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Does the fact that gold barely budged in a week that, based on the strength of the equities rally, should be falling sharply, mean that gold may be at the beginning of a bigger move? BNN asks Mark Leibovit, chief market strategist, VRTrader.com.

Marks VRTrader Silver Newletter covers Stock, TSE Stocks, Bonds, Gold, Base Metals, Uranium, Oil and the US Dollar.

More kudos – Mark Leibovit was named the #1 Intermediate Market Timer for the 10 year period ending in 2007; the #1 Intermediate Market Timer for the 3 year period ending in 2007; the #1 Intermediate Market Timer for the 8 year period ending in 2007; and the #8 Intermediate Market Timer for the 5 year period ending in 2007. NO OTHER ANALYST SURVEYED APPEARED IN ALL FOUR CATEGORIES FOR INTERMEDIATE MARKET TIMING AS PUBLISHED IN TIMER DIGEST JANUARY 28, 2008!
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The VR Gold Letter is available to Platinum subscribers for only an additional $20 per month, while for Silver subscribers the price is only an additional $70.00 per month. Prices are going up very shortl, so act now! Separately, the VR Gold Letter retails for $1500 a year! The VR Gold Letter is published WEEKLY. It is 10 to 16 pages jam-packed with commentary and charts. Please call or email us right away. Tel: 928-282-1275. Email: mark.vrtrader@gmail.com .

With earnings season having kicked off this week, today’s chart provides some long-term perspective in regards to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today’s chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low — the largest decline on record (the data goes back to 1936). Since its Q1 2009 low, S&P 500 earnings have surged (up over 700%) and currently come in at a level that has only been exceeded during the latter years of the dot-com and credit bubbles. Current expectations on Wall Street are that earnings reach the mid-$70 level by the end of 2011 — a level surpassed only briefly during the tail-end of the credit bubble. Where’s the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron’s recommended charts of Chart of the Day Plus.

Market Going Down With the Ship?

The Baltic Dry Index is Shouting “Danger, Will Robinson!” But Are Investors Listening?

The BDI most recently topped out in May. As of yesterday (Thursday), it has already dropped 35 days in a row.

That’s significant.

This string of “down days” is the longest in at least nine years, The Economist reported this week. During the crash of 2008, the index never fell 35 days in a row.

Today, the BDI is again flashing serious warning signs that not everything is as it appears. It may be warning us about the start of a “double-dip” recession, or it may be telling us that something even worse is at hand.

Historically, the Baltic Dry Index has shown itself to be the EKG of future industrial demand. And, right now, the BDI is screaming “Danger, Will Robinson!” to any investor who will read it and heed it as a true leading indicator.

If the price of refined copper is called “Dr. Copper,” for its ability to ascertain the health of the demand for growth in an economy, the BDI is the daily heartbeat for near-term future industrial demand.

Combined, those two indicators can provide investors with a view of whether the world economy is growing or shrinking, based on the big picture of world demand for growth. Currently, the BDI is flashing serious warning signs to anyone who is looking at it.

The drop in the BDI index in 2008 was one of the most obvious signs of the real impact that the so-called “Great Recession” would have. From May 20, 2008 to Dec. 3, 2008, the BDI fell from its high of 11,793 to its low of 663 – a near-freefall of 94%.

Via Jack Barnes – Jack Barnes started his career at Franklin Templeton in 1997, working with the company’s portfolio team in its fund-information department – just as the Asian contagion infected the Asian tiger countries. He launched his own RIA shop in 2003 just as the second Gulf War was breaking out. In early 2006, after logging a one-year return of nearly 83%, Forbes named Barnes the top stock picker in its “Armchair Investors Who Beat the Pros” competition.  His two audited hedge funds generated double-digit returns in 2008.  Last summer, Barnes retired to the beach – which is where he writes from now.]

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Where’s the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron’s recommended charts of Chart of the Day Plus.

Obama’s Financial Reform

Ed Note: I include a comment on the Fed from Richard Russell Yesterday. The Article Pushing on a String is below the Wikipedia Piece

Question — Russell, you’ve been ranting against the Fed for years. Why so bitter?

Answer — My answer can be gleaned from a quote from the ancient House of Rothschild, at one time the wealthiest and most powerful family on earth. Here’s the quote that tells the story — “Let us control the money of a country, and we care not who makes the laws.” Amschel Rothschild, original head of the House of Rothschild.

Around 1913, a small group of bankers met secretly at Jekyll’s Island, where they developed a plan to establish a national bank that would take over the “task” of issuing the currency of the US. The plan was delivered to an abbreviated and sleepy Congress.

