Currency

A golden idea to save (or doom) the euro

Gold is back in the news, big time, and not just because the price may be on the verge of another upswing or that Peter Munk is turning Barrick, the world’s biggest gold company, into a CEO meat grinder. It’s because Germany, it appears, wants to make gold the effective currency of the euro zone before the region plunges to the bottom of the seas like a concrete U-boat.

MORE RELATED TO THIS STORY

  • IMF says Spanish banks need at least $50-billion in aid
  • Stumbling economies have central banks girding for more intervention
  • Greek economy continues to crumble

 

The weakest euro zone countries are tapped out financially and economically. But a few of them are brimming with gold reserves. Take Italy…

…..read more HERE

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Coast with the Most

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Forty kilometres from Vancouver “North by west in the sunlight”, to quote the former Union Steamship line, basks the Sunshine Coast.

Cast adrift from the Lower Mainland by Howe Sound and the Coast Mountains, this verdant peninusula is accessible only by a 40 minute ferry ride or 20 minute floatplane ride. It feels just like an island.

On the Sunshine Coast you’ll find relaxation and advernture in equal measure, from safe beaches and idyllic inlets to rugged slopes and snowy peaks with a wide arroy of parks and trils, hikers, bikers and dog lovers will never run out of places to explore.

The vibrant communities of Gibson’s, Roberts Creek, Sechelt and Pender Harbour offer big-city amenities in a small town atmosphere. A newly expanded hospital, great schools and quality recreation appeal to young and old alike. Up and down Highway 101 there are great pubs, restaurants, and eclectic coffee houses to suit every budget and taste.

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Global Insights – June 11th

Kevin Konar

»» Stocks in North America and Europe rallied on news reports a Spanish bank bailout forthcoming. The clock is ticking.

»» Even though Bernanke didn’t tip his hand, the Fed may end up launching QE3 after all, but to what end? (page 3)

»» Many Americans are turning a blind eye toward U.S. fiscal cliff and European risks. (page 3 – U.S. section)

»» China’s interest-rate cut may be seen as reactive, rather than preemptive. (page 4 – Asia Pacific section)

»» Global Roundup: Updates from the U.S., Canada, Europe, and Asia. (pages 3-4)

Click Here to read the complete analysis

Investing for Income – Sat. June 16th

Our good friend Kevin Konar of RBC Dominion Securities is hosting a special seminar on Saturday, June 16th in West Vancouver entitled “Investing for Income  – What you need to know TODAY to Increase Income, Reduce Taxes and Minimize Risk.”

Kevin has been gracious enough to set aside some FREE seats exclusively for our MoneyTalks audience. If you live in the Lower Mainland we highly recommend that you take advantage of this opportunity. Michael Campbell asked Kevin to present on this topic last February at the 2012 World Outlook Financial Conference and this seminar is an expanded version of that presentation. Seating is limited.

Date: June 16th, 2012
Time: 10:30am
Location: Welsh Hall – West Vancouver Public Library – 1950 Marine Drive, West Vancouver (enter library via main entrance, Welsh Hall is downstairs on the bottom floor)

There is a parking lot beside the West Van Library that you can enter via Bellevue Street

To confirm your attendance please e-mail Brian Moore at brian.e.moore@rbc.com“>brian.e.moore@rbc.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it with your name and contact information. For more detailed information, please call 604-981-6645.

Topics to be discussed include:
– specific income alternatives to today’s low rates
– why dividend income is so crucial for anybody who pays taxes
– time tested investment strategies that minimize risk
– how to invest so that both your  income and your capital increases in value over time
– the current outlook for both interest rates and the equity markets

Financial markets around the globe are struggling to figure out how to price in the European political response to the European debt/financial crisis. One minute it looks like there is a serious risk of contagion, bank runs and a death spiral that will set off a true global depression…the next minute it seems that there is hope that the authorities will finally “come together” and “fix” the problem

It reminds me of an observation made by Robert Prechter (www.elliottwave.com) many years ago, “Markets reflect the social mood, not the other way round…when the social mood changes the markets change.

On Friday June 1 stock markets ended hard on their lows (and gold rallied $60) as the European mood was grim and the American employment data added to the picture of a very weak global economy. On Monday June 4 there was additional downside pressure in the stock markets early in the day…but then markets felt “sold out”…and went sideways to better through Tuesday.Wednesday through Friday saw a huge change in mood with the DJI rallying over 500 points from Monday’s lows to Friday’s close…with some violent intraday price swings across asset classes (stocks, currencies, interest rates and commodities.)

I’m wondering if we may have seen another KEY TURN date on June 1/June 4…or just a s/t change in psychology. Market sentiment was extremely negative June 1/June 4, yet prices reversed sharply across asset classes this past week…see charts below.

