Bank of America (BAC) chief Brian Moynihan announced a management reorganization late yesterday that is aimed at aligning the companys operating units with its core customer group, individuals, companies and institutional investors. Moynihan appointed David Darnell and Tom Montag to the newly-created posts of co-chief operating officers.
Bull Market In Gold Over With Double Top?
David Banister- www.MarketTrendForecast.com
A few weeks ago I penned a public article and private forecast for my subscribers calling for a major correction in Gold being due. 72 hours after my forecast, Gold had dropped a stunning $208 per ounce in 3 days catching most by surprise. Why did I forecast a top in Gold then? Why did Gold rally back to new highs recently? Is the Gold Bull Market now over? Let’s see if I can answer those questions with some level of logic below.
I had forecasted a major correction because Gold has had a run of 34 Fibonacci months from October 2008 to August of 2011 from $681 to $1910 per ounce spot price in US dollars. That type of pattern was formed with a clear 5 wave move, with obvious corrections along the way. The reason I was confident of a major correction was due to the confluences of the 34 months of time, the price relations to prior rallies and corrections, and the Fibonacci sequences coupled with the sentiment and cover stories on Gold in major publications. Gold should have entered into a multi-month correction that will consolidate that 34 month move, and the first shot across the bow was the $208 drop in 3 days.
Interestingly, that $208 drop over 3 days corrected 50% of the 8 week move from $1480 to $1910. As we can see markets move very very fast these days and can whipsaw even the best of traders. I told my subscribers to cover their short bets at $1724 spot, and since then we rallied to $1920 this week before topping again.
The reason Gold rallied back and touched the old highs and then some was due to the German Court pending decision regarding the constitutionality of backing the Eurozone countries with bailout funds. Today we had a positive decision by the court denying claims that the bailouts were unconstitutional. Had the German Court ruled the other way, we would have seen Gold spike to $2000 and the SP 500 and European Bourses tank hard. So if you were getting long Gold on this recent rally, you were taking on a lot of short term headline risk and I told my subscribers it was best to stand aside until we got the ruling.
Now that the ruling came out, Gold has topped at 1920 in what typically traders would call a “Double Top” pattern, but it’s more involved than that. In the work I do, we call it an “Irregular correction “ pattern, where the retracement of the $208 decline runs all the way back up and past where the decline began at $1910. These are very rare patterns and again, I believe exacerbated by the Eurozone issues as they hinged short term on the German decision. What we should see now is what I call a “C WAVE” to the downside, with targets typically at $1620 relative to the rally from $681 to $1910 over 34 months. A drop of $290 is only 15% from the highs and would fill in gaps in the Gold chart.
Will Gold drop that low? The fundamentals for Gold are screamingly bullish, but the entire world knows that and it may be priced in for a while. Gold should consolidate those topping highs for a while to let the fundamentals catch up the price action in Gold which ran ahead of them and then some. The Gold bull market should run for 13 Fibonacci years, and I have been bullish since November 2001. I understand the fundamentals are very strong for Gold, so please don’t miss-read my comments ore forecast. I use crowd behavior and psychology to help pinpoint major tops and bottoms, and right now we should have some more work to the downside to correct sentiment in Gold and then allow for the base building period before the next leg up towards the highs in 2014.
Over at my TMTF service, we called the top in Gold and shorted it and covered at $1724. We also recently forecasted the deep drop in the SP 500 from 1231 highs and warned our subscribers in advance. My methods use contrarian signals and behavioral patterns to warn of pivot highs and lows in advance.
Consider checking us out at www.MarketTrendForecast.com and take advantage of a 33% discount or sign up for our occasional free updates.
Barclays’s Robinson Sees Gold, Dollar Rising on SNB Move
Sept. 7 (Bloomberg) — Paul Robinson, global head of foreign-exchange research at Barclays Capital, discusses the outlook for currencies and gold following the Swiss National Bank’s decision to impose a ceiling on the franc’s exchange rate. He speaks from London with Maryam Nemazee on Bloomberg Television’s “The Pulse.”
Urquhart Stewart Says `Relief Rally’ Can’t Be Relied on
Sept. 7 (Bloomberg) — Justin Urquhart Stewart, a director at 7 Investment Management, talks about the outlook for equities. He speaks with Francine Lacqua on Bloomberg Television’s “Countdown.”
The Best Income Stock of the Past 10 Years
By Carla Pasternak, DividendOpportunities.com
If you think investing in income stocks means giving up strong returns, think again. This security could have turned a $1,000 investment 10 years ago into $64,800 today.
