We  are  approaching  the  end  of  this  current  8.6  year  wave  come  June  13th,  2011. What  awaits  us  on  the  other  side  is  a  change  in  the  overall  trend.

e  are  approaching  the  end  of  this 
current  8.6  year  wave  come  June 
13th,  2011.  What  awaits  us  on  the 
other  side  is  a  change  in  the  overall  trend. bankruptcies  that  followed,  if  anything,  these 
past  4.3  years  have  certainly  not  been  but 
boring.  Many  people  lost  their  retirement 

TOM HUDSON: Stocks and metal prices continue climbing, despite nervous investors and that`s a good sign according to tonight`s “Market Monitor.” Mark Leibovit back with us, chief market strategist at vrtrader.com, author of the new book entitled “The Trader`s Book of Volume.” He joins us tonight from Troy, Michigan. Mark, welcome back, great to see you again.

MARK LEIBOVIT, CHIEF MARKET STRATEGIST, VRTRADER.COM: Always a pleasure to be here, Tom, thank you.

HUDSON: So why do you think that some nervous investors is going to help push prices higher from here?

LEIBOVIT: Well, it`s called the wall of worry. Look, this past Monday where the S&P comes out threatening to downgrade U.S. debt. Dow was down 200 and then here we go yesterday, it`s a new closing, I believe today as well a new closing, (INAUDIBLE) market high. Just the function of bad news and the market choosing to ignore it, but generally when are you in an uptrend and get these shakes along the way, it just confirms the trend. And plus we have higher projections. Plus we have Ben Bernanke who is accommodative to the stock market who actually has said he is targeting a higher stock market. If you step back and look at any chart, weekly, monthly, daily, it is clearly an uptrend. So the trend is your friend. Stick with the trend.

HUDSON: So with that in mind here, volume though, some have been calling volume lighter than normal. You follow volume. What do you make of it?

LEIBOVIT: Volume is just fine. Basically it`s relative volume. You`re comparing one day to the next. Overall volume has still been relatively heavy. I don`t see anything in volume that has changed, at least the analysis that we do, more proprietary volume reversal and all the indicators that we follow in the traders` book of volume also confirm the trend as well.

HUDSON: Speaking of the trend, let`s take a look at your model for the Dow Jones Industrial Average through the middle of this year. This model here is anticipating a pretty nice rally from here through the end of June. What makes you bullish?

LEIBOVIT: Well, you know, the model is called a sharp sell-off. Remember this is published in January, called for a sharp sell-off right into mid-March which was a perfect call and basically it is trending up here into early summer. There is the expression sell in May, go away. In Canada they say buy when it snows, sell when it goes. Basically this is where we are at and maybe we will run into a little bit of a swoon in the summer, but beyond that, I still see a higher market but we are giving you a short-term picture here.

HUDSON: And how about for gold, we mentioned $1500, pierced that level today finally at the close. Looks for a slight climb through the summer before a bit of weakness into June. Is that weakness going to stick around?

LEIBOVIT: No, this is another cyclical swoon, so to speak, a pullback. Let`s see what kind of volume patterns come in and let`s see how high we are by June. If gold is $2,000 in the next two months, then we are probably due for one heck of a correction from some higher levels.

HUDSON: Are you going to call $2,000? Is your call $2,000 by the end of June?

LEIBOVIT: No, I would say we have a chance you could see $1650 the way it`s moving now. That`s a possibility. But we record interviews here (INAUDIBLE) for years that we`re looking for 3,000 plus. I have revised it up to about $3600 now. So that is a multiyear comment.

HUDSON: And it`s not just gold in the precious metals space. You also like silver. Here we`re going to look at the ETF, SLV, the ticker symbol, $45 an ounce. And you think this could hit triple digits?

LEIBOVIT: I think we`re looking at $100 in silver in the next couple to five years. And we`ve been looking, listen, look at it now. It is basically just catching up to where it was in 1980 which was $50 an ounce. Of course SLV trades at a discount to the actual spot metal so could see SLV very well near triple digits by the time this silver moves over and then gold by then like I say, could be $3600.

