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GOLD & SILVER UPDATE: Setting Up For The Next Leg Higher In 2020
GOLD & SILVER UPDATE: Setting Up For The Next Leg Higher In 2020
The Day of Reckoning is coming, and it won’t be pretty for the overall markets. While the Fed liquidity has pushed the major U.S. indexes to new highs, the underlying fundamentals in the economy continue to deteriorate. Without the record amount of Fed QE and Repo Operations, the market and economy would have gone into a tailspin in 2019.
Now, to give credit where credit is due, the term, “The Day of Reckoning” was the title from the Northman Trader’s most recent public article. What I like about Sven Heinrich’s work (the Northman Trader), is his ability to use technical and fundamental analysis to provide “PRICE DISCOVERY” in the markets.
Unfortunately, we don’t have price discovery anymore due to the Fed and Central bank decade-long propping up of the markets. This chart from the Northman Trader shows how the Fed’s interventions have come in to support the markets at key technical levels:
What is quite interesting more recently (2019) is the substantial Fed’s rate cuts, QE, and Repo Operations at a time when there isn’t a downturn in the U.S. economy. When the Fed started QE1 in 2009, the stock market had crashed to a low, and the economy was in a severe recession. The Fed continued to support the economy and markets with QE2, TWIST, and QE3 into 2013. Again, these Fed interventions took place during a struggling economy.
Today, the Fed is pulling out all the FIREPOWER when the markets are at new highs, and the economy is still rolling along nicely. This is a recipe for DISASTER at some point. Furthermore, the energy market that is one of the driving forces of the U.S. economy is in serious trouble.
…click on the above link to read the rest of the article…
Greed Driving Broader Markets Today, Fear To Spark Precious Metals Fireworks In The Future
Greed Driving Broader Markets Today, Fear To Spark Precious Metals Fireworks In The Future
With the Fed propping up the entire market and extreme greed driving the stock indexes to new highs, investors have lost interest in the precious metals, for the moment. However, I am not surprised. What is taking place in the overall markets is precisely what I forecasted back in September.
After gold and silver broke out of key resistance levels in the summer and then moved to new highs for 2019, a consolidation period would likely follow before the precious metals began the next leg up. I mentioned this in my last Youtube precious metals update, Silver Price Update & End Of Mining Era, published on September 21st.
In that video update, I posted this daily chart on silver:
I stated that silver would probably correct back down to these price levels before setting up for the next phase higher. Today, silver fell to a low of $16.71 in the U.S. markets ($16.58 in overnight markets), so it seems to be heading down to the $16.20 level. Here was the silver price on stockcharts as of Thursday, November 7th.
I believe silver will fall back to that $16.20 level, according to how traders are now anticipating the market. Again, I am not saying that silver should go down to $16.20, especially with all the Fed money printing and Repo-madness, but this is how traders are viewing the silver market. Why? Because the Fed is now buying $60 billion a month in Treasuries, the same as the U.S. Military monthly spending budget, it has given the market another FALSE BUYING SIGNAL. Thus, GREED in the market has gone back up to a record “Extreme Level.”
…click on the above link to read the rest of the article…
The End Of Fiat In One Chart
The End Of Fiat In One Chart
For the first time in 21 years, Germany has openly bought gold into its reserve holdings.
German reserves climbed to 108.34m oz in September from 108.25m a month earlier.
With ECB mutiny and Deutsche Bank’s rapid demise, fears are rising of a looming financial crisis, and with that, Germany has shown a renewed interest in gold.
As a reminder, September’s outright purchase of the precious metal comes after Germany’s central bank, the Bundesbank, repatriated 583 tonnes, or $31 billion worth, of gold in 2017, years ahead of schedule.
Which came after Germany’s stunning announcement in January 2013 that the Bundesbank would repatriate 674 tons of gold from the NY Fed and the French Central Bank (which was initially abandoned in 2014).
Of course, while Germany is now the latest to turn to gold as a safe haven store of value in its reserves, it is not the first as the de-dollarization shift has been accelerating in recent months…
Germany’s shift comes after China’s acceleration in gold-buying as Peter Schiff recently noted this a “global gold rush on the part of central banks” in preparation for a dollar crash.
“The days that the dollar is a reserve currency are numbered and the smart central banks are trying to buy as much gold as they can before the number is up,” Schiff said.
Remember, nothing lasts forever…
And now that the always conservative Germans are back in the market buying gold, one wonders if the end of fiat is drawing closer.
Should Americans Hoard Cash?
Should Americans Hoard Cash?
QUESTION: Martin, I appreciate all the information that you provide and just got done reading about money shortage and hoarding. Would it be good for US citizens to hoard also? Is there any difference in hoarding dollars or gold and silver coins? Thanks for your comments.
