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Close Call For US Banks
Phase Two – The Volatile Ride to Higher Gold
Excerpt from Stuppler and Comany's Weekly Market Update, March 5, 2012
In my January 2012, 32 page booklet called “ Is Hyperinflation the US Government’s Only Way Out”*, I compared the gold rally of 1977-1980 with the current rally in Gold. I discussed the three major phases of Gold’s 1977-1980 movement (from $134.50 to $850) and the gold rally that started in 2001. In August of 2011, I said that we have entered Phase 2 of the gold rally, based upon the dramatic increase in volatility.
When did the increasing volatility start Phase 2 of the Gold rally?
Looking at trading from 2010 and 2011 it was easy to see. Between Jan 1st of 2010 and July 31st 2011 (577 days), gold traded between $1,121 and $1,628 per ounce. There were only 8 days (1.3% of the 577 Days) when the gold price increased/deceased more than $30, and 0 (zero) days with a move of $40 or more. Between August 1st and Dec 31st 2011, there were 153 days when gold traded between $1,520 and $1,920 per ounce, and there were 34 days (22% of the 153 Days) when gold increased/deceased more than $30, with 8 days when the move was over $50 (including 2 days when the gold price changed more than $100 in just 24 hours.)
What will result from Phase 2 volatility?
I believe that in Phase 2 of the current gold rally we will see the average annual gold price increase over the next 3 years, surging from the 20% average of the past ten years, to 40%. Gold will reach $4,000 per ounce by 2015 before we get to the final Phase Three, when the gold market explodes.
Phase Three will be short and explosive.
Back in 1980, Phase Three only lasted for 21 days, but increased 66% in that time span. Considering the ten year time span of Phase One, and my projection for Phase Two, I feel that Phase Three (which starts in 2015) will last for six months and drive gold up to over $6,000 per ounce. If the world’s financial leaders decide to return to a Gold Standard, or if gold bullion confiscation becomes the government’s reaction to severe inflation, my projections would escalate. Possible other government reactions that can affect my projections negatively are: limiting gold ownership, restrictions on transporting or trading, and any Gold windfall profits tax.
* “Is Hyperinflation the US Government’s Only Way Out” is available on line at http://www.coinmag.com.
Excerpt from Stuppler and Comany's Weekly Market Update, March 5, 2012
In my January 2012, 32 page booklet called “ Is Hyperinflation the US Government’s Only Way Out”*, I compared the gold rally of 1977-1980 with the current rally in Gold. I discussed the three major phases of Gold’s 1977-1980 movement (from $134.50 to $850) and the gold rally that started in 2001. In August of 2011, I said that we have entered Phase 2 of the gold rally, based upon the dramatic increase in volatility.
When did the increasing volatility start Phase 2 of the Gold rally?
Looking at trading from 2010 and 2011 it was easy to see. Between Jan 1st of 2010 and July 31st 2011 (577 days), gold traded between $1,121 and $1,628 per ounce. There were only 8 days (1.3% of the 577 Days) when the gold price increased/deceased more than $30, and 0 (zero) days with a move of $40 or more. Between August 1st and Dec 31st 2011, there were 153 days when gold traded between $1,520 and $1,920 per ounce, and there were 34 days (22% of the 153 Days) when gold increased/deceased more than $30, with 8 days when the move was over $50 (including 2 days when the gold price changed more than $100 in just 24 hours.)
What will result from Phase 2 volatility?
I believe that in Phase 2 of the current gold rally we will see the average annual gold price increase over the next 3 years, surging from the 20% average of the past ten years, to 40%. Gold will reach $4,000 per ounce by 2015 before we get to the final Phase Three, when the gold market explodes.
Phase Three will be short and explosive.
Back in 1980, Phase Three only lasted for 21 days, but increased 66% in that time span. Considering the ten year time span of Phase One, and my projection for Phase Two, I feel that Phase Three (which starts in 2015) will last for six months and drive gold up to over $6,000 per ounce. If the world’s financial leaders decide to return to a Gold Standard, or if gold bullion confiscation becomes the government’s reaction to severe inflation, my projections would escalate. Possible other government reactions that can affect my projections negatively are: limiting gold ownership, restrictions on transporting or trading, and any Gold windfall profits tax.
* “Is Hyperinflation the US Government’s Only Way Out” is available on line at http://www.coinmag.com.
Marc Faber: US 'Financial Mess' Will Force Government to Take Your Gold
Economist Marc Faber, publisher of the Gloom, Boom and Doom report, says the government will seize privately held gold, even as he continues to buy physical gold himself.
