Gold & Precious Metals
Terry Laundry’s ‘Adaptive Channels’ view of the gold market (herein using GLD as an example) remains the most important chart in terms of defining overall trend. Keep in mind that GLD trades at approximately at 3% discount to the physica metals which explains why we are showing a 132.16 close on Wednesday, September 18 below versus the spot close of 1364.30. In any event, the patterns are all relative. The key, as before, is the important 150 day moving average depicted below by the dark blue line. Trading under that line defines a bear or corrective cycle, while trading above it defines a renewed bull cycle.
The bottom line is these ‘magical’ bands hold the key for gold and a sustainable resumption of the uptrend will not occur until we trade and trend over the 150 day moving average.
Should the undesired event occur and gold nosedives once again the ‘dotted’ band does not show any meaningful support until we reach just under the 107.50 level in GLD or approximately 1100 in the physical market, but let’s take it one step at a time. Stepping back, you know I am very much a long-term unwavering bull on gold and natural resources. That said, I’ve told you that the current rally in gold may only be ‘dead-cat’ bounce, i.e., a corrective bounce well ahead part of the final bottoming process. Indeed, if you look at the two channels above the market, one shows resistance in the 1500s and the one above it in the mid 1600s. Though a desired result, it would be far from new highs. We will know ‘in the fullness of time’!
The above is an excerpt from Mark Leibovit’s 14 page VR Gold Letter. The Leibovit VR Gold Letter arrives weekly via e-mail with alert bulletins as market conditions dictate. “We offer multiple subscription plans to best suit your needs.”
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About Mark Leibovit:
Mark Leibovitwas ranked the #2 U.S. Gold Timer by TIMER DIGEST Magazine for 2011 and held the #1 slot in the first six months of 2011
Mark Leibovit’s career in the financial industry spans more than 35 years, beginning as a market maker on the Chicago Board Options Exchange and the Midwest Options Exchange where he made a market in many issues including Newmont Mining, and continuing on to serve as Director of technical Research at Rodman and Renshaw, later leaving to publish his own stock market research letter currently available at http://www.vrtrader.com. He is both a Certified Investment Management Analyst (CIMA) and Accredited Investment Fiduciary (AIF), and is also a member of the Market Technicians Association and CFA Institute.
Mr.Leibovit’s extensive media television profile includes seven years as a consultant ‘Elf’ on “Louis Rukeyser’s Wall Street Week” television program, and over thirty years as a Market Monitor guest for PBS “The Nightly Business Report”. He also has appeared on Fox Business News, CNBC, BNN (Canada), and Bloomberg, and has been interviewed in Barrons, Business Week, Forbes and The Wall Street Journal.
Mr.Leibovit’s specialty is Volume Analysis and his proprietary Leibovit Volume Reversal Indicator is well known for forecasting accurate signals of trend direction and reversals in the equity, metals and futures markets. He has historical experience recognizing, bull and bear markets and signaling alerts prior to market crashes. His indicator is currently available on the Metastock platoform at http://www.vrplug-in.com.
His comprehensive study on Volume Analysis, The Trader’s Book of Volume was recently released by McGraw-Hill 2011. Mark has appeared in speaking engagements and seminars in the U.S. and Canada and provides customized Volume Analysis for managers and institutions. He publishes a newsletter on the gold, metals and mining markets which can be found at (www.vrgoldletter.com) .
Mr. Leibovit is currently Timer Digest’s #2 Gold Market timer for 2011, and has also been named the #1 Gold Market timer for the 5 year period ending in 2010, and the #1 Intermediate Stock Market timer for the 10-year period ending in 2007.
Top Stories
Emerging markets rally as Fed forgoes taper. Emerging market stocks (EEM) posted big gains overseas on the back of the U.S. Federal Reserve’s decision to keep the size of its asset purchase program unchanged for the time being. Indonesian shares (IDX, EIDO) jumped as much as 7.4% early before retreating a bit to trade around 4% higher. Stocks likewise rallied sharply in India (EPI), Thailand (THD), the Philippines (EPHE), Malaysia (EWM), and Turkey (TUR).
