One of the Greatest Opportunities in History

08/23/2011 – Today’s bearish outside reversal in gold and silver in the appropriate time window for a top sets the stage for a decline into September. Initial breaks from tops typically take six to nine trading days. Silver should retrace a Fibonacci 61.8% or more of the advance from June; targeting $37.60. Gold should straddle the 50 day moving average ($1670) within two weeks – Ross Clark via Institutional Adviso rs,

….gold charts below

One of the Greatest Opportunities in History

Bob Hoye is a remarkable analyst. A graduate with a degree in geophysics, he spent a lot fascinating summers in mining exploration before he turned his talents studying financial history and developing forecasting models designed to anticipate significant trend reversals. The author of the Institutional Adviso rs, he is at his best when interpreting periods of alarming volatility as well as identifying the transition from rampant bullish speculation in tangible assets and financial assets to bear.

In an interview with Michael Campbell Bob sees the European mess as one huge short. Indeed he went so far in the interview to say that everyone should be short at least one Euro – ” I mean you’ve never had an opportunity in history to be short the currency of a country that is artificial and is going to fly apart”.

As to the European Union, he feels that the Germans have grown so tired of bailing out Greece and Portugal that he wouldn’t buy the recent bond bailout package under any circumstances. To underline the point he declared that “this is just another stop gap measure by issuing a bond package they think they can save everything but you know Mike, I wouldn’t even buy that thing with your money”. Hoye thinks that there will be many attempts for fix the crisis’s in Europe and the US over the coming years but that none of them will work. He notes that the current steeping yield curve and the widening of corporate credit spreads are a warning that the credit markets are changing. His work suggests that the trend would run into the fall when widening and dislocations in the corporate bond market would be really quite significant.

Hoye says that it was the widening of credit spreads was the nail in the coffin that led to the 2007 disaster as credit spreads are outside the power of the Central Bank. Hoye also notes that if you go back “many, many decades in history whenever you have a big dramatic blow off in commodity prices the recession usually starts about right then”. His current work suggests that a recession started around this May of 2011 and that this recession will be quite nasty. Asked about mortgage rates he recommends locking in the current low rates as soon as possible.

Gold

“Gold has been a great move lately but again on a chart work and technical side the target was for a very good high in this week, the week that just concluded. Indeed we are up to an overbought condition so gold can correct, silver would probably correct more because when you are in a rally for gold and silver typically silver outperforms gold. When you get into the correction silver underperforms so you can short silver stocks to kind of protect your position in the gold side.”

The Following from Bob’s colleague Ross Clark via Institutional Adviso rs

…to view larger charts go HERE