“I prefer to play the commodity space by owning physical gold,” Faber tells Chiefsworld. “If I were an American, I would store it outside the U.S., because in the U.S., it is not completely unlikely that they will eventually take it away.”
“Like in 1933, gold will be purchased back by the government” because eventually the financial mess will be so bad that gold prices “will go ballistic, and the government will take away something from a minority, and not many people own gold."
“When gold prices shoot up, it will be quite a popular measure to take it away from these rich people,” Faber says. “It’s happened before.”
From May 1, 1933, until 1974, U.S. citizens could no longer hold gold as a protection against paper money, which also lost its gold backing at the same time.
Foreign central banks could continue to exchange the U.S. dollars that came into their possession – known as eurodollars for decades — for gold and did so particularly when the U.S. dollar was devalued and then floated against the gold price in 1971.
Faber says he’s not in a hurry to buy gold, but accumulates gold every month because he believes the gold market is still under a correction.
Faber notes that the Chinese economy is slowing, and says it will slow further and perhaps crash at some point, which is why he is staying out of commodities other than gold.
Meanwhile, Nomura's Bob Janjuah says markets are so rigged by government policies that investing dangers lurk virtually everywhere.
"My personal recommendation is to sit in gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities," Janjuah writes at Zero Hedge.
"Bond and currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears."
Elsewhere, Gold traders are getting more bullish after billionaire hedge-fund manager John Paulson told investors it’s time to buy the metal as protection against inflation caused by government spending.
Twelve of 22 surveyed by Bloomberg expect prices to gain next week and five were neutral. Paulson & Co. is already the biggest investor in the SPDR Gold Trust, the largest exchange-traded product backed by bullion, with a stake valued at $2.9 billion, a Securities and Exchange Commission filing Feb. 14 showed.
Gold for April delivery, the most actively traded contract, rose $10.90, or 0.6 percent, to settle Thursday at $1,722.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
Economist Marc Faber, publisher of the Gloom, Boom and Doom report, says the government will seize privately held gold, even as he continues to buy physical gold himself.
“I prefer to play the commodity space by owning physical gold,” Faber tells Chiefsworld. “If I were an American, I would store it outside the U.S., because in the U.S., it is not completely unlikely that they will eventually take it away.”
“Like in 1933, gold will be purchased back by the government” because eventually the financial mess will be so bad that gold prices “will go ballistic, and the government will take away something from a minority, and not many people own gold."
“When gold prices shoot up, it will be quite a popular measure to take it away from these rich people,” Faber says. “It’s happened before.”
From May 1, 1933, until 1974, U.S. citizens could no longer hold gold as a protection against paper money, which also lost its gold backing at the same time.
Foreign central banks could continue to exchange the U.S. dollars that came into their possession – known as eurodollars for decades — for gold and did so particularly when the U.S. dollar was devalued and then floated against the gold price in 1971.
Faber says he’s not in a hurry to buy gold, but accumulates gold every month because he believes the gold market is still under a correction.
Faber notes that the Chinese economy is slowing, and says it will slow further and perhaps crash at some point, which is why he is staying out of commodities other than gold.
Meanwhile, Nomura's Bob Janjuah says markets are so rigged by government policies that investing dangers lurk virtually everywhere.
"My personal recommendation is to sit in gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities," Janjuah writes at Zero Hedge.
"Bond and currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears."
Elsewhere, Gold traders are getting more bullish after billionaire hedge-fund manager John Paulson told investors it’s time to buy the metal as protection against inflation caused by government spending.
Twelve of 22 surveyed by Bloomberg expect prices to gain next week and five were neutral. Paulson & Co. is already the biggest investor in the SPDR Gold Trust, the largest exchange-traded product backed by bullion, with a stake valued at $2.9 billion, a Securities and Exchange Commission filing Feb. 14 showed.
Gold for April delivery, the most actively traded contract, rose $10.90, or 0.6 percent, to settle Thursday at $1,722.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold, Silver Appear Unintimidated
By Rick Ackerman, Rick's Picks
Precious metals appear to be recovering nicely after Wednesday’s punitive selloff. Although we initially assumed it might take a few weeks for gold and silver to build a base for the next moon shot, yesterday’s price action hinted that bullion quotes could be off and running much sooner. To be sure, the price action yesterday just inches from ground zero was relatively timid, with small gains driving the markets. However, that was to be expected, given the ferocity of the previous day’s plunge. It would have scared hