Posts Tagged Gold
Top Ten Signs the Market Could Be “Topping”
Posted by Harley in The Economy on October 3, 2009
By Justin Ford
Let’s get right to it. Drum roll, please…
10. Irrational Exuberance gives way to Incomprehensible Elation. In the midst of the worst recession since the great depression, on the heels of a 50% stock rally in six months and just before a new major wave of housing foreclosures and a likely commercial real estate bust… Wall Street is selling stocks like there’s no tomorrow. A screen of 5,817 actively screened stocks yields just 154 with a “sell” rating. That’s one out of 38. At the height of the tech boom, it was one out of 29.
9. The “Invisible Bailout” reaches record levels. This is the bailout no one’s talking about—executives bailing out of their company’s shares! Trim Tabs reports the highest level of insider selling since they began keeping records in 2004, with insiders dumping $105 billion of stock during the rally. That’s 31 times greater than the pace of insider buying. This is almost the exact opposite of Wall Street’s sell-rating ratio. Well, the sharks have to sell to someone, and brokers appear to be lining up the minnows to take the CEO’s shares off their hands.
8. Ugly is beautiful and bad is good. Excessive credit caused the crisis we’re in but you wouldn’t know it by looking at the stock market. A recent survey of public companies showed those with the worst credit ratings have led the rally—soaring 89% while the S&P 500 rose 53%.
7. The Rally is long in the tooth. We’ve had greater rallies than the current one but not longer ones—at least not after major crashes. The longest rally during the 1929-32 bear market was 155 days. We are on day 204 of the current rally.
6. A New Wave of Housing Foreclosures will begin in the 4th quarter. Loan modification plans have been largely ineffective because banks have been stingy and loan servicers don’t have the authority to modify many of their loans. Consequently, many foreclosures that have been postponed until now, will be postponed no longer. They’re going to happen. And there are quite a few of them. Mortgage companies hold 1.2 million loans on which they haven’t received a payment in 90 days, another 1.5 million that are “seriously delinquent,” and 217,000 that haven’t received a payment in over a year. In all, 3 million new foreclosures could come on the market in the next year, further depressing real estate prices. A big chunk of those could happen in the next few months. “We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running,” a Bank of Ame rica spokeswoman told The Wall Street Journal last week.
5. Dirt-cheap mortgage money may come to an end soon. If you can get a mortgage today, the money is as cheap as it’s ever been—about 5% for a 30-year fixed-rate loan. But that may not last long. The Fed has bought 80% of the Freddie Mac and Fannie Mae mortgages since the crisis began. Private investors still aren’t interested. What’s more, the Fed’s $1.25 trillion program for buying these mortgages is two-thirds done and scheduled to finish at the end of the year. If the government doesn’t incur more debt to buy this debt, rates will rise and put a further kibosh on the decimated housing market. And all these housing woes don’t even count the considerable trouble brewing in the commercial real estate sector…
4. The Crisis in Commercial Real Estate is just beginning. Delinquencies on commercial real estate loans recently rose above 3%. That’s more than six times the level of a year ago, but it’s likely only the beginning. Double-digit unemployment and a chastened consumer’s are causing office and retail vacancy rates to rise and rents to plummet. Making matters worse, most lenders finance commercial properties with balloon loans. These are typically due in full after just five, seven or ten years, and loose-money loans originated in ’05 and ’06 are now coming due. Yet since values are falling many commercial property owners will not be able to refinance. The problem is widespread too since commercial real estate loans are usually the bread and butter of local banks. Only ten major banks made up the bulk of the housing lending market. Yet, according to The Wall Street Journal, more than 3, 000 banks and savings institutions have more than 300% of their risk-based capital in commercial real-estate loans. And almost $100 billion of their loans coming due in the next three years may have difficulty getting new financing.
3. The Consumer isn’t coming to the rescue, as hoped. Consumption is the biggest component of the U.S. economy—but getting smaller. Unemployment is at 10% by official figures (over 20% according to Shadow Stats); there are six job hunters for every job opening and 52% of job hunters say they’re exhausting benefits before they find that next job. Credit card delinquencies are up 60% and 7.6% of all U.S. households were late on their mortgage last month!
2. October is a scary month. OK, there’s nothing very scientific about this one, but October is the month for Halloween and major market crashes. Past Octobers have seen intra-month plunges of 41% in 1929; 39% in 1987; and 29% last year. As we enter month seven of a record rally, this odd piece of history may replay yet again.
And the number one reason the market could be topping…
1. The number one Predictor of Collapsing Share Prices just issued its first sell signal in 226 days. The predictor is The Credit Crunch Short Indicator. It consists of four criteria that appear very rarely together in any one stock. The first identifies a company that is going through a credit crunch. The second and third confirm the situation is getting worse. The fourth indicates the credit problems are beginning to show up in the share price.
The one problem with the indicator is that it is extremely selective. It doesn’t tell you when to short an index or a mutual fund or ETF. And it doesn’t try to catch all falling stocks. It only targets the ones that are the “weakest links” financially.
But when it triggers, it has proven to be very accurate. And when it doesn’t find easy pickings, it’s as silent as a church mouse. In fact, during the recent bull market rally the Credit Crunch Short Indicator didn’t issue a single sell signal in over seven months. After averaging over two a month covering nearly a three-year period, it went dead silent. Until last week.
Then, like a reliable old boiler kicking on again the first cold day of winter, it revved up and spit out a brand new sell signal. Two months ago, during the height of the rally there were none. But now seven are “knocking on the door” with three criteria for shorting confirmed and only a few points away from a possible 4th criterion and another “sell signal.”
The point is that when the most selective indicator we’ve ever seen begins to issue sell signals, it is another good reason to keep an eye on the exits and take action to protect your capital and possibly even make significant profits in the next market correction.
In itself, a 50%+ rally in just over six months should be enough to give even the most bullish investors pause. But combined with other unpleasant news on the horizon and the sudden “talkativeness” of one of the market’s most selective indicators… it all leads me to believe it’s time to take some defensive action.
What’s that mean?
- Buy gold if you haven’t already. If a market correction turns into a panic even for a little while, you could see gold and silver rise smartly. And if it’s a dull steady decline, gold tends to hold when paper assets fold.
- Set stop losses on your long positions. It could be 20% or 25%. They could be market stops or mental stops (which makes you responsible for placing the sell order when the shares drop 25% from their high). Either way, pay attention to your stocks, especially in broad market declines and stick to your strategy for protecting gains and preserving capital.
- Look for opportunities to make money on the short side, profiting from falling share prices by targeting the most financially vulnerable companies, waiting for technical price confirmation before placing your trade, and again—having a stop loss in place.
They say an ounce of prevention is worth a pound of cure. It’s time to take a few ounces.
Sincerely,
Justin Ford
Massive Inflation Has Already Arrived in the U.S.
Posted by Harley in The Economy on September 18, 2009
See my last article, “Proven Business Model Participates In World’s Greatest Transfer of Wealth” and then read the article below relating to the same thing. If interested in learning how you can participate, click on the tag in the my blog header titled “Elite Wealth Plan”.
Article Source: http://www.inflation.us/massiveinflation.html
September 18, 2009
On March 5th with the U.S. Dollar Index at a multiyear high of 89, we wrote an article entitled, “The World is Awashed with Dollars” and said, “It’s a real shame that those who lost most of their money in the stock market and Real Estate bubbles, and are now finally selling out after these markets have already collapsed, are positioning themselves to get wiped out all over again through massive inflation.”
On March 26th we wrote another article entitled, “Don’t Be Last Person Out of the Dollar” and said, “They (the politicians in Washington) will soon learn that you can’t reinflate a bubble as Americans start to wake up and begin pouring their Dollars into real, hard assets like Gold and Silver.”
Since then, the U.S. Dollar Index has fallen practically straight down to a new 52-week low of 76, while gold has risen to a new 18-month high of $1,025.80 per ounce and silver has risen to a new 13-month high of $17.63 per ounce. Meanwhile, several of our gold and silver stock suggestions have gained over 100%.
Ben Bernanke said this week that the recession is “very likely over”. Yes, the recession may be over in nominal terms, but massive inflation has just begun and prices of stocks and real estate will continue to plummet when valued in real money, gold and silver. You can’t just print your way out of a recession without increasing production. Sure, if you print enough money prices of stocks and real estate will rise when priced in dollars, but that won’t mean a thing when it costs $10,000 to fill your refrigerator with food.