Income stocks have a reputation. They’re boring. They’re stodgy.
If you want to earn 4-5% a year — the conventional wisdom goes — then income stocks are for you. If you want to earn higher returns, then you better look elsewhere. In fact, for decades income payers have even been nicknamed “widow and orphan” stocks because their stable and predictable returns appealed to the most conservative investors.
But sometimes the conventional wisdom gets it wrong.
How else can you explain the income payers we’ve found that have returned 538%… 733%… 2,270%… and even more over the past decade?
That’s what we found a few days ago, when a member of StreetAuthority’s research team tracked down the best-performing high-yielders of the past 10 years.
In total, 18 stocks yield over 6% and have had a total return of more than 500% during the past decade. But one stock took the cake. This investment currently yields 6.0%, and over the past decade, it’s returned 6,380% — enough to turn a modest $1,000 investment into $64,800.
That investment is Terra Nitrogen (NYSE: TNH). The Sioux City, Iowa master limited partnership (MLP) sells nitrogen fertilizer to farmers in the central and southern United States.
So why has a company that makes a “boring” product like fertilizer soared more than 6,000%?
Demand for food commodities of all types is soaring. Prices for wheat have risen 180% since 2001. Corn has risen from under $3 per bushel to over $7 per bushel during the same time.
In turn, that’s sparked demand for fertilizer to boost crop yields, causing fertilizer prices to zoom as well. In just the past year alone, prices for Terra Nitrogen’s fertilizers have increased 47%.
That support behind prices has caused the partnership’s sales to rise dramatically. In the trailing twelve months, TNH has seen revenues of $673 million — more than 120% greater than a decade ago.
As an MLP, Terra Nitrogen must distribute all available cash after expenses to the general partners and unit holders. In the past year, TNH has distributed quarterly payments totaling $11.35 per unit. That works out to an annualized yield of 6.0% at recent prices. While the distributions vary with earnings, the overall trend is sharply higher. In 2007, TNH distributed a total of $7.64 per unit, but only $1.92 per unit in 2006. Investors were paid just $0.44 per unit in 2001.
Now, I’m not suggesting you run out and buy into Terra Nitrogen. In fact, after an explosive run-up since May, I wouldn’t rule out a pullback in the stock.
But if you’ve held on to the notion that earning an income stream from high-yield stocks means giving up strong returns, I hope you’re seeing that’s simply not the case.
Good Investing!
Carla Pasternak’s Dividend Opportunities
P.S. — If you’re interested in finding out more about high-yield ideas, be sure to check out this presentation about my High-Yield Investing advisory. We’ve locked in yields as high as 10.1%, 10.5% and 12.1%… and I’ve even seen some holdings return triple-digit gains. Visit this link to learn more.
Bloxham Says Productivity a Concern for Australia Growth
Sept. 7 (Bloomberg) — Paul Bloxham, chief economist at HSBC Holdings Plc, talks about Australia’s second-quarter gross domestic product reported today and outlook. He speaks from Sydney with Linzie Janis on Bloomberg Television’s “First Look.” (Source: Bloomberg)
Challenges to German Euro Rescue Rejected by Top Court
Sept. 7 (Bloomberg) — Challenges to Germany’s participation in the euro rescue funds were today rejected by the Federal Constitutional Court in Karlsruhe, the nation’s top court. Maryam Nemazee and Elliott Gotkine report on Bloomberg Television’s “The Pulse.”
Gold Falls, “Green Light Given” to future Euro Bailouts, Greece “Not Europe’s Pariah”…says Greece
London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 7 September, 08:20 EDT
U.S. DOLLAR gold bullion prices dropped to around $1833 an ounce Wednesday morning in London – 4.5% off yesterday’s intraday record high.
Stocks and commodities rose and government bonds fell after Germany’s highest court ruled the country’s bailout policies are not in breach of its constitution.
Silver bullion prices dipped to a low of $40.86 around lunchtime – a 5.5% loss for the week so far.
“From a physical perspective, demand for gold remains supported by India’s wedding season and desperate Chinese customers,” says a note from Swiss refiner MKS.
“People have jumped to buy gold due to the current decline [in prices]” added a gold bullion dealer in Mumbai on Wednesday.
Earlier on Wednesday gold bullion prices saw a sudden drop during Asian trade – losing 2.3% in two hours.
“It was intra-day technical stops…it doesn’t reflect any changes in fundamentals,” reckons one trader in Sydney quoted by news agency Reuters.