Short Term Trading: I bought gold May 25 (after holding a short position from early Feb to early May) and I liked the $60 surge on June 1…but I liquidated my position Tuesday June 5 when I sensed a change in psychology across markets (less reason to “want” to hold gold?) and noticed on the charts that gold had rallied into serious resistance levels around $1625. I felt some seller’s remorse Wednesday when prices went higher but I was happy to be out of the position when gold fell on Thursday and Friday. This week I also liquidated the S+P contracts I bought May 24 at around breakeven. I probably should have liquidated the trade for a loss when the market broke to new lows on June 1…but “trader’s instinct” told me the market was s/t oversold and might bounce off the support levels around 1275 created last October, November and December. In truth, I didn’t manage the S+P trade very well…I justified hanging onto a losing trade by changing the time frame of my analysis…usually a really dumb idea…and I was lucky to get out around breakeven. I ended the week with no positions and felt fortunate to have made some money in very choppy markets. Now I can start next week with a clear mind and look for trading opportunities without the emotional baggage of holding a position!  

Charts: To say that we have had very choppy markets with manic depressive mood swings would be an understatement. Last week I pointed out Weekly Key Reversals Up in gold, silver and platinum and Weekly Key reversals Down in the S+P…this week we have a Weekly Key Reversal Up in the S+P and Ross Clark points out a three day Island Reversal Up on the S+P day session chart  for June 1,2 and 3. NoteOn the weekly chart the S+P may have found support around the 1250/1275 levels from last fall.

In terms of “did we just see a Key Turn Date June 1/June4?” here are some charts from the commodity, currency, and interest rate markets that show reversals around those dates:

Here’s a very interesting Weekly Island Reversal Up for Banco Santanderone of Spain’s biggest banks:

 

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Politics and the Social Mood: The Republican win in Wisconsin‘s recall election may be seen as a turning point in US politics, and that turn may herald a loss for Obama in the Presidential elections. Governor Walker represents a mood in America that says, “We’ve got to cut back on the expensive promises we’ve made to government employees.” The fact that the people of the state returned him to office may be a sign that enough people across the country know that Big Expensive Government has to be cut back. There seems to be little sign of that kind of mood in Europe where the welfare state remains entrenched…(Hollande election) and at the margin capital will flow away from Europe and towards America if it becomes increasingly clear that America is prone to (relatively!) less government and Europe is prone to more. The Supreme Court ruling on Obamacare…due before the end of June…may be another signal of a changing social mood…a ruling against Obamacare will be bullish for US stocks and USD.

My Big Picture View: Deflationary pressures remain unrelenting across global financial markets…with the potential for a “deflationary shock” if the European crisis ramps up. The first interest rate cut in China in 4 years is not “reflation bullish”…but is a sign that the economy there is slowing and the authorities are trying to counter deflationary pressures. My “rolling thunder” thesis for the sequence of deflationary pressures showing up first in America, now in Europe and next in Asia is based on a crude assessment of cultural willingness to “come clean” on problems…in other words…the Americans wash their laundry in public, the Europeans don’t and the Asians definitely don’t!

Article from http://www.victoradair.com/

 

 Europe’s dominating the news. But the question is: Will it solve its problems? Based on what the markets are telling me, I don’t think so.

Be sure to check out my latest market update by clicking here now.

Best wishes,

Larry

P.S. Right now, the U.S. is looking relatively good compared to Europe. However, the markets are still in a disinflationary mode, which I’ve been forecasting for you. 

Gold: Here’s a new weekly chart of gold. As you can see, gold has broken its major uptrend from the low in 2008 and it’s so far been unable to penetrate back above this uptrend line. We could see a brief rally up to about the $1,700 level, but even that would not turn around gold’s immediate downtrend. It’s far more likely that we’ll continue to see lower lows in gold until there is a coordinated central bank intervention in the sovereign debt crisis. And I don’t see that occurring immediately. Therefore, the bias remains to the downside in gold.

….read more &view all charts at  http://www.uncommonwisdomdaily.com/will-europe-solve-its-problems-14408?FIELD9=2

 

Silver: Here’s my latest updated weekly chart of silver. Here you can see that silver is making lower highs and lower lows. Basically it’s tested the $26 level no less than five times counting the last couple of weeks. That’s usually a sign that it’s breaking down that support floor here and the next test will likely penetrate right through that floorboard and see silver drop substantially lower to at least $23 where I have some system support and probably even lower to $20, perhaps even just below $20, depending on how long it takes for silver’s next leg down to unfold?

 

The Bottom Line

Look for lots of volatility during a base building period for equity markets lasting until mid-July when difficult second quarter earnings reports are released. Thereafter, intermediate prospects are expected to improve.



Equity Trends

The S&P 500 Index gained 47.52 points (3.73%) last week on lower than recent volume. Intermediate trend is down. Support is forming at 1,266.74 and resistance is forming at 1,334.93. The Index recovered above its 20 and 200 day moving averages, but remains below its 50 day moving average. Short term momentum indicators are trending higher. Stochastics already are overbought, but have yet to show signs of peaking.