JPMorgan faces $900M in fines, will admit wrongdoing in Whale case: NYTimes. JPMorgan (JPM) will pay in excess of $900M in fines and admit to wrongdoing in an effort to settle multiple investigations into the whale-sized blunder that took place in Q1 2012 at the firm’s London CIO office, the NY Times’ Jessica Silver-Greenberg and Ben Protess reported. The government authorities across the settlement table reportedly are the SEC, the OCC, the Fed, and the Financial Conduct Authority in London. Although it looks likely the blame will not be placed with any of the higher-ups, the bank will apparently “acknowledge that it had lax controls and should have caught the problem faster.”
Top Stock News
Oracle turns in mixed quarter. Oracle (ORCL) reported FQ1 earnings that beat Street estimates Wednesday evening, but revenue growth of 2% left the top line shy of consensus. Software license and cloud subscription revenue rose 5% (GAAP), which was a “a bit of a relief,” according to an FBR Capital analyst quoted by WSJ. The growth rate is better than FQ4’s disappointing 1%, and hit a guidance range of -1% to +7%. Nevertheless, hardware product sales fell 13% Y/Y to $669M, missing a guidance range of -6% to +2%. The company’s FQ2 EPS guidance came in light at $0.64-$0.69, versus consensus of $0.69. Larry Ellison missed the conference call for an “important” America’s Cup race.
Take-Two scores record with Grand Theft Auto V. Take-Two Interactive (TTWO) said global Grand Theft Auto V retail sales likely topped $800M in the game’s first 24 hours of availability, smashing the previous record set last year by Activision Blizzard’s (ATVI) Call of Duty: Black Ops 2. A Piper Jaffray analyst quoted by Bloomberg said the game may generate more revenue (after vendors take their cut) in two weeks than the Street was expecting the company to make in three months.
Apple garners upbeat reviews for new iPhones, iOS. Reviewers found much to like about Apple’s (AAPL) iPhone 5S and the 5C’s hardware, and generally gave a thumbs-up to iOS 7 along the way. TheNYT‘s David Pogue praised the performance of the 5S’ A7 CPU, the improved color balance yielded by its dual-LED flash, and the convenience of its fingerprint sensor. Pogue also lauded iOS 7’s revamped UI and plethora of new features. As for the 5C, Engadget’s Myriam Joire said the performance and battery are good and believes “most buyers will pick the phone for the price and color choices alone.”
Sony sets high bar for PS4 sales. Sony (SNE) said it plans to sell 5M PlayStation 4s globally by March. If the company can hit the ambitious target, it would mark a 41% improvement from the numbers PlayStation 3 put up from November of 2006 to March of 2007. Speaking at the Tokyo Game show, the company’s president of Worldwide Studios for Sony Computer Entertainment Shuhei Yoshida also teased an iOS and Android PlayStation app which, according to WSJ, “lets players use the camera on the smartphone to interact with the gaming environment.”
Petrobras plans big data security investment: FT. Unnerved by suggestions of U.S. spying, Petrobras (PBR) plans to invest around $9.6B in data security over the next five years, FT reported. PBR president Maria das Graças Foster said the move was “personally approved by the board of directors.” This year’s investment will total some $1.8B and will apparently include measures designed to keep the transfer of information related to seismic studies off the internet.
Top Economic & Other News
Japan exports jump in August. Japanese exports rose 14.7% in August, data showed. That’s good for a sixth consecutive gain and is the largest increase in three years. This is welcome news analysts said, as “a recovery in exports will help cushion the impact” from Prime Minister Shinzo Abe’s planned sales tax hike, which some fear has the potential to stifle the country’s economic momentum.
SNB says franc cap is critical, keeps rates low. The Swiss National Bank reiterated Thursday that its franc (FXF) ceiling is “essential” and kept the cap at 1.20 per euro. “There’s absolutely no reason to give [it up],” SNB President Thomas Jordan said earlier this month in an interview. With the economic situation in the eurozone still tenuous (at best), “safe haven positions have [remained] far stickier than most investors thought possible,” a UBS currency strategist told Bloomberg. As expected, the SNB also kept the band for its benchmark rate unchanged at 0-0.25%.
Home builders rise on Fed, upbeat data. Investors will likely be keeping a close eye on the homebuilders (XHB) after the sector got a big lift Wednesday from the Fed’s decision to postpone the dreaded taper and from data which showed single-family housing starts rose 7% M/M to 628K in August. It’s now a question of sustainability, as some wonder how well demand for housing will hold up in the face of tepid jobs growth once the FOMC finally takes the plunge and begins to scale back its asset purchases.
Oil prices get support from Fed, inventories data. “News of Fed refraining from tapering comes at the same time as relatively low spare capacity and relatively low crude [and product] stocks,” Barclays oil analyst Miswin Mahesh said Thursday. Mahesh believes emerging market demand is now set up for an upside surprise, as the prospect of rising import costs appears likely to “fade.” MarketWatch notes that the 4.4M barrel decline in petroleum inventories reported by the EIA on Wednesday “far exceeded [Platts’] expectations for a fall of 1.5M barrels.” The outlook: Barclays sees oil (USO, OIL) prices staying put with “an upward bias” for the balance of the year.
U.K. retail sales disappoint. U.K. consumers pulled back on spending in August, data showed Thursday. Retail sales volumes fell 0.9% last month, defying analysts’ expectation of a 0.4% gain. One BNP Paribas economist quoted by BBC called the figure “one of the weakest prints on the economy for some time” and suggested expectations for the country’s recovery may have gotten ahead of themselves, although the outlook remains broadly positive.
Alpha-Rich Stock Movers and Great Calls
1) On September 11, Nathan Hamilton made the long case for ADT Corp. (ADT), citing the company’s steady cash flow and unique model that should keep it secure from competition. The stock is +5.5% since. Read article »
2) On July 8, Stephen Simpson argued that HudBay Minerals (HBM) had hit rock bottom, with a revised debt covenant, a new cash inflow, and increasing production offering 65% upside. The shares are +35.9% to date. Read article »
Alpha-Rich Stocks To Watch
1) Major Drilling (MJDLF.PK, TSE: MDI) has a strong balance sheet to survive this downturn and industry leadership to drive upside through the next cycle. A possible double for the patient investor. Read article »
2) Confusion over Signet’s (SIG) Q2 has offered investors this gem at a bargain price. Numerous tailwinds should drive a sparkling 100% return over the next 18 months for the jeweler’s shares. Read article »
Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.
Today’s Markets:
In Asia, Japan +1.8% to 14766. Hong Kong +1.7% to 23502. China, Closed. India +3.2% to 20607.
In Europe, London +1.5%. Paris +1%. Frankfurt +1.2%.
Futures at 6:20: Dow +0.33%. S&P +0.44%. Nasdaq +0.43%. Crude+0.7% to $108.74. Gold +4.1% to $1361.80.
Ten-year Treasury Yield +1 bps to 2.71%
Today’s economic calendar:
8:30 Initial Jobless Claims
8:30 Current Account
9:45 Bloomberg Consumer Comfort Index
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today’s open: CAG, IHS, PIR, RAD
Notable earnings after today’s close: CTAS, TIBX
See full real-time earnings coverage »
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After being speechless and in a mild state of shock for the past 5 hours I have some thoughts on today’s market action:
- Today’s FOMC announcement was a tacit admission by the Fed that the economy is not nearly as strong as it appears to be using certain widely lauded data points (consumer confidence, housing starts, etc.)