DM
ANSWER: In order for gold and silver to be a medium of exchange, it requires the general population to accept that. The older generations know what a silver quarter or a $20 gold coin might be. However, the younger generation does not. Paper dollars will still be best to hoard for every day use until about 2022. At that time, we will have to reassess the climate of the monetary system. There are those videos where people were offered a 10 oz bar of silver of a chocolate bar. They took the chocolate.
Gold and silver should be in coin form. Bars will not be easily used among the average person.
Gold’s long-term gains have even outperformed Warren Buffett…
Gold’s long-term gains have even outperformed Warren Buffett…
Warren Buffett, despite his extraordinary investment success, has a rather famous and long-standing love/hate relationship with precious metals.
Maybe it started with his dad– Congressman Howard Buffett of Nebraska– who, as a staunch advocate for the gold standard, argued to his colleagues on Capitol Hill that “paper money systems have always wound up with collapse and economic chaos.”
Warren himself acquired a record-setting 128 million ounces of silver back in the late 1990s… which he later sold at a profit in the early 2000s.
But to listen to him talk about precious metals these days, he’s always negative.
Buffett often quips that if you took the world’s entire supply of gold and melted it together, it would form a cube of about 68 feet (~21 meters) per side and be worth around $9 trillion.
With that same $9 trillion, you could buy every share of Apple, Disney, Google, Microsoft, JP Morgan, Exxon Mobil, all the farmland in the United States, all the developable land in Manhattan, and still have more than a trillion dollars left over.
This is Buffett’s central argument: gold doesn’t produce anything. So it’s much better to invest in a productive asset like a business, farmland, etc.
Sure, I’d rather own a profitable, productive asset than a pile of metal.
But Buffett is completely wrong to compare gold to productive assets… they’re apples and oranges.
Gold isn’t an ‘investment’. It’s an insurance policy against paper currencies will lose value over time. So a MUCH better comparison for gold is CASH.
Using Buffett’s same thought experiment, would an investor with $9 trillion rather have all that money sitting in a bank earning 0%? Or buy all the productive assets I mentioned above?
Clearly it’s more attractive to own productive assets than cash sitting in a bank.
…click on the above link to read the rest of the article…
Peter Schiff: The Only Winners Will Be the People Who Bought Gold and Silver
Peter Schiff: The Only Winners Will Be the People Who Bought Gold and Silver
Gold has been on a three-day skid, but as Fox Business anchor Liz Claman put it, “So what? It’s been a breakout summer for bullion.”
Over the last three months, gold is up about 12% and has hit six-and-a-half year highs in recent weeks.
Peter Schiff joined Claman, along with, Frank Holmes and Imaru Cassanova on The Claman Countdown to talk about the yellow metal.
Holmes started out the segment saying that recession fears are driving central bank easy monetary policy and that’s good for gold.
Each month we’re seeing more and more governments offering you a negative real rate of return on your money and that automatically makes gold much more attractive. And I don’t think it’s ending yet.”
Cassanova said gold has come back in favor after being range-bound for nearly six years.
In June, it broke out … The driver there was the Fed. What is the Fed signaling when they are shifting, when they are going from tightening to cutting? They’re saying we too are worried about the US economy. And investors responded to that — to the higher risk of a recession in the US.”
Claman noted China has added about 100 tons of gold to its reserves over the last nine months. She asked Peter if China’s stockpiling of gold plays into the picture. He said he expects China to keep adding gold, along with other central banks because they recognize the weakness of the US dollar.
The dollar is actually very weak. People have been looking at the dollar versus other fiat currencies. But if you look at the dollar’s decline against gold, that really tells you that we have a weak dollar, not a strong dollar, and I think it’s going to get a lot weaker.
…click on the above link to read the rest of the article…
These Are Not Signs of a Healthy Market
These Are Not Signs of a Healthy Market
If these three charts reflect a “normal” “healthy” Bull market, then why are they so uncommon?
The implicit narrative of the latest rally in stocks is that this is just another normal rally in the ongoing 10-year long Bull market. Nice, but do these three charts look “normal” to you? Let’s take a quick glance at a daily chart of the S&P 500 (SPX), a weekly chart of TLT, the exchange-traded fund of the US Treasury 20-year bond, and silver.
In other words, let’s look at three different assets: stocks, bonds and one of the precious metals.
Even the most cursory glance reveals there is nothing normal about any of these charts. The recent action in the SPX is anything but normal: yet another announcement of yet another (low-level nothing-burger) trade meeting opens a gap big enough for a semi to drive through, punching through the upper Bollinger Band, and on the heels of a previous big gap up, also on no fundamental news.
Look at August: if a month of nearly daily open gaps and manic swings is “normal,” why are such periods so uncommon in “normal” rallies? Looking at August’s wild schizophrenia, does this strike you as “normal” market action in an ongoing Bull market? If so, perhaps you should dial back your Ibogaine consumption.
Next up, TLT, the US Treasury long bond. You know, the “safe” long bond, which moves glacially compared to risk-on stocks.