We are very happy that Peter Schiff announced on Thursday that he is officially a candidate for U.S. Senate in the State of Connecticut. We are big supporters of Peter Schiff with two of our co-founders each donating $2,400 to his Senate campaign. We are extremely pleased to be hearing from countless NIA members who have also contributed to the campaign. Unfortunately, even if Peter Schiff is elected and s able to help persuade Washington to reverse course immediately, it may still be too late to prevent hyperinflation. Every day that goes by with interest rates at 0%, tremendous damage is being done to our economy that we may never recover from.
China is now beginning to sell yuan-denominated bonds in Hong Kong while encouraging their citizens on state-run television to invest in silver. These moves are quietly positioning China to move away from the dollar as the world’s reserve currency. When this day comes, all hell will break loose.
In the weeks ahead, we will be launching a new feature on our web site called NIAnswers. It will be a fully interactive section for you to submit to us your questions about the economy and inflation, and search through previous questions and answers that will be categorized in a database. We need to educate America as to how we will feel the pain of the government’s trillions of dollars in wasteful spending so that at the next major tea party protest, we have hundreds of people holding inflation related signs. If Obama’s supporters became aware of what happened in Zimbabwe when Robert Mugabe implemented the same policies that Obama and Bernanke are implementing here, they would see the light and jump to our side.
To view original article see http://www.inflation.us/massiveinflation.html
Hitmen Contracts to Bust Comex
Posted by Harley in Financial Education on June 3, 2009
[Sorry for the length but important for your reading, Harley Hunter]
by Jim Willie, CB. Editor, Hat Trick Letter | May 28, 2009
Major dislocations are coming. Tremendous disruptions are coming. Price discontinuities are coming. Price chart patterns might be rendered useless soon. Last week, the case for a grand Paradigm Shift was made, covering many elements in order to paint a mosaic. Taken in isolation, any one point is important in its own right, but not enough to convince of a structural change. Taken in entirety, the many points create a full picture that is more easily recognized. The ruinous events of the Wall Street banks last September and October surely served as an extreme event loaded with profound disruption. The Chinese have proceeded with a transition to yuan-based domestic banking, with an installation of yuan swap facilities around the world, with an ASEAN regional fund again supplied by yuan for flexible purposes, with permission granted to two Hong Kong banks to sell yuan-based bonds, with an admitted rise in significant gold bullion reserves, and with continued verbal battles over legitimacy of the US Dollar as the global reserve currency. These Chinese initiatives in recent weeks, occurring rapidly, are serving as a collective extreme event with the potential for profound disruption. A gold-backed yuan currency would surely cause massive disruption in a climax merger of events. The barter system set up between Russia and Europe will bypass the US$-based settlement system, as will the barter system set up between Russia and China. The avoidance of contract settlement in USDollars would result in extreme disruption to the global banking system. The creditor nations are plotting to organize and launch alternative currencies, maybe to fortify existing currencies (like the euro or yuan or ruble) with a gold component, maybe also with a crude oil component. A challenge to the USDollar by asset-backed currencies would result in extreme disruption to the global banking system. The hidden nitroglycerine to the disruptions is the Russian military, and any pledges of support for nations attempted to force systemic changes. These are just some important examples of change agents.
All Paradigm Shifts result in extreme disruption. That is the essence of Paradigm Shifts. The entire table changes, like its shape, its seats, its location, even who sits at the table, and in particular who sits at the head of the table. Big disruptions are to come from the COMEX pit of corruption, the central nexus for controlling illicitly the price structure for gold, the USDollar, and the USTreasury Bonds. The COMEX in all likelihood is the weakest link in the US-UK chain of corrupted financial markets. For many months my view has been that gold fights the political battles, while silver gathers more than its share of rewards and spoils. Gold has a long history of experience fighting grand battles. It can be placed in dungeons, but not for more than a couple decades. The rot in financial systems without golden foundations forces gold to the surface!