- The economic projections really sealed the “dovish deal” (the no taper headliner was simply an appetizer….) http://www.
forexlive.com/wp-content/ uploads/2013/09/Economic- projections.pdf – FOMC members are still seeing sluggish GDP growth and persistently low inflation - The Fed now appears to be targeting a 6% unemployment rate which means QE for longer than markets had been pricing in, and no rate hikes until well into 2015
- Yellen appears to have locked up her status as next Fed Chair today (I believe this is what caused gold to get going a few minutes before the 2pm release of the Fed announcement)
- Bernanke continues to play a clever game of poker with the market as he ensures that he will go out on top with a market making new highs and plenty of animal spirits flowing all around
….more charts and commentary HERE
TEN Out of Ten
The Barrick Nevada project that I find most interesting is the joint venture with junior resource company Midway Gold at Spring Valley. Terraco Gold Corp. (TSX.V – TEN) has a gold royalty and royalty option on the Spring Valley Gold Project.
…..Go HERE for recent drilling highlights
The Greatest Gold Rush
Northern Vertex is truly an unknown story that is moving at light speed, on time and on budget. What they have accomplished in just over two years speaks well of this experienced committed management team and bodes well for investors future with NEE.
The world’s gold vaults are being emptied, ahead of the herd investors have already started accumulating the best junior gold stocks – the greatest gold rush of them all has quietly started.
The stealthy start of the ‘Greatest Gold Rush’ and at least one quality junior, soon to be miner of gold and silver, should be on all our radar screens. Are they on yours?
If not, maybe they should be.
….more charts & analysis HERE
The Fed’s failure today to announce some sort of tapering of its QE program, despite the consensus of an overwhelming percentage of economists who expected action, once again reveals the degree to which mainstream analysts have overestimated the strength of our current economy. The Fed understands, as the market seems not to, that the current “recovery” could not survive without continuation of massive monetary stimulus. Mainstream economists have mistaken the symptoms of the Fed’s monetary expansion, most notably rising stock and real estate prices, as signs of real and sustainable growth. But the current asset price bubbles have nothing to do with the real economy. To the contrary, they are setting up for a painful correction that will likely be worse than the one we experienced five years ago.
Given the strong anticipation for a taper announcement, today’s relief rally should come as no surprise. However, the Fed’s inaction should be perceived by many as an admission that the economy is fundamentally weak. Once that possibility takes hold, today’s euphoria is likely to dissipate. Perhaps the Fed’s inaction may cause many to wonder if the economy is not as strong as they believed. This could ultimately lead to an even bigger sell off than what we would have seen today if the Fed had come through with a taper announcement.
A major factor in the current “recovery” is the confidence that has been created by rising stock and real estate prices. On Wall Street confidence can become a self-fulfilling prophecy. If the Fed were to make its fears more explicit that confidence could drift away. As a result, I believe that they chose a path of continuous obfuscation. But in so doing they lost control of the message.
The Fed knows that the appearance of economic health would evaporate if stimulus were withdrawn. But like Jack Nicholson in A Few Good Men, it also knows that the markets can’t handle the truth. Over the past year Ben Bernanke and other top Fed officials have tried mightily to communicate to the markets that no decisions had been made on the future and timing of QE reductions and that its moves would depend on the data. On many occasions they even hedged the automatic nature of their data triggers and moved the goal posts that supposedly guided their policy. But as a result of this continuous obfuscation, the Fed lost control of its message.
Despite its efforts toward vagueness, the markets nevertheless made definite conclusions. In addition to the overwhelming consensus of economists who had predicted a taper announcement for today, many even offered precise measures of how big the taper would be (median forecasts were that bond purchases would be trimmed by between $10 and $15 billion per month). As the Fed had not dashed these expectations strongly enough, today’s non-event comes as a surprise to most. However, as I have mentioned many times in the past, the Fed has checked into a monetary Roach Motel. Getting out will be infinitely harder than getting in. In fact it will be likely impossible to get out without tipping the country back into recession.