European stock markets meantime continued to perform well during Wednesday morning’s trading – with the FTSE up 1.8% by lunchtime, while the German DAX gained 2.8%.
“Valuations are attractive in the short term,” reckons Guillaume Duchesne, Luxembourg-based equity strategist at BGL BNP Paribas.
“Still, volatility remains significant and it’s best to be cautious. Today looks like a technical rebound.”
Germany’s participation in previous Eurozone bailouts is not in breach of the country’s constitution, according to a verdict delivered Wednesday by the Constitutional Court in Karlsruhe.
The verdict, however, “should not be mistakenly interpreted as a constitutional blank check authorizing further rescue measures,” warned the court’s president Andreas Vosskuhle.
“This gives a green light for continued bailouts,” reckons Frederik Erixon, co-founder of the Brussels-based European Centre for International Political Economy, adding that such measures represent “the only track available to Eurozone leaders right now”.
“Today’s ruling should bring some relief to financial market,” says Carsten Brzeski, economist at ING.
“But it shouldn’t lead to euphoria…a bigger say for German parliament in future bailouts could easily find copycats in other Eurozone countries.”
The Bundestag is due to debate a proposal to increase the size of the Eurozone’s current bailout mechanism – the €440 billion European Financial Stability Facility – later this month. The proposals – agreed at the Eurozone summit of on July 21 but not yet enacted by national parliaments – would increase Germany’s EFSF guarantees from €123 billion to €211 billion.
The German government last week granted the Bundestag a formal role in drafting future Eurozone aid packages. Two days ago 25 members of Germany’s ruling coalition voted against the draft law to increase the size and powers of the EFSF.
Elsewhere in Europe, Athens has vowed to speed up its economic reforms – following comments from German finance minister Wolfgang Schaeuble that suggested inadequate progress would threaten Greece’s next bailout installment.
“If we don’t complete structural reforms…we will be stuck,” Schaeuble’s Greek counterpart Evangelos Venizelos said Tuesday.
“Greece is not the pariah of the European Union,” added Venizelos.
“It is an equal, competitive country that has a very serious problem regarding its public debt and fiscal deficit.”
Yields on Greek government bonds set new record highs on Wednesday as investors continued to sell. The yield on 10-Year bonds breached 20% – while 2-Year bonds this morning traded above 53%.
Over in the US, President Obama is due to announce a new job creation package on Thursday. The combination of spending and tax cuts Obama will propose will be worth $300 billion, according to some US media reports.
“I have no doubt the president will propose many things on Thursday that, when looked at individually, sound pretty good, or that he’ll call them all bipartisan,” said Senate minority leader, Republican Mitch McConnell.
“I’m equally certain that, taken as whole, they’ll represent more of the same failed approach.” Kazakhstan’s central bank meantime pledged Wednesday to buy all of the country’s domestic gold bullion production until at least 2015.
Kazakhstan produced 26.9 tonnes of gold last year, making it number 20 in the world, according to leading precious metals consultant GFMS. The latest figures published by the World Gold Council put its official gold bullion reserves at 70.4 tonnes.
Ben Traynor
BullionVault
Gold value calculator | Buy gold online at live prices
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
EUR Flow Analysis Shows Indecision amongst Speculators
The most recent CFTC Commitment of Traders report (COT) shows speculators are indecisive on the direction of the most heavily traded currency pair the EUR/USD. The lack of direction in the futures market could be significant in identifying the next move in the pair.
The most recent data from the International Monetary Market indicates speculators have maintained a small net long position in the EUR/USD as has been the case over the last 4-weeks. Speculators are net long by only 3,341 contracts while the average net position since the beginning of the year is 11,725 in favor of the EUR. At the same time open interest has fallen to 176K from a peak of 296K in June. The CFTC data highlights the reduced speculative flows in the EUR, hinting at a weakening trend.
And the price action is confirming what the COT data is showing. The EUR/USD has been consolidating between 1.46 and 1.40 for the past month and is now pressing the long term trend line from the May 2010 and January lows. Combining the bearish price action with the flow analysis from the IMM data that shows a lack of conviction and we begin to paint a gloomy picture for the EUR/USD.
Read more forex trading news on our forex blog.
Bloom Says Norway’s Krone `Much Safer’ Than Swiss Franc
Sept. 7 (Bloomberg) — David Bloom, global head of currency strategy at HSBC Holdings Plc, talks about the Swiss central bank’s decision to cap the franc’s rate and its impact on other currencies. He speaks with Francine Lacqua on Bloomberg Television’s “Countdown.” (Source: Bloomberg)