If we dare to be honest (risky in a world terrified of honesty), this looks like the blow-off topping move of risk-on bitcoin in December 2017. There is nothing “normal” about this parabolic move in Treasury bonds.
…click on the above link to read the rest of the article…
Why Silver Is Better Than Gold
Why Silver Is Better Than Gold
While the surging gold price has received most of the spotlight in the market, silver will outperform the king monetary metal over the longer term. Key fundamental factors make silver the more attractive asset and investment to own versus gold when we look closely at the data. However, that doesn’t mean precious metals investors shouldn’t own gold. Investors need to own both precious metals, but I believe silver will provide better returns than gold in the future.
Now, there is this notion put forth by many precious metals analysts that central banks will be forced, at some point, to back their currencies by gold. Thus, the idea is that gold will reset at a much higher price. While that is a possibility, backing debt-based currencies with gold will not solve our coming energy crisis. And, let me tell you, it’s an energy predicament that we have no real solution.
You see, it doesn’t really matter if we back fiat money with gold. The REAL ISSUE has always been ENERGY. The massive increase in debt and derivatives are a symptom of the Falling EROI (Energy Returned On Investment) of oil. Basically, while gold may solve certain issues in regards to “Confidence” in money, it doesn’t fix our energy problems.
I touched on this briefly in my newest video, Why Silver Is Better Than Gold. However, most of the video explains new charts that show fundamental factors on why silver is a better investment than gold as well as some key price levels for the short term.
One of the more important charts in the video shows the amount of “Identifiable” physical gold and silver investment stocks. Interestingly, according to the data from the World Gold Council and the World Silver Surveys, there is just about the same amount of physical gold investment as there is silver.
…click on the above link to read the rest of the article…
“Pet Rock” Indeed: Bank of America Says Buy Gold As Central Banks Lose Control
“Pet Rock” Indeed: Bank of America Says Buy Gold As Central Banks Lose Control
What a difference a few years makes. Back in the summer of 2015, a WSJ op-ed writer, who somehow was unaware of the past 6,000 years of human history, infamously and embarrassingly said “Let’s Be Honest About Gold: It’s a Pet Rock.” Fast forward to today, when with every central bank once again rushing to debase its currency in what increasingly appears to be the final race to the debasement bottom, when even BOE head Mark Carney recommends that it is time to retire the dollar as the world’s reserve currency, pet rock gold has emerged as the second best performing asset of the year… and at the rate it is going –4th in 2017, 3rd in 2018, 2nd in 2019 – gold will be the standout asset class of 2020.
Which naturally has sparked comparisons for gold’s performance in 2019 with 2008+, when gold exploded higher as the financial system nearly collapsed and central banks started injecting trillions in liquidity into the system to keep it afloat.
Are such comparisons appropriate?
Deutsche Bank Mulled Investment Banking Alliance With UBS: Dow Jones
As Bank of America writes in “anatomy of two gold bull markets”, in comparing the gold bull markets in 2008 and 2018, real rates remain key price drivers, while a critical difference in market dynamics – this time around – is that central banks have been unable to reflate global economies and even as metrics like the value and proportion of negative yielding assets has been increasing, further easing is on the cards. Linked to that, Bank of America makes a stunning admissions: “the risk of quantitative failure, which was not a concern in 2008, makes gold an attractive asset.”
…click on the above link to read the rest of the article…
Peter Schiff: The World Will Drown in an Ocean of Inflation; Gold Is Going Ballistic
Peter Schiff: The World Will Drown in an Ocean of Inflation; Gold Is Going Ballistic
The gold market took a one-two punch on Tuesday as Trump made some concessions in the trade war and inflation numbers came in a bit higher than expected. Peter Schiff talked about it in his latest podcast, saying gold traders still don’t understand the gold rally.
Stock markets surged as gold and silver dropped after US trade representatives said they would delay some of the additional tariffs recently announced by President Trump. The Dow closed 372 points higher. Meanwhile, the price of gold dropped below $1,500 briefly before rallying back above that key number.
Gold actually began selling off before the trade war news when the Consumer Price Index number came in hotter than expected. Peter said he knew that would happen.
That is the way the lemmings trade, because according to the conventional wisdom, if inflation is higher, then the Fed will be less likely to cut rates. After all, they’re cutting rates because inflation is too low and if inflation comes in hotter, well, then there’s less of a reason for the Fed to cut rates. So paradoxically, higher inflation is seen as being bad for gold. And the reason I’m saying paradoxically is because gold is an inflation hedge. Normally, the more inflation the more you want to buy gold.”
Peter said investors are banking on the Fed fighting inflation, but they’re wrong.
There is no way the Fed is going to fight inflation. I don’t care how high it is … One of these days the traders have to realize that these numbers don’t matter. I mean, maybe they matter to the public who has to live with a rising cost of living. But they don’t matter to the Fed. The Fed is going to take rates back to zero no matter what these numbers are, because the economy is going into recession even as inflation rises.”
…click on the above link to read the rest of the article…
