Timing & trends
U.S. Stock Market – We’re starting to see the excess that is needed before a major top can be put in. As more of these types of headlines and predictions of higher and higher take hold, the more likely we can see “the” top (but not before).
Millions of investors have been skinned alive in the gold market. They got married to their positions and failed to realize that gold is like any other market. What goes up, must also pullback.
Even some of the savviest investors in the world got killed in gold. Billionaire investor John Paulson lost as much as $600 million in last week’s gold rout and nearly $1.5 billion since gold peaked in 2011.
Another huge investor, David Einhorn also lost big. Ron Paul has lost big. So has billionaire hedge fund manager Kyle Bass. And more.
Even the central banks have been pounded by gold, losing an estimated $560 billion in last week’s gold rout.
That’s just the big investors. It doesn’t count the tens of billions of dollars lost by average investors all over the world.
Fortunately, those following my analysis are not among them. I have been consistently bearish gold for well over a year now, and anyone following my work either avoided huge losses …
Or even better, acted on the more specific advice I’ve given in my paid publications, went short via futures or inverse ETFs on gold, and cleaned up big time.
The Level of Disbelief in Gold’s Correction
Means More Losses Lay Ahead
When investors in any market are in denial about what’s happening, it’s virtually a sure fire sign that the current trend is going to continue.
Why? Because they’ve suspended all semblance of logic and they’ve become so irrational that they can’t see the forest for the trees.
For instance, in gold right now you have three types of investors …
1. Those who believe gold was “ambushed” by big investors who wanted to trash the market and inflict losses on small investors.
But if that were true, then why did all the big investors I mention above lose so much money? Surely, they would have gotten wind of the ambush and been able to avoid a big portion of the actual losses they took, wouldn’t they?
Then there are …
2. The gold investors who believe the gold market is “manipulated” by a combination of big investors, politicians, and central banks set on pushing the price of gold down to “keep a lid on inflation,” or at least the perception that inflation is out of hand.
But if that were true, then again, why did so many big investors take such big losses? And why did central banks lose as much as $560 billion?
Central bankers are not the smartest traders in the world, but they’re certainly not dumb and stupid.
3. And then, there are the gold investors who refuse to believe that there are deflationary forces at work, and they claim that gold has lost touch with reality, and that the current decline in gold therefore represents the buying opportunity of a lifetime.
Again, that’s denial, plain and simple. It’s touted by analysts and investors who refuse to believe that a market can — and must — go down, even if it’s just setting the stage for the next bull leg higher.
Look, markets never go straight up year after year as if there’s nothing but blue skies ahead.
The fact of the matter is that the biggest, strongest bull markets are those that correct violently, shake out all the weak and even strong long positions and buyers …
And clear the air for new buyers to come back into the market.
So if you’re a real student of the markets and a real gold bug, then this violent correction that has occurred in the gold market should have been expected, and further, should be music to your ears!
For in the end it is about the best thing that could have happened in the gold market.
It will allow the gold market to refresh itself, to reenergize, and to set the stage for a massive new leg to the upside.
Right now, you should expect a bounce in gold. But as I said in my special Money and Markets column of April 15 …
Gold’s Historic Collapse Is NOT Over
Keep your eyes on the $1,412 and $1,458 levels. One of those two levels should cap any bounce in the gold market.
On the downside, I repeat the key support levels you should be watching:
$1,298.70
$1,244.90
$1,160.90
$1,028.40
$ 993.90
Each of the above levels should temporarily hold once they are hit. But based on my system models, I repeat my warning of my April 15 special column: Gold will likely not bottom until it hits major long-term support at $1,028.
If you’ve acted on any of my suggestions to purchase inverse ETFs such as theProShares UltraShort Gold (GLL) and the Direxion Daily Gold Miners Bear 3x Shares (DUST) … or even the ProShares UltraShort Silver (ZSL) for a play on silver’s downside …
Hold those positions!
And most important of all, do not be tempted to buy any gold, or silver, or mining shares, until I give you the all-clear!
Instead, let those who are in denial about gold’s correction continue to get their head handed to them.
When they finally realize that all their theories about gold market manipulation and ambushing, central bank shenanigans to depress the gold price, and more of such conspiracies …
Are nothing but gobbledygook, then gold will finally bottom!
Best wishes,
Larry
POSTED BY LARRY EDELSON
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/.
“The market plunged this past week in its biggest correction of the year! Run away, flee, panic, the horror….oh…the horror of it all.”
That was the consensus of the headlines from this past week assuming you saw any others than of what was happening in Boston. I am exaggerating somewhat but the reality is that the media’s reaction to the selloff reached a near frantic peak. However, if you have been reading our missives over the past couple of months you were already aware that such an event was coming.
Before I jump into this week’s missive I do want to suggest that you take a few minutes and review some of the blog posts from this past week. I covered the crash in gold and the economy in more detail which is highly worth your time to read. While some of the analysis that we will do today is bullish in the short term – there is clear evidence that the economy is slowing much more rapidly than the media would currently lead you to believe.
Also, earnings season has kicked off and it is very weak at the top line. While bottom line earnings are once again beating much lowered estimates – top line revenue growth is dismal. This is something that the market will eventually come to realize to the disappointment of investors. Caution is advised.
>> Read More. Download This Weeks Issue Here.
Find out about a few of the junior minors “on the move.”
Rare Earth Weekly
The global rare earth industry is experiencing price deterioration which has exacerbated declines in revenues, earnings and share prices of junior minors. Molycorp (MCP), with its heavy concentration of light rare earths (“LREE”), experienced price declines of 30% quarter-over-quarter. The price deterioration does not seem to be abating anytime soon. According to the Motley Fool, it’s a wonder that some junior minors are even still in business:
The price of common rare-earth minerals has been dropping since 2011, the year prices peaked, which is why revenue is slipping. It’s a wonder at this point that miners without production, like Rare Element Resources (REE) and Avalon Rare Metals (AVL), are still in business at all. If Molycorp can’t make money now that it’s in full production, then how could there be enough demand to support all of these companies?
…..read more HERE
About the author: Shock Exchange
B.A. in economics and MBA from top 10 business school. I have over 10 years of M&A / corporate finance experience. Currently head the New York Shock Exchange (www.newyorkshockexchange.com), a youth mentorship program that teaches investment management skills and competitive basketball skills.
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