HUDSON: Last fall is when you were here in September 24th. We`re going to take a look at all four of your picks which have done very, very well. IAU, the gold, trust ETF up 16 percent. The central fund of Canada which is gold and silver up 50 percent. You also like Palladium, another metal, up almost 61 percent and the total stock market index up 18 percent. You still like these four?

LEIBOVIT: Absolutely. Stick with them. Trending the stock market is up, the BTI is a total stock market index. That`s like holding every stock in the stock market. Palladium is an industrial play just like platinum. Of course the silver and gold, I`m on record there and we might as well just hold what is working as the trend is up in all four.

HUDSON: Any ownership positions with these four, Mark?

LEIBOVIT: I own and trade every one of these. I love the metals.

HUDSON: It`s Mark Leibovit, the trend has been his friend, no doubt. He is with vrtrader.com

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Commentary above from Mark Leibovit, TIMER DIGEST’s #1 Intermediate Market Timer for the 10-year period ending in 2007, the #2 Intermediate Market Timer for the 10-year period ending in 2009, AND the #3 Gold Timer for the Ten Year Period ending 12/31/10. Subscribe to the VRTrader Newsletter.

Metals Market Equations Are No Longer Simple

From the April 2011 Hard Rock Analyst Journal

David Coffin & Eric Coffin, HRA Advisories

World events continue to signal support for hard assets, but caution is still advised. News in the copper space is as much about consolidation of the players as the metal itself right now. The $7 bid by China Minmetals for Equinox Minerals (EQN-T, ASX) has offered some support for other mid tier copper assets. The Minmetals bid requires EQN to drop its own bid for Lundin Mining (LUN-T, LUNMF-Q) that had already squelched the planned merger of LUN with Inmet Mining (INM-T, IEMMF-Q). EQN had already merged with an Australian junior to acquire its Saudi copper mine development that is to begin out put late this year. To this has just been added a take-over bid by Capstone Mining (CS-T, CSFFF-Q) for Far West (FWM-T, FWMLF-Q) and its copper-iron project in Chile, with an assist from state owned Korea Resources Corp. Small and mid tier copper producers are focused on securing growth assets of the right scale as Asia gets more aggressive in ensuring supplies for its markets.

That’s enough to and fro for even the most ardent resource sector bears to give the sector another look. The interest in copper equities has contrasted with weakness for the metal’s fundamentals. The three-market (LME, SHFE, COMEX) inventory levels for the red metal are back up to levels similar to those at the copper price low in March ‘09. The biggest build up through that period has been in Shanghai where stocks actually went negative in early ‘09. (Of note is that the SHFE now breaks out “bonded” metal which has been delivered to a Chinese port but hasn’t had duties paid for entry.) This extra stockpile will work through the system in time, but it is large enough to have broadened the call for near term weakness in copper’s price. The looming structural deficient in copper supply still has producers looking for near term additions to their output. That should continue to support copper assets with well defined cash flow potential. Near term weakness for the red metal can still be viewed as an aid to picking up asset rich deals.

Base metals and globally priced commodities more generally also continue to see support from US dollar weakness. Dollar weakness and inflation are somewhat perversely linked. At the start of the year many expected strength in the Dollar based on higher growth forecasts for the US. The rise of the Arab Street and $110+ oil prices changed the picture. If a ceasefire in Libya calmed that region the oil price at least may be less of an issue. That’s still a big if. High oil prices definitely hurt in 2008 but much of the following recession was baked in the cake by the real estate bubble. Mayhem in the Arabic could generate a real time experiment on the breaking point from rising oil prices this go around.

News that tightening moves in China don’t seem to be biting yet has added to concern on the oil, but in balance we think China will continue this tightening until they do. However, near term Euro strength may ironically have the most influence Dollar pricing.

