Harvey Organ 2-8-11
Filed under: Jim's Mailbox
Greetings Jim,
Gold closed moderately higher today, moving up to a new short-term high for the developing reaction from late January. Technical indicators are now moderately bullish overall on the daily chart, supporting a continuation of the advance.
Technical indicators are strengthening on the Gold Currency Index (GCI) daily chart as well, indicating that the short-term uptrend will likely continue.
From a temporal perspective, today’s strong move higher has confirmed that the current short-term cycle from January 27 is right translated, forecasting additional gains and a likely return to previous all-time highs.
The current short-term cycle has developed almost exactly as anticipated since the initial cycle low signal setup was generated in late January. Now that we have a confirmed Short-Term Cycle Low (STCL) followed by a right translated cycle, the Intermediate-Term Cycle Low (ITCL) that we have been expecting is one strong weekly close away from forming.
Both price oscillators have experienced bullish crossovers and a bullish engulf pattern has formed on the weekly chart. Therefore, if gold closes on Friday at current levels or higher, a confirmed intermediate-term cycle low signal will be generated, forecasting 2 to 3 months of gains and a likely breakout to new all-time highs.
Best,
CIGA Erik McCurdy
Prometheus Market Insight
http://www.prometheusmi.com
‘Toxic’ Assets Still Lurking at Banks
CIGA Eric
Accounting tricks may hidden the problem from plain view, but out of sight, out of mind approach hides the problem behind layers of complexity. Trillions of dollars of toxic assets still exist and have no market. This largely explains why the Fed refuses to throttled back on it’s liquidity programs despite the illusion of an economic recovery.
During the financial crisis, investors fretted over "toxic," hard-to-value assets that banks were carrying. Those fears have faded as bank profits have rebounded, loan delinquencies have declined, and bank stocks have soared 25% in the past five months.
But banks still hold plenty of the bad assets that once spooked investors: mortgage-backed securities, collateralized debt obligations and other risky instruments. Their potential impact concerns some accounting and banking observers.
Source: online.wsj.com
More…
Dear Jim,
Note the mention of the Chinese bank offering a gold buying plan that has 1 million investors signed up to purchase $42 dollars of gold per day!
CIGA Marc in the Trenches
Click here to watch the video…
Posted: Feb 08 2011 By: Jim Sinclair Post Edited: February 8, 2011 at 4:20 pm
Filed under: In The News
Dear CIGAs,
There is a reasonable argument that North America should stay out of the political affairs of other cultures. There are examples today of beneficent dictatorships that have delivered good and plenty to their nation.
The view of the Egyptian situation varies from the US to Asia and the Middle East.
Democracy was not contained in the 10 Commandments Moses carried down the holy mountain. The Democratic process has the potential of a major backfire inherent in it.
I suggest that rose colored glasses might not be the best tool to determine what the change in Egypt will mean.
Think back to the 2006 Democratic process surprise.
People with others opinions will seek protection against violent currency price changes like Egypt has just experienced. There are 10 situations internationally that have the same profile as Egypt from which Saudi Arabia is not exempt.
Jim Sinclair’s Commentary
An interesting comment was made by a Bloomberg interviewer today at 2.24pm. That comment was that if the USA measured their food inflation using the same measures as China does, the food inflation here would be exactly the same as in China.
Posted: Feb 08 2011 By: Dan Norcini Post Edited: February 8, 2011 at 2:11 pm
Filed under: Trader Dan Norcini
Gold and silver skyrocket despsite rise in Chinese rates
Marc Faber And Nassim Taleb On Risk, And The One Asset To Own Whether One Is Bearish Or Bullish
And Some Bad News For David Einhorn...
ABC Consumer Comfort Index Plunges To Year Lows On Surging Gas Prices
Posted: Feb 08 2011 By: Jim Sinclair Post Edited: February 8, 2011 at 8:12 pm
Filed under: Jim's Mailbox
Greetings Jim,
Gold closed moderately higher today, moving up to a new short-term high for the developing reaction from late January. Technical indicators are now moderately bullish overall on the daily chart, supporting a continuation of the advance.