If stock and home prices continue to rise, and if the unemployment picture appears to brighten as a result of a shrinking workforce, the Fed may have an increasingly difficult time explaining why they are failing to cut back on a policy that many mistakenly assume is no longer needed. Look for the rhetorical pretzels to get ever more complex and the goalposts that would trigger an action to become completely mobile.
But the reality is that the economy will never regain true health as long as the stimulus is being delivered. Despite trillions already administered, the workforce is shrinking, energy usage is down, the trade balance is weakening, savings are down, inflation is showing up in inconvenient places, debt is up, and wages are flat. So while QE has succeeded in hiding the truth, it hasn’t accomplished anything of substance. Unfortunately, the Fed is only interested in the headlines.
We also must understand that even if the Fed were to deliver a small reduction in bond purchases, such a move would change nothing. The Fed would still be adding continuously to its enormous balance sheet while presenting no credible plans to actually withdraw the liquidity. As I have pointed out many times, it simply can’t do so without pushing the economy back into recession. Although this would be the right thing to do, you can rest assured that it won’t happen.
We should also recall where this all began. When QE1 was first launched Bernanke talked about an exit strategy. At the time I maintained the Fed had no exit strategy as it had checked into a monetary Roach Motel. But now questions about an exit strategy have been replaced by much more delicate taper talk. But easing up on the accelerator without ever hitting the brakes will not stop the car or turn it around.
Bernanke has maintained that his purchases of government bonds should not be considered “debt monetization” because the Fed intends to only hold the bonds temporarily. In recent years however talk of actively selling bonds in the portfolio have given way to more passive plans to simply hold the bonds to maturity. But this is a convenient fiction. When the bonds mature, the Fed will have little choice but to roll the principal back into Treasury debt, as private bond buyers could not easily absorb the added selling that would be required to repay the Fed in cash. Judged by his own criteria then, Bernanke is now an admitted debt monetizer.
Following this playbook, the Fed will likely maintain the pretense that tapering is a near term possibility and that it has a credible plan on the shelf to bring an end to QE. In reality the Fed is stalling for time and hoping that the economy will inexplicably roar back to life. Unfortunately, hope is not a strategy.
Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show.
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The Beatles of the Energy Revolution
“This is the end!” People love to make this statement about everything – from good music to energy production to the world as we know it. Lucky for us, these people are almost always wrong. Here are a few examples of why the future is actually brighter than most people think, and how you can make money because of it.
One of the greatest mysteries of human biology is music. We know that most human beings have the capacity, perhaps even the need, to enjoy music. These ordered sounds and rhythms play a major role in our lives, even if we never set out purposely to make it so.
If you watch television or movies, you are immersed in music. Even if you only listen to talk radio, you will hear music in commercials and as part of virtually every show’s production soundtrack. Our most important rituals and cultural institutions, from weddings to funerals, include music.
Untold volumes have been written by scholars attempting to explain why the phenomenon developed. It is, in fact, deeply ingrained in the human genome and brain, very much as is language. Various theories exist about the reason that music is such an enormous part of the human experience, but there is not serious consensus.
We know very little about the way that music developed and why. I’ve never encountered an explanation for the genetic basis of music that is really convincing. I don’t understand why we would have developed such massive musical capacity without a more obvious biological advantage. Music may be some sort of survival mechanism, but nobody so far has properly explained it if that’s true.
That doesn’t mean, however, that I don’t think that music isn’t important. Both of my kids, in fact, have been given musical training. I suppose you could say that my “hobby,” if that’s the right word, is music history. From Pythagoras through classical, big band, the blues and contemporary forms, I’m fascinated by the constant evolution of music.
In fact, I’ll tell you exactly how best to irritate me. All you have to do is tell me that there hasn’t been any great music made since (fill in the date.) You all know people who have this attitude, that the golden age of music, which always seems to have taken place when they were at the peak of their physical virility, has passed.
When I was a kid, these people were claiming that Elvis or Buddy Holly were the last great musicians and that those long-haired English boys, the Beatles, were just junk. Then, people who embraced Beatles era music turned off to everything that came after it. People who came of age in the ’90s claim that there’s no good music in the 21st century.