The ongoing debt crisis in Euroland is one reason many expected the Greenback to keep strengthening, but Portugal finally succumbing to its debt reality caused barely a ripple in the markets. The amounts involved are small enough that the larger Euro economies should not have much trouble absorbing those costs. That is not yet the end of the story. It’s widely assumed the next domino to fall could be Spain. The cost of a Spanish bailout would be an order of magnitude higher than Portugal, and the market would be much less sanguine about it. Spain continues to insist a bailout is unnecessary, as did Greece, Ireland and Portugal until right before they threw in the towel. Given this backdrop the strength in the Euro would be surprising except for one thing — the European Central Bank.

The ECB has credibility as an inflation fighter. It raised interest rates again this month by 25 basis points and made it clear it would continue to if it sees evidence inflation continues to accelerate. This sort of credibility is the reason the Euro has been strengthening. The US Dollar Index has now reached new 52 week lows, largely due to Euro strength.

Inflation is also rising in the US, but messages out of the Fed and Washington politicos are as mixed and contradictory as ever. While it seems unlikely there is the political will or necessity to institute “QE3”, it’s equally unlikely the US will follow Europe’s lead with interest rate increases anytime soon. The US Fed tracks GDP price deflators and core inflation numbers that are still steady since they exclude food and energy. The “QE3” issue revolves around the lack of demand for US Treasuries. The Fed has been the buyer of last resort in the treasury market for some time now. PIMCO, the world’s largest bond fund has sold what had been the biggest private holder of US treasury bonds, and gone short Treasuries.

The US Treasury yield did drop in March as the safety trade took hold, but that reversed fairly quickly as the markets started to normalize later in the month. During this period the Dollar itself barely benefited from the safety trade. There was some uptick as rates moved up but this soon dissipated and reversed. Despite worry about bonds selling off, Treasuries are still a parking spot for funds. That might change with another interest rate gain in Europe. If that happens PIMCO would have lots of company on the short side of US Treasuries.

Meanwhile, China still refuses to let its currency appreciate. And, recent economic stats increase the likelihood of more rate increases there. China’s Q1 trade statistics were headlined with a trade deficit, the first in years, but the numbers for March indicate strong gains for both imports and exports and a small trade surplus for the month. Numbers like these indicate China is still the world’s widget maker.

Like the ECB, Beijing is serious about tackling inflation so more interest and reserve ratio increases seem certain. The Yuan should be gaining while this tightening continues, but Beijing still seems to be more concerned about losing sales than allowing a stronger currency to knock down import costs and help cool inflation. With China trade so important these days, that eats into everyone else’s wiggle room.

Assumptions that the US Fed will avoid raising rates to fight inflation are none the less still quite rational. Moderate inflation debases US debt, and it’s simply not that easy to argue with the world’s biggest debtor. The US will try to maintain a negative real interest rate policy for at least the rest of this year. As long as the market is letting them get away with not spiking Treasury yields it makes no sense for the Fed to change tack — unless forced to.

More hawkish central banks trying to stay ahead of the inflation curve will continue to attract bond holders. This will maintain a benign environment for metals and other commodities, even if it does not push them to higher prices. However, as rates outside the US move higher it will become more difficult for Washington to roll over its debt without following suite. The S&P downgrade of US debt recognized that simple truth. We aren’t yet at that point of concern and may not be soon, but it has potential to be turning point when it takes place.

Gold and silver have continued barreling higher thanks to insurance buying, inflation expectations, and the currency picture. Given the underlying chaos in global affairs there is room for gold and silver to continue their gains, in US Dollar terms at least, as long as negative real rates persist in the US. Around that upward bias will be traders moving in and out of the safety trade and other short term sentiments. Expect volatility.

Gold’s advance has been fairly measured, with plenty of consolidation along the way. Pullbacks have been few lately in the silver market. Silver looks technically stronger, but it will be prone to sharp pull backs given the large one way move it has already had. Silver’s strength has shifted a number of companies we follow from being gold dominant to silver dominant just as they are reaching cash-flow waypoints. These are safer ways to play silver after its strong gain, so they have been getting some emphasis in our updates to subscribers. We are looking at a few exploration stories that may offer better silver leverage, but we do so cautiously. Market shifts can impact smaller metal markets swiftly, and unpredictably.

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HRA initiated coverage on 22 companies since early 2009 – the average gain to March 2011 is 268%!