Technical indicators are strengthening on the Gold Currency Index (GCI) daily chart as well, indicating that the short-term uptrend will likely continue.
From a temporal perspective, today’s strong move higher has confirmed that the current short-term cycle from January 27 is right translated, forecasting additional gains and a likely return to previous all-time highs.
The current short-term cycle has developed almost exactly as anticipated since the initial cycle low signal setup was generated in late January. Now that we have a confirmed Short-Term Cycle Low (STCL) followed by a right translated cycle, the Intermediate-Term Cycle Low (ITCL) that we have been expecting is one strong weekly close away from forming.
Both price oscillators have experienced bullish crossovers and a bullish engulf pattern has formed on the weekly chart. Therefore, if gold closes on Friday at current levels or higher, a confirmed intermediate-term cycle low signal will be generated, forecasting 2 to 3 months of gains and a likely breakout to new all-time highs.
Best,
CIGA Erik McCurdy
Prometheus Market Insight
http://www.prometheusmi.com
‘Toxic’ Assets Still Lurking at Banks
CIGA Eric
Accounting tricks may hidden the problem from plain view, but out of sight, out of mind approach hides the problem behind layers of complexity. Trillions of dollars of toxic assets still exist and have no market. This largely explains why the Fed refuses to throttled back on it’s liquidity programs despite the illusion of an economic recovery.
During the financial crisis, investors fretted over "toxic," hard-to-value assets that banks were carrying. Those fears have faded as bank profits have rebounded, loan delinquencies have declined, and bank stocks have soared 25% in the past five months.
But banks still hold plenty of the bad assets that once spooked investors: mortgage-backed securities, collateralized debt obligations and other risky instruments. Their potential impact concerns some accounting and banking observers.
Source: online.wsj.com
More…
Dear Jim,
Note the mention of the Chinese bank offering a gold buying plan that has 1 million investors signed up to purchase $42 dollars of gold per day!
CIGA Marc in the Trenches
Click here to watch the video…
Posted: Feb 08 2011 By: Jim Sinclair Post Edited: February 8, 2011 at 4:20 pm
Filed under: In The News
Dear CIGAs,
There is a reasonable argument that North America should stay out of the political affairs of other cultures. There are examples today of beneficent dictatorships that have delivered good and plenty to their nation.
The view of the Egyptian situation varies from the US to Asia and the Middle East.
Democracy was not contained in the 10 Commandments Moses carried down the holy mountain. The Democratic process has the potential of a major backfire inherent in it.
I suggest that rose colored glasses might not be the best tool to determine what the change in Egypt will mean.
Think back to the 2006 Democratic process surprise.
People with others opinions will seek protection against violent currency price changes like Egypt has just experienced. There are 10 situations internationally that have the same profile as Egypt from which Saudi Arabia is not exempt.
Jim Sinclair’s Commentary
An interesting comment was made by a Bloomberg interviewer today at 2.24pm. That comment was that if the USA measured their food inflation using the same measures as China does, the food inflation here would be exactly the same as in China.
Posted: Feb 08 2011 By: Dan Norcini Post Edited: February 8, 2011 at 2:11 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Today’s big news once again came out of China, which announced yet another rate increase in what has now been a series of hikes over the last several months. In what has to be a significant development, gold, which initially dipped lower upon the news, ricocheted higher, surging through overhead resistance just above the $1350 level. It appeared that a series of buy stops were set off which then allowed price to run into the next resistance zone centered around the $1365 level.