They’re all wrong, of course. Every era has a pretty proportionate share of enduringly excellent music as well as junk. If I had the forum for it, I’d enjoy presenting the evidence.
My bigger point is simply that a large percentage of the population sees history, just as they see music, through their own biology. This is why, at any time in history, esteemed writers and thinkers have always declared the end of civilization’s best days and the inevitable descent into mediocrity — if not actual chaos. Somehow, though, civilization has managed to overcome far greater insults than anything we are experiencing today to reach new height after new height after new height.
I’m bringing this up right now because, lately, I’ve been particularly bored by the deference that is given to the contemporary pessimists. They claim, as so many did before them, that civilization has peaked. They are, in fact, the same type of people who see worth only in the music that was popular before they began growing a paunch, losing their hair or seeing wrinkles in the mirror.
Of course, I could be wrong. I don’t have a crystal ball or a time machine. However, I’ve been pretty much right so far about a whole range of issues that should have discredited the doom and gloomers. I normally don’t rub it in, but we all know today that the panicked merchants of Peak Oil got it badly wrong. I said when that Peak Oil “meme” was building that market pricing mechanisms would solve our energy supply problems, and it has happened exactly as I said it would.
We are seeing North America emerge as the greatest producer of fossil fuels on the planet, with hundreds of years of reserves. America is the new Saudi Arabia of the energy world. There’s far more fossil fuel energy than we need to take us to that point in the future when technology enables true alternative energy, especially thorium power, which will power humanity for tens of thousands of years longer. Even more radical innovation is not just possible, it’s likely.
New extraction technologies, such as horizontal drilling and hydraulic fracturing, otherwise known as hydrofracking, have opened up the potential to tap vast reserves of oil and natural gas buried deep underground. But hydrofracking technology has not just opened up massive energy stores. It has made America the cheapest place in the world to produce commodity chemicals. Seven ethylene crackers are under construction right now. Any process, such as phosphate production, that uses natural gas is soaring.
Though the fracking revolution has already begun, this technology is a true breakthrough that will catapult hydrocarbon production at very low marginal costs. I call it the fracking breakthrough, or just the fracking break. And Lord knows, given the complete inanity of our ruling classes, we sorely needed a fracking break.
I think it’s probably normal human psychology to feel as your time is running out that the human race’s best days are over — just as it is normal to think the music of your youth was better than that new stuff the kids are listening to — the whippersnappers. History, however, refutes the notion that despite the incredible acceleration of scientific innovation, progress will end and humanity will slip backward.
A very, very good science fiction writer, William Gibson, felt compelled to address this cyclical pessimism in a work titled Distrust That Particular Flavor. It is a useful read if you’re susceptible to age-related apocalyptic thinking.
Besides the disappearance of Peak Oil and the fracking break, we also are seeing a truly remarkable biotech revolution. I wonder, in fact, if all the pessimists would be so depressed if they knew that healthy life spans have already started increasing dramatically.
On second thought, I suspect that nothing will shake the stubborn confidence of those who refuse to listen to anything they didn’t hear in high school or college. They will always be convinced that the best is behind us, just as they see their own vigor dissipating. They’re wrong, however, and those who invest in the emerging and much better future are going to be vindicated in the best possible ways, with profits and new vigor via revolutionary biotechnologies.
Yours for transformational profits,
Patrick Cox
For Tomorrow in Review
Ed. Note: The biotech revolution is upon us. Every day companies are developing life-extending technologies, treatments for deadly diseases, and an array of other astounding applications. And investors who are willing to expand their horizons are making the most of it. That’s why we write the Tomorrow in Review newsletter every day — to highlight these life-changing technologies… and to give you the chance to profit from them. It’s completely free to sign up and comes with a wide variety of investment opportunities. Check it out for FREE, right here.
This article originally appeared in The Daily Reckoning on June 13, 2013
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