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week from 12.80% to 30.20%. Percent is trying to recover from a deeply oversold level.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week from 45.60% to 56.80%. Percent has returned to a slightly overbought level.

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The ratio of S&P 500 stocks in an uptrend to a downtrend (i.e. the Up/Down ratio) improved last week from 0.40 to (123/292=) 0.42. Thirty S&P 500 stocks broke resistance (notably utility stocks) and 19 stocks broke support.

Bullish Percent Index for S&P 500 stocks increased last week from 47.60% to 48.20% and remained below its 15 day moving average. The Index remains in an intermediate trend down despite strength in the S&P 500 Index last week.

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The Up/Down ratio for TSX Composite stocks slipped last week from 0.43 to (66/156=) 0.42. Eleven stocks broke resistance and 12 stocks broke support.

Bullish Percent Index for TSX Composite stocks slipped last week from 46.03% to 45.82%, but managed to move above its 15 day moving average. The Index remains in an intermediate downtrend.

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The TSX Composite Index gained 139.43 points (1.23%) last week on lower than recent volume. Intermediate trend is down. Support is forming at 11,209.55 and resistance is forming at 11,727.58. The Index moved above its 20 day moving average, but remains below its 50 and 200 day moving averages. Short term momentum indicators are trending higher. Stochastics already are approaching overbought levels. Strength relative to the S&P 500 Index recently changed from negative.

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Percent of TSX stocks trading above their 50 day moving average increased last week from 24.21% to 29.48%. Percent is intermediate oversold and showing early signs of recovery.

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Percent of TSX stocks trading above their 200 day moving average increased last week from 28.97% to 33.47%. Percent is intermediate oversold and showing early signs of recovery.

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The Dow Jones Industrial Average gained 435.63 points (3.59%) last week. Intermediate trend is down. Support is forming at 12,035.09 and resistance is forming at 12,555.26. The Average recovered to above its 20 and 200 day moving averages, but remains below its 50 day moving average. Short term momentum indicators are trending higher. Stochastics already are overbought, but has yet to show signs of peaking. Strength relative to the S&P 500 Index remains positive.

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Bullish Percent Index for Dow Jones Industrial Average stocks increased last week from 63.33% to 66.67% and moved above its 15 day moving average. The Index remains intermediate overbought.

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Bullish Percent Index for NASDAQ Composite stocks increased last week from 46.42% to 46.77% and remained below its 15 day moving average. The Index continues to trend down.

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The NASDAQ Composite Index gained 110.82 points (4.04%) last week on lower than recent volume. Intermediate trend is down. Support is forming at 2,726.68 and resistance is forming at 2,873.59. The Index recovered above its 20 and 200 day moving average, but remained below its 50 day moving average. Short term momentum indicators are trending up. Stochastics already are approaching overbought levels, but have yet to show signs of peaking. Strength relative to the S&P 500 Index remains negative.

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The Russell 2000 Index gained 31.77 points (4.31%) last week. Support is forming at 729.75 and resistance is at 775.65. The Index moved above its 20 and 200 day moving averages, but remained below its 50 day moving average. Short term momentum indicators are trending higher. Strength relative to the S&P 500 Index is neutral/negative.

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The Dow Jones Transportation Average gained 150.81 points (3.06%) last week on lower than recent volume. Intermediate trend is down. Support is forming at 4,795.28 and resistance is forming at 5,159.84. The Average recovered to above its 20 and 200 day moving averages, but remains below its 50 day moving average. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index remains positive.

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The Australia All Ordinaries Composite Index slipped 4.75 points (0.11%) last week. Intermediate trend is down. The Index remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index remains neutral.

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The Nikkei Average added 19.01 points (0.23%) last week. Intermediate trend is down. Short term momentum indicators are trending higher. The Average remains below its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index remains negative.

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The Shanghai Composite Index fell 91.99 points (3.88%) last week despite news that the Bank of China reduced its lending rate by 0.25% to 3.25%. Intermediate trend is down. Support is at 2,242.34 and resistance is at 2,478.38. The Index remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are oversold, but have yet to show signs of bottoming. Strength relative to the S&P 500 Index has been positive, but is showing signs of change.

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The London FT Index gained 114.22 points (2.15%), the Frankfurt DAX Index fell 133.56 points (2.13%) and the Paris CAC Index added 34.68 points (1.15%) last week.

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The Athens Index fell another 9.21 points (1.84%) last week. Intermediate trend is down. The Index remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are oversold, but have yet to show signs of bottoming. Strength relative to the S&P 500 Index remains negative.

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…. More on Currencies,Gold, Commodities http://www.timingthemarket.ca/techtalk/2012/06/11/tech-talk-for-monday-june-11th-2012/