THE HITMEN COMETH
It has come to my attention that several private parties have accepted contract assignments to neuter the COMEX and London Metals Exchange, to render ruin to its gold market. That bears repeating from the rooftops. MUTLIPLE HIRED HITMEN HAVE ASSIGNMENTS TO KILL THE COMEX GOLD MARKET. That is the lynchpin to control the US Dollar, the US Treasurys, and the corrupt mechanisms used by the New York and London syndicates. Their clear criminal behavior is beyond the reach of law enforcement, but they are not beyond the reach of hitmen. The US Dollar has been in violation of the US Constitution since 1971, perpetuated by a renegade series of administrations. The global creditors for the USTreasury Bonds are so angry at the past suffered losses, the prospect of deep future losses, and the corruption laced throughout the US financial system, that they have hired third parties to kill off the US$-gold platforms, to destroy the burdensome banking ballast dominated by protected entrenched fraud experts, to lay waste to the vehicles used by the US-UK bond trafficking syndicate totally saturated with corruption, dishonesty, and collusion, replete with greed, totally absent conscience. They have systemically been dismantling the COMEX pillars and levers over the last several months, quietly and without fanfare, surely without publicity. If gold investors knew of their actions, they would become much bolder. Some want the bankers in their gunsights not to be warned. They await their fate with the Financial Grim Reaper. Their executions will be as swift as brutal.
The HITMEN have been hired, with highly lucrative contracts and wide berth in methods to be put to use. Their assigned task is to castrate the levered family jewels from some of the major players who illegally keep the gold price and silver price artificially low. The targeted victims know their awaited fate, and are presently defecating in their skivvies. A short list of banks facing the firing squad is already known, details for Hat Trick Letter members. Some detailed speculation will be devoted to the June HTL reports, since too controversial. This will be an evolving story, with new chapters soon written. The executions will be sudden. The missing US-UK levers will be immediate. Since last autumn, the global powers have aligned against Wall Street, even if the central bankers have supported it. If one wants to destroy a building, then weaken its pillars, cut a few support beams, then rush in a crowd of people, and wait for a turbulent storm. In the case of the COMEX, the wicked players will crowd the corrupted building. They will sink into ruin and then oblivion. They might become objects of mockery when they make noises from prison. If lucky, they will join Ken Lay from Enron fame in a remote Caribbean island where other favored operators live a secluded life, but a life nonetheless, complete with plenty of sunshine, fresh air, beaches, bikinis, and sailboats, but no intrusive cameras. Please, do not disturb the quasi-dead!
The financial cartel dominated by the United States and United Kingdom is soon to suffer some serious blows. The list of their financial crimes is as magnificent as it is long. Its list of victims is as prominent as it is long. The harbored resentment is great by many global players. They waited patiently for the Obama Admin to install a new group, but the old group remains due to a revolving door from the same smoky club, dominated by Goldman Sachs once more. Their influence, if not bribery, of the US Congress is in continuation, sufficient for unwanted obsequious approval. The regulatory agencies are from the same encrusted chambers replete with stench. The Coup d’Etat of the US Govt financial offices has not changed with Obama, who sounds like a refreshing leader but who is actually a marionette under control by those who selected him, favored him with publicity, then enabled his election. Nothing has changed except the rhetoric of change and the pace on the path to bankruptcy for a few icon firms like General Motors and Chrysler, if not the desperate cries from the 50 states suffering from insolvency. More prominent failures will follow, since nothing has been remedied. The channeled funds directed to Wall Street firms continue unabated. The bread crumbs to Main Street and the people continue unabated. Even the war continues unabated. Forget not that Marie Antoinette once said “Let them eat cake” before the French Revolution and the Storming of the Bastille. Today, the Bastille is the entire US Economy where insolvent Americans are stuck.
Some might wonder what was the turning point that resulted in hired hitmen to be under contract against certain US financial markets. Some might say the failures of Lehman Brothers, American Intl Group, and Fannie Mae. Not so! In my opinion, it was the invasion in the South Osettia region of Georgia in August 2008. The events around Georgia, with the United States Military deeply involved, along with a certain tiny mischievous ally nation, lit a fuse that set off a chain of events. In time, events led to orders given by high level powers, for the US fraud kings on Wall Street to swallow the medicine no later than first thing Monday morning on September 15th. When the Jackass inquired as to the nature of the urgency leading into that understood stated deadline date, no answer was given. The guess of the Bank For Intl Settlements was submitted by me, and it was confirmed. Other sources, the US Treasury Bond creditors, also applied the pressure, it was told. Rumor was thick that death threats had been delivered to certain Wall Street executives, such as Paulson. Thus the pressure passed on to the USCongress for passage of T.A.R.P. funds. The disbursement of those funds have not been made public partly because Wall Street (read Goldman Sachs) does not want the US people to be aware of payoffs for bond fraud under death threats. Also, the Congressional Inspector has cited a few dozen recommendations for criminal fraud investigations of the same T.A.R.P. funds. The US financial sector has become a den of vipers, no longer the bastion of gentlemen, but rather of syndicate bosses.
