Timing & trends
U.S. Stock Market – I continue to look for the economy to roll over and whatever “tapering” occurs to be lessen, then halted; then eventually a new “easing” as the economy and jobs slip further than Obama’s popularity. But until the easing and perception that the FED is now “behind” the curve, the stock market is not likely to fall sharply.
U.S. Bonds – Avoid!
Gold – Once again selling large quantities at the worst possible time is taking place, which strongly suggesting the agenda we seen earlier this year is not complete. One of the obvious goals is to demoralize the sentiment. It’s working as I’m fed up with all the manipulation and horrific media response to it. Need to get back above $1,350 fairly soon or the rest of 2013 shall likely be shot.
U.S. Dollar – How long will it remain like kissing your sister? Your guess is as good as mine.
Mining and Exploration Shares – While the price movement of gold shall have a direct impact on the mining shares, the further one goes down the food chain in the juniors, the darker the outlook becomes. I’ve said it for many, many months now and sadly it continues to play out – the junior resource market is on life-support and at best, it shall be 2014 before we see any sustained lift – if at all.
I can assure you this belief of mine doesn’t help business or my own portfolio but in all cases – the truth shall always set you free.
It’s tempting to think that all big oil companies are the same. They trade more or less in line with crude prices–with little to differentiate one from another for investors.
But in fact, each has its own distinct personality. That makes a huge difference to value creation. Oxy, for instance, is one of the best exploiters in the business. They can wring value from a mature field that few other firms would see.
Companies like Shell tend to lead through innovation. Ditto Statoil. And we got a good example of that DIY spirit this month.
Statoil announced that it wants to revolutionize power supply for offshore oil production. The major has signed a JV with power and automation provider ABB to develop a concept called “the subsea factory”.
This basically involves building industrial complexes on the ocean floor. Pumps, motors and compressors all located below the water, to make them more stable and cost-efficient in servicing production platforms.
The new JV is aimed at solving one major piece of this puzzle: power supply. Statoil and ABB will jointly work on a solution where a single power cable can be run to a subsea site, and then split off to power individual pumps and other machines. Currently, each unit requires its own dedicated line–which adds a lot of cost.
Statoil has said it believes this technology is critical to economically developing remote, deepwater fields in places like the Arctic.
This is the kind of thinking that differentiates big companies. Some are sitting and waiting for the next big find. Others are trying to manufacture it–making known fields more attractive by changing the game in terms of exploration or production technology.
It’s too early to tell if the subsea factory will be a success. But it’s the right kind of thinking.
Here’s to moving forward,
I am not screaming from the rooftops, “Buy gold!”
The reason is simple: I am not 100 percent confident that the bottom is in.
Why is that, especially when all is not well with the world?
After all, in addition to the Syrian crisis, which is not over, tensions are rising dramatically between the United States and Russia.
North Korea is reactivating its plutonium reactor. The Fed, even if it tapers its bond buying this week, is still printing oodles of money. The budget ceiling war is about to go into overdrive and heated debate again.
And interest rates are rising, a sure-fire sign that inflation will be coming back.
My answer is simple: It’s not yet time for gold and silver to take off to the upside. Quite the contrary, they have more work to do on the downside.
Look, every market has its time and place in the sun. That’s why timing is so critically important. You can be 100 percent right on the direction of a market, but you will not make money if you don’t get your timing right.
The pause in gold and silver’s long-term
bull markets is not yet over.
In contrast to important tops in any market, important bottoms take time to complete. That’s especially true with the precious metals.
Gold and silver have backing and filling to do. They have a lot of investors they still need to chew up and spit out. They will not bottom until most investors have turned outright bearish on them.
That’s one of the reasons why gold and silver took a nice nose-dive last week, precisely in accordance with what my cycle work was telling me. You can see the forecasted decline in this chart I’ve shown you previously.
And according to all of my indicators, as I have mentioned before, gold and silver needed a one- to three-year correction from their 2011 highs.
So far, we have a two-year correction in place. And so far, gold, which is my barometer for both metals, has fallen to as low as $1,178.
But importantly, that low did not precisely hit long-term support levels, which stood a bit lower at the $1,150 level.
For a market to bottom, it must hit long-term support at the right time. When price and time converge together, you have an important bottom. And though gold came very close to doing that in June, it was not close enough.
There are two more cyclical time
targets for a bottom in gold.
One is this month, shown by the cyclical chart above. If gold can break the June $1,178 low by October 3, at the latest, I will be screaming from the rooftops that the bottom is in place.
But if gold does not break the $1,178 low by October 3, we’re not likely to see the bottoming process in the precious metals end until January of next year.
That’s the next major cyclical target for a low in the precious metals ― January 2014.
So there are three scenarios ahead for gold (and silver):
Scenario #1: Gold declines to below $1,178 by October 3. If so, the bottom will be in place.
Scenario #2: Gold declines but does not break $1,178 by October 3. Then expect a brief bounce but largely a sideways trading range for the precious metals heading into year end.
And then, a sharp decline into January, with gold finally breaking the $1,178 low and bottoming once and for all.
Scenario #3: Gold somehow miraculously explodes higher and closes above $1,605.50. If gold were to do that — at any time — then we would have confirmation that the June low at $1,178 will hold and was the final bottom.
This third scenario is extremely unlikely. Far more likely is that we will see a major new low in gold either by October 3, or by the end of January.
And then, both gold and silver will be off to the races. No matter what, I do not see gold’s bear market extending beyond January 2014.
This should not surprise you. I have said all along that gold’s pause could take up to three years.
As to mining shares, as long as they hold their August lows, there is a very high possibility that mining shares have already bottomed, way in advance of gold.
So be patient and follow my signals.
For my Real Wealth Report members, those signals are optimized to average down in the precious metals and mining shares, to capitalize on their longer-term bull markets.
For members of my trading services, my signals are designed to capitalize on the short-term moves in gold, silver and mining shares, either up or down.
For members of my Hard Asset Trader, my signals are exclusively long-term in nature, for physical purchases of precious metals, and will largely be using an average-down approach.
Best wishes,
Larry
See more at: http://www.swingtradingdaily.com/2013/09/16/a-few-things-need-to-happen-before-gold-rallies/#sthash.cFIQv5x0.dpuf
Foreign investors resumed their acquisition of Canadian securities by adding $6.1 billion to their holdings in July, following a $15.4 billion divestment in June. Meanwhile, Canadian investment in foreign securities slowed to $0.9 billion and focused on bonds.
Drew Zimmerman
Investment & Commodities/Futures Advisor
604-664-2842 – Direct
604 664 2900 – Main
604 664 2666 – Fax
800 810 7022 – Toll Free
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