What I find so noteworthy about today’s performance in gold is that it also mirrored what was taking place to a greater extent across the entire commodity complex. If anything, gold took on a leadership role along with silver. You might recall that in the past, these rate hikes by China have brought in extremely heavy selling in commodities as the prevailing sentiment at those times has been that any attempt by China to rein in its inflation stallion was going to result in a slowdown in what has been the main driver of the global economic engine. That would lead to a global slowdown which would pressure commodity prices.
Copper in particular would get hit hard during such episodes due mainly to its historic role as a leader in the overall commodity sector. Today, copper did what it has done in the past – it moved sharply lower but then it too rebounded and while it did not make it back into positive territory, it came back well off of its lows working back to nearly unchanged at one point.
The same pattern was seen in the grains and in the meats, which were also lower overnight as the news came down the wires but those too came back off their worst levels thanks also to some help from wheat (more about that later).
Why I want to bring this to your attention is that we might indeed be seeing another one of those frequent shifts in trader/investment psychology which makes markets so interesting and fresh. To see market action like this tells me that an inflation psychology is beginning to become more entrenched in the minds of global investors who are slowly coming to realize that the Central Banks are well behind the inflation curve. I think it is also safe to say, based on the price action across these various markets, that the deflation boogeyman is losing his allies.
Perhaps this is what has been foretold in the bond market’s breakdown of last Friday. Were it not for the continued meddling by the US monetary authorities in that bond market ( they euphemistically term it “Quantitative Easing ), I suspect that the bonds would have been sharply lower today as well. Inflation is raging across Asia and in many places in Latin America and it is just a matter of time before even the worst skeptic is going to be forced into acknowledging the obvious – that it is coming to a movie theater near you. Certainly a plunging US Dollar is not synonymous with deflationary pressures!
Which brings me to the US Dollar – in yet a further development certain to rekindle investor suspicions concerning the “health” of this economic recovery, news came out of Denmark, that Amagerbanken, the nation’s eighth largest bank in terms of lending, was toppled due to a series of failed real estate related loans. The Danish government is now on the hook for $2.8 billion worth of losses.
News like this tends to remind those who are looking through rose-colored glasses, that beneath the apparent tranquil surface there still lurks issues that have been essentially plastered over with money printing. This sort of thing is what brings buying into gold across a wide assortment of various currencies as investors become fearful of the erosion of the value of their currencies. It did not help the Dollar any for the current Chairman of the Federal Reserve to be out leading the cheerleading squad to warn the Republicans that they had better not mess with NOT RAISING the debt ceiling from its current cap of $14.3 TRILLION.
I can see it now – Ben is dressed in a cheerleader’s costume with pom-poms:
2 bits,
4 bits,
6 bits a dollar,
All for raising the debt ceiling,
Stand up and HOLLER…..
Yea…
I find Ben’s comments particular obscene seeing that the mass of the nation is seriously worried about the US debt level. The recent election blowout was due in large part of concerns over the economy and rising levels of national indebtedness and here we are treated to the pathetic spectacle of what should be a beacon of frugality and responsibility thinking he is leading the charge in some sort of economic war:
Admiral Ben Farragut:
“Damn the torpedos – full speed ahead”.
To show you that it is not just the dollar that is a concern, the euro fell against gold. Gold, when priced in Euro terms, moved higher coming in at €999.707 at the PM Fix but actually trading above the €1,000 mark at one point during the session.
The technical posture of gold just got a tremendous boost with today’s good showing. Both the 10 day and the 20 day moving averages have now turned higher and momentum has now broken the downtrend line that has been in place for the last two months. What is now needed to put some icing on the cake is for momentum to move into positive territory. This will further encourage traders to Buy dips rather than Sell rallies.
Open interest stabilizing down near 466,000 seems to have done the trick for gold as the failure of the longs to liquidate in any further size has short circuited the bears’ attempts to break it down below $1320. All of those shorts slammed on below $1320 in anticipation of another move lower were snared by Chinese buying and are now taking their medicine as those positions are all deeply underwater. Only the strong handed shorts can handle that sort of loss.