The piece below is from Wikipedia, and is so important that I’m including the whole of the piece below —
……………………………………………………………….

(Ed Note: This chart of Obama’s Financial Reform appeared in Dennis Gartman’s Letter this morning with this comment: “this legislation is simply one more example of
government becoming larger and more seriously intrusive in our lives.”

Jekyll Island and the Federal Reserve.

By John Pounders, Paradigm Publishing, Copyright 1996

National and world events of the 1930s led ultimately to the Club’s closing in 1942. Jekyll Island was purchased by the state of Georgia in 1947. 33 of the Club member cottages and Clubhouse still stand. Many have been restored to their former grandeur and are open for tours.

Pushing on a String … Again?

In the wake of the latest batch of “double-dip” chatter, the market’s attention is shifting back to the Federal Reserve. Investors are asking a simple question:

“What, if anything, will the Fed do if the economy craps out again?”

Before I give my answer to that question, I’m inclined to ask a different one:

“Who cares?”

These guys have already done just about everything they can … pulled every trick out of their hats … and bailed out and backstopped virtually the entire financial system!

While all of that free money helped boost ASSET prices, it hasn’t done a heck of a lot for the “real” economy. Unemployment remains stubbornly high. Housing continues to slump. Investment is anemic and confidence is lacking.

In other words, the Fed is pushing on a string — and more pushing isn’t going to do a darn thing for those of us living in the real world! But since the market is focusing on the Fed again, let me address the question at hand …

Is QE2 Coming?

The latest economic data clearly suggests that my double-dip scenario is becoming much more likely.

Just this week, for instance, we learned that retail sales dropped 0.5 percent in June after falling 1.1 percent in May. That was worse than economists expected and the first back-to-back decline since early 2009.

What about housing?

Well, if you believe purchase mortgage applications are a good leading indicator of demand — and I do — then you should be worried. A Mortgage Bankers Association index that tracks loan activity just fell to 163.30. That’s the lowest level going all the way back to December 1996!

Finally, as Claus noted on Wednesday, a key leading index is pointing decisively lower. The inescapable conclusion? Despite the happy talk on Wall Street and the recent market rally, the economy appears to be rolling over.

The last time the economy fell into the drink, the Fed reacted by slashing interest rates to a range of 0 percent to 0.25 percent. The federal funds rate has remained there ever since, and there’s no indication it’ll rise anytime soon.

But the Fed did much more than lower the funds rate …

It also embarked on a policy of “Quantitative Easing” (QE). That’s a fancy way of saying it printed money out of thin air and bought more than a trillion dollars of securities: Mortgage-backed bonds, Fannie Mae and Freddie Mac debt, long-term Treasuries, and so forth.

The idea was to lower mortgage rates and bond yields, thereby spurring home purchases, refinances, and corporate investment.

Did it work?

Well, mortgage rates definitely tanked. At around 4.5 percent, in fact, 30-year fixed mortgages are the cheapest they’ve been in the last century! But as I noted above, housing activity is now plumbing depths we haven’t seen since Bill Clinton’s first term in office. Bond yields did drop initially, but not much. And they subsequently rose again.

Bottom line: I’d argue the Fed didn’t accomplish much. Even some Fed officials doubt the rampant money printing and QE policy worked all that well, according to The Wall Street Journal.

That hasn’t stopped some of the Keynesian acolytes from begging for even more free money from Helicopter Ben Bernanke though. Take New York Times columnist Paul Krugman …

He lambasted the “Feckless Fed” this week, begging it to do “all it can to stop it” — the “it” being deflation. Buy government bonds? Buy private bonds? Pledge to keep short-term rates low, essentially, forever? Krugman is all for it!

So far, the Fed itself appears split. The Journal this week puts Fed governor Kevin Warsh, Richmond Fed president Jeffrey Lacker, and Kansas City Fed president Thomas Hoenig in the “No more funny money” camp.

But Boston Fed president Eric Rosengren and New York Fed president Bill Dudley appear more open to the idea. Bernanke is reportedly somewhere in the middle, preferring to just wait, watch, and let the market sort itself out.

If So, Should We Care?

But again, my answer is that whether the Fed goes hog wild printing money or not, it won’t matter much to the real economy. It’ll probably boost gold prices. It’ll likely hammer the dollar. And it could temporarily boost stocks, even in the face of lousy fundamentals.

But all the kings horses, all the kings men, and even a further ballooning of the Fed’s balance sheet — currently around $2.3 trillion vs. $900 billion before the credit crisis burst onto the scene — won’t matter to most Americans.

