observing stars from Oxford. Astronomy was just one of the many areas of science Bacon explored as he compiled encyclopedias of scientific knowledge. Wikimedia
Bacon believed that the improvement of human life, both personally and socially, depends on the eradication of error. To correct what ails society, it is necessary to restore respect for learning, real-world experience and the pursuit of truth. So long as people go forth with a false map of reality, they will lose their way and never reach their true destination.
The importance of the right question
Bacon argued that there are four causes of error: 1) weak and unworthy authority, 2) longstanding customs, 3) the opinions of ignorant crowds, and 4) the hiding of ignorance through displays of apparent knowledge.
What people often lack, Bacon believed, are not correct answers but the best questions. To advance knowledge, people must subject authorities to scrutiny, winnowing away the unreliable. Who is speaking the truth, and on what basis, and who is merely mouthing what people want to hear?
In Bacon’s view, too many people lapse into a credulity of habit, simply accepting what they have been told over and over. To combat this tendency, he called for experimentation, but not only in the sense of a scientific laboratory. He believed that people should put their ideas on trial, seeing how well they fare when tested in the real world of experience. What doesn’t hold up should be rejected.
Bacon gave the example of fire, writing, “Reasoning draws a conclusion and makes us grant the conclusion, but does not make the conclusion certain, nor does it remove doubt so that the mind may rest on the intuition of truth, unless the mind discovers it by the path of experience.” Only someone who actually sees fire burn will understand what it can do.
Without proper habits of mind, Bacon argued, society would be mired in ignorance and failure. Only if institutions of learning such as universities fulfill their proper function can society find and stick to its proper course. And all persons, he believed, have both the capacity and the responsibility to think for themselves and keep their community on track.
Bacon expressed deep antipathy toward those who merely pretend to know, such as magicians who pretend to use scientific methods. Princeton philosopher Harry Frankfurt more recently referred to such pretenders as “bullshitters.” Ignorance is bad, but pretending to know is even worse, because it undermines trust.
On ignorance and corruption
Bacon treated ignorance so harshly partly because he saw that it sowed the seeds of corruption.
Extrapolating from Bacon, regular scrutiny is necessary if political leaders are to act responsibly. The last thing any good political leader needs is to be surrounded by yes men. It is through the contest between differing points of view that people are most likely to arrive at the truth.
This perspective helps to explain both Bacon’s promotion of the science he called “perspective” and his lifelong dedication to the study of languages such as Greek and Hebrew. To determine the best perspective from which to understand something, it is first necessary to look at it from multiple points of view.
Above all, Bacon promoted humility. People must seek to know the truth and cling to what they have proved by experience to be valid. But they must also recognize the limits of their own knowledge, seek out the advice of experts, and pursue deeper understanding.
This was Bacon’s life’s work. “No one,” he wrote, “worked in so many sciences and languages as I did, nor so much as I. And yet I did not work that much, since in the pursuit of wisdom no work” – of the sort one might resent – “was required.”
Like Aristotle, he believed that it is human nature to desire to know. There is, he held, nothing more natural and also more necessary and beneficial to humanity than pursuing the truth.
This article has been updated to remove a quote that cannot be confirmed as Roger Bacon’s.