A quick comment about silver – those of you who have been tuning in to my weekly radio interviews with Eric King over at King World News have heard us discuss its technical price chart. I am still watching for a strong close above the $30 level for a sign that this market is ready to kick up another leg higher. One can see the action of the Bears attempting to hold it down below this level by watching the 3 minute bar chart, as they realize what such a close would mean to their positions. Going into the close, it is apparent that they failed. If silver can stay above $30 the rest of the day, odds now favor a test of the recent high in short order. Keep in mind, as we discussed on our recent radio interview, the COT report shows that last week the hedge funds (managed money) finally began increasing their net long exposure after having whittled that down for the last couple of months. They are now returning to this market and doing so from a sharply reduced long side exposure. There is plenty of room available for them to begin piling back in and that is what leads me to believe that the recent high is going to fall. Also, a lot of guys sitting on the sideline waiting for silver prices to move lower so that they could buy are now realizing that they had better get in. That is what buying does – it begets more buying.
On the food front, wheat, notched yet another 30 month high as it moves ever closer to the $9.00 mark. It seems like just yesterday when we were talking about watching for wheat to make a run towards the $8.00 level! The impetus for its move higher today was news out of China (not about rate hikes) that severe drought could be affected as much as 37% of its entire wheat crop. Great goggly moogly – the news on the food front just keeps getting worse with each passing week it seems.
Platinum and palladium were both strong today.
Please take a bit of time to stop by my developing blog site at www.traderdannorcini.blogspot.com. I will be posting some comments on the HUI and some technical charts later in the day there.
Bonds are beginning to give up their artificial gains as I finish this commentary up. We will see how they fare going into the close this afternoon.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
ShareThis
Today’s big news once again came out of China, which announced yet another rate increase in what has now been a series of hikes over the last several months. In what has to be a significant development, gold, which initially dipped lower upon the news, ricocheted higher, surging through overhead resistance just above the $1350 level. It appeared that a series of buy stops were set off which then allowed price to run into the next resistance zone centered around the $1365 level.
What I find so noteworthy about today’s performance in gold is that it also mirrored what was taking place to a greater extent across the entire commodity complex. If anything, gold took on a leadership role along with silver. You might recall that in the past, these rate hikes by China have brought in extremely heavy selling in commodities as the prevailing sentiment at those times has been that any attempt by China to rein in its inflation stallion was going to result in a slowdown in what has been the main driver of the global economic engine. That would lead to a global slowdown which would pressure commodity prices.
Copper in particular would get hit hard during such episodes due mainly to its historic role as a leader in the overall commodity sector. Today, copper did what it has done in the past – it moved sharply lower but then it too rebounded and while it did not make it back into positive territory, it came back well off of its lows working back to nearly unchanged at one point.
The same pattern was seen in the grains and in the meats, which were also lower overnight as the news came down the wires but those too came back off their worst levels thanks also to some help from wheat (more about that later).
Why I want to bring this to your attention is that we might indeed be seeing another one of those frequent shifts in trader/investment psychology which makes markets so interesting and fresh. To see market action like this tells me that an inflation psychology is beginning to become more entrenched in the minds of global investors who are slowly coming to realize that the Central Banks are well behind the inflation curve. I think it is also safe to say, based on the price action across these various markets, that the deflation boogeyman is losing his allies.
Perhaps this is what has been foretold in the bond market’s breakdown of last Friday. Were it not for the continued meddling by the US monetary authorities in that bond market ( they euphemistically term it “Quantitative Easing ), I suspect that the bonds would have been sharply lower today as well. Inflation is raging across Asia and in many places in Latin America and it is just a matter of time before even the worst skeptic is going to be forced into acknowledging the obvious – that it is coming to a movie theater near you. Certainly a plunging US Dollar is not synonymous with deflationary pressures!