Private companies aren’t firing workers and hoarding cash because interest rates are too high. They’re doing so because there’s too much factory and labor capacity.

Consumers aren’t cutting back on spending because loans are too expensive. They’re doing so because they just went on the wildest debt-fueled spending binge in U.S. history, and they’re trying to repair their balance sheets.

Look, we’ve had twin bubbles in stocks and housing over the past decade and a half. They both popped. The fallout will be with us for a long, long time.

I wouldn’t be surprised in the least if a long Japan-like period of economic stagnation lies ahead. In fact, I’d invest accordingly — by paring back stock positions into rallies, and using inverse ETFs and put options to target downside profits.

And when the Fed chatter reaches a fever pitch, I have some advice: Turn off the TV and go play with your kids or grandkids. It just doesn’t matter much in the grand scheme of things.

Until next time,

Mike

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.It also embarked on a policy of “Quantitative Easing” (QE). That’s a fancy way of saying it printed money out of thin air and bought more than a trillion dollars of securities: Mortgage-backed bonds, Fannie Mae and Freddie Mac debt, long-term Treasuries, and so forth.

Out of curiosity, I ran the monthly chart of gold that you see below. The chart starts with the year 1999 and each bar represents one month’s action. You can see that gold has been advancing along a rising trendline. In late-2008, the rise accelerated, and we see a steeper ascending trendline.

My thinking is that somewhere ahead we’re going to see a third still-steeper rising trendline. (Ed Note: Russell has been Bullish Gold since below $300 and currently holds the biggest position he has ever had since 1950 in Precious Metals)

General Advice: General Advice — Stay with the primary trends. Stocks are caught in a primary bear market, so stay out of the stock market and I mean stay out. Gold is in an established primary bull market, so don’t trade gold, stay on the back of Toro and ride the bull (and ignore all warnings from know-nothing analysts who keep calling for a “gold top”).- Richard Russell Dow Theory Letters (

Gold Prices Holding Up Well

by Gold-Prices.biz

Despite Portugal’s sovereign debt being down graded the eurocrats have managed to calm the waters and keep the euro reasonably steady. Austerity is the word for the Europeans, real or imagined, whereas stimulus is the word for the United States. Interestingly the euro is steady but the dollar has lost 6.8% of its value in just over a month as the spot light once again is focused on the fundamentals of the dollar. Throw in a down grade from the Chinese and things don’t look to bright for the US sovereign debt.

Taking a quick look at the above chart we can see that apart from one bad day at the office, when gold was sold down about $40.00/oz, gold prices are holding up pretty well especially for this time of the year when the summer doldrums usually kick in and volumes drop off significantly. We can also see that the STO is heading north and the MACD looks as though it is also ending its downward slide, which all bodes well for gold prices. If gold can maintain these levels through until September then the stage will be set for a major advance and the forming of a few new all time highs.

Turning to the chart for the USD we can see that it has resumed its trek south, all as we suggested on 09 June 2010 when the USD looked a tad overbought and has since lost about 6.8% in little over a month. The technical indicators have been floored so some consolidation may be on the cards, however we expect it be short lived as the economic recovery in the United States continues to fade and the general mistrust of paper currencies compels investors to re-think their strategies.

The days of a rating agency duopoly in the United States whereby Moody’s and Standard and Poors could issue triple A status to companies on the verge of bankruptcy are now over. Making their debut is this area is the world’s first “non-Western” sovereign credit rating agency, a Chinese company named Dagone (means Big Justice in Chinese) who have down graded the US to AA with a negative outlook. This agency would appear to concentrate more on the ability to pay than the ability to borrow. The dragon has stirred from its slumbers and its influence on world affairs will be felt in every corner of the planet. However, a no nonsense, practical assessment of the state of play will be welcomed by many, especially gold bugs who are contrarian by nature and tire of big government influence in these matters.

Below is the chart we posted of USD which we posted on 09 June 2010 accompanied with a snippet of our commentary.

We could well be too early in making this call but it appears to us that the dollar may now have run its course and will now look to take a breather. As we can glean from the chart, over the last two months the Euro has been under the gun, resulting in a rally for the USD as the preferred currency. Also note the gap that is opening up between the dollar at ‘88′ and the 200dma, which stands at ‘79′. The RSI, MACD and the STO are bouncing along at the top of their respective ranges and sooner or later they will return to somewhere more in the middle of their ranges. So the dollar now appears to be a tad overbought, in our humble opinion.

Stay on your toes and have a good one.

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