COMEX STRESS NEAR A BREAKING POINT
Sources from GATA (the Gold Anti-Trust Action committee) report growing distress for participants in the COMEX gold contracts, where a commercial party is very short and in deep trouble. They have sold more gold bullion than they can deliver. They are likely one of the big banks who violate the law with impunity, with US Govt sanctioned protection. By that is meant they routinely do not post 90% of the metal as collateral that they illegally sell. This is naked shorting by any other name. There are reports of grave concern over the upcoming June gold option expiration. If too many deliveries are ordered, then the commercial shorts would be under stress for exposure for naked shorting. They will eventually be caught in a bind and default on contracts. The important loaded monthly contracts are March, June, September, and December. The COMEX has tried to limit the ability of buyers to take delivery, running them around in circles, and entangling them in red tape, all clearly restraint of trade endorsed by the USGovt. Such rules are not in effect for cotton or soybeans or crude oil or pork bellies. After all, a financial crime syndicate has taken control of the USGovt, ever since Robert Rubin took charge at the USDept Treasury in 1992. His major project was to gut the nation of its gold, for the private profit of his friends. Recall Rubin came from Goldman Sachs. Rubin was the author of the Strong Dollar Policy which brought ruin to the nation. Hey, just my opinion!
Background inventory strain has come from unexpected sources. The Germans have demanded that gold bullion held in US custodial accounts be returned to their owners, with physical gold shipped back to Germany. The Dubai bankers have demanded that gold bullion held in London custodial accounts be returned to their owners, with physical gold shipped back to the United Arab Emirates. They are following the hired German counsel. In all likelihood, neither US nor London sources are in possession of all the gold held in those custodial accounts, since at least some of it probably was improperly leased. By that is meant without owner permission or knowledge. So an uproar could come soon with charges of gold bullion theft, or at least failure of fiduciary responsibility. Theft is a simpler description.
China is the biggest gold producer in the world now, but none of its output is directed to the open market. Russia is a significant gold producer also, but none of its output is directed to the open market either. A near default occurred in early April from a close call to Deutsche Bank on 850 thousand ounces of gold. The tarnished bankers at D-Bank dug up over a million ounces on the quick from the ready Euro Central Bank mine shifts in the nick of time. Never ignore the basic fact that COMEX lies through its teeth about the gold bullion in its vaults, since audits do not occur, some is leased (replaced by paper certificates), and some is committed in some fashion to very wealthy parties (unavailable). Far less gold bullion rests in COMEX vaults than is advertised. All signals point to serious strain in COMEX gold supply.
FEEDERS FOR GOLD FULLY LOADED
Two important feeder systems continue to be US Dollar weakness and US Treasury Bond weakness. More important than these is the systematic ruin of the major global currencies generally, but a convenient chart is not offered to track it. Just note the near 0% official rates dictated by the failed franchised Politburos known as central banks in most countries, or the movement toward 0%. The US Dollar has broken below important support at 81. Expect it to fall further after more dithering. The long-term US Treasury Note has suffered a fast rising surge in its bond yield. Its target from different perspectives is 4.1%, and right quick. These two highly favorable charts will power the gold price to new highs very soon. Nobody knows how soon, but soon. Rarely does one see both the US Dollar and US Treasurys fall in value simultaneously. They are now, and will provide a jet assist to gold, which is held back only by COMEX corruption. Their illicit maneuvers are more obvious and desperate with each passing week. Someday their actions might even be on the news. The imminent Standard & Poors debt downgrade of the UKGilt (bonds from British Govt) hit the credit market last week like a bolt of lightning. My belief is that it might have short-circuited the US-UK financial foundation, and burned out some major circuit boards. The US and UK share Third World finance characteristics. If a Fourth World existed, the US would merit it.