Which brings me to the US Dollar – in yet a further development certain to rekindle investor suspicions concerning the “health” of this economic recovery, news came out of Denmark, that Amagerbanken, the nation’s eighth largest bank in terms of lending, was toppled due to a series of failed real estate related loans. The Danish government is now on the hook for $2.8 billion worth of losses.
News like this tends to remind those who are looking through rose-colored glasses, that beneath the apparent tranquil surface there still lurks issues that have been essentially plastered over with money printing. This sort of thing is what brings buying into gold across a wide assortment of various currencies as investors become fearful of the erosion of the value of their currencies. It did not help the Dollar any for the current Chairman of the Federal Reserve to be out leading the cheerleading squad to warn the Republicans that they had better not mess with NOT RAISING the debt ceiling from its current cap of $14.3 TRILLION.
I can see it now – Ben is dressed in a cheerleader’s costume with pom-poms:
2 bits,
4 bits,
6 bits a dollar,
All for raising the debt ceiling,
Stand up and HOLLER…..
Yea…
I find Ben’s comments particular obscene seeing that the mass of the nation is seriously worried about the US debt level. The recent election blowout was due in large part of concerns over the economy and rising levels of national indebtedness and here we are treated to the pathetic spectacle of what should be a beacon of frugality and responsibility thinking he is leading the charge in some sort of economic war:
Admiral Ben Farragut:
“Damn the torpedos – full speed ahead”.
To show you that it is not just the dollar that is a concern, the euro fell against gold. Gold, when priced in Euro terms, moved higher coming in at €999.707 at the PM Fix but actually trading above the €1,000 mark at one point during the session.
The technical posture of gold just got a tremendous boost with today’s good showing. Both the 10 day and the 20 day moving averages have now turned higher and momentum has now broken the downtrend line that has been in place for the last two months. What is now needed to put some icing on the cake is for momentum to move into positive territory. This will further encourage traders to Buy dips rather than Sell rallies.
Open interest stabilizing down near 466,000 seems to have done the trick for gold as the failure of the longs to liquidate in any further size has short circuited the bears’ attempts to break it down below $1320. All of those shorts slammed on below $1320 in anticipation of another move lower were snared by Chinese buying and are now taking their medicine as those positions are all deeply underwater. Only the strong handed shorts can handle that sort of loss.
A quick comment about silver – those of you who have been tuning in to my weekly radio interviews with Eric King over at King World News have heard us discuss its technical price chart. I am still watching for a strong close above the $30 level for a sign that this market is ready to kick up another leg higher. One can see the action of the Bears attempting to hold it down below this level by watching the 3 minute bar chart, as they realize what such a close would mean to their positions. Going into the close, it is apparent that they failed. If silver can stay above $30 the rest of the day, odds now favor a test of the recent high in short order. Keep in mind, as we discussed on our recent radio interview, the COT report shows that last week the hedge funds (managed money) finally began increasing their net long exposure after having whittled that down for the last couple of months. They are now returning to this market and doing so from a sharply reduced long side exposure. There is plenty of room available for them to begin piling back in and that is what leads me to believe that the recent high is going to fall. Also, a lot of guys sitting on the sideline waiting for silver prices to move lower so that they could buy are now realizing that they had better get in. That is what buying does – it begets more buying.
On the food front, wheat, notched yet another 30 month high as it moves ever closer to the $9.00 mark. It seems like just yesterday when we were talking about watching for wheat to make a run towards the $8.00 level! The impetus for its move higher today was news out of China (not about rate hikes) that severe drought could be affected as much as 37% of its entire wheat crop. Great goggly moogly – the news on the food front just keeps getting worse with each passing week it seems.
Platinum and palladium were both strong today.
Please take a bit of time to stop by my developing blog site at www.traderdannorcini.blogspot.com. I will be posting some comments on the HUI and some technical charts later in the day there.
Bonds are beginning to give up their artificial gains as I finish this commentary up. We will see how they fare going into the close this afternoon.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
ShareThis
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
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