The gold price is on the verge of a breakout to new nominal highs. The chart demands it. It needs only a trigger, in a land where potential triggers dot the charred landscape. A gold event will be unavoidable. Its chronic strain has derived from the extreme disparities between the physical market mired in shortage, versus the paper market with unlimited supply. The tail is wagging the dog here, as it has been for years, soon to end. The silver price will easily recover to the 17 level in a flash. It has already surpassed the February high. It is loading up for the next little surge to resistance that awaits at the 17-19 range. The potential sling shot momentum boost for silver will be powerful, enough to send its price to 30 with ease. Think pendulum.
NOW FACTOR IN DISRUPTIVE EVENTS, THE PRICE DISLOCATIONS, AND THE OVER-ARCHING PARADIGM SHIFT IN PROGRESS. THE GOLD PRICE COULD REACH 1300 SUDDENLY. WITH EXTREME CONTROVERSY FROM COMEX, LIKE DELIVERY DEFAULTS, PUBLICIZED CORRUPTION, AND EVEN FRAUD INDICTMENTS, THE GOLD PRICE COULD OVER-RUN THE 1300 TARGET AND HEAD FOR 1500 AND BEYOND. SILVER COULD AS A RESULT FOLLOW ITS WARRIOR BROTHER, HEAD PAST 20 IN A FLASH, AND PURSUE 30 EASILY.
Little attention has been given lately to one of the most reliable time-tested forward indicators of the gold price. The ratio of the 10-year USTreasury Note yield to the 2-year USTreasury Bill yield has always been highly reliable in predicting a move in the gold price. The simple chart of bond yields versus maturity years is known better as the Treasury Yield Curve. The ratio is more amenable to chart analysis. A breakout in the Treasury Yield Ratio is in progress. All benefits from the mid-March monetization announcement have vanished. If the 2-year bond yield remains near 1%, where it appears stuck, then the breakout target would indicate that the 10-year bond yield is heading to 4.1% at least. Yet another method targets 4.1% in the long bond yield. The presented ratio contains information on the future prospect of price inflation, in a reliable contrast of time perspectives. Knuckleheads who insist on pounding the Deflation Tables might want to check this indicator, and look at the crude oil price. It is $63 per barrel, not the $20-25 predicted by these lost troopers. Yo Mish Bro, can you spare me a deflating dime? The strict definition of money is useless anymore. The Shadow Banking system is an actual part of the real world, which you do NOT count.
To the fools, dolts, and morons out there who cling to notions of recovery and Green Shoots, bless your heart. Hope has clouded your minds. Once more you believe the liars and purveyors of propaganda, after being nearly fatally burned. You must believe in the Easter Bunny, Santa Claus, and the Tooth Fairy. You should not be in charge of investment funds, but rather of crayon supply cabinets and Beanie Baby collector items. The Case Shiller housing price index this week reported a 19.1% annual decline in 1Q2009 from Q1 last year. Foreclosures in April were up 32% over last year, as the nightmare continues. That is 1 in 374 homes with mortgages in America in some process of foreclosure. A relentless decline in home prices erases household wealth, and the source of consumer spending. Consumer confidence is ephemeral and baseless. The mortgage rate has just gone above the pre-March levels, when the US Fed announced they would monetize $1050 billion in both US Treasury Bonds and US Agency Mortgage Bonds. The benefit has been erased. Today’s underwater mortgage is tomorrow’s foreclosure, made worse by job losses. The FDIC this week reported a 25% rise in non-current loans in 1Q2009 from Q4 of last year. Greater bank losses will come, much like floods follow hurricanes. And lastly, give credit to the US Govt stat rats in their busy laboratories. They decided to ramp up the Q2 Gross Domestic Product by including all US Govt rescue funds for the big banks, including the diverse funds from the many liquidity facilities. All those funds will go directly into the GDP for Q2 as a special line item. Expect a miraculous economic recovery in the second quarter, based in vapor. The stock rally since March was based in accounting fraud. These are true American innovations, but too bad they are not exportable! They are not, since they have no value.
Copyright © 2009 Jim
Willie, CB
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a Ph.D. in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials.
http://www.financialsense.com/fsu/editorials/willie/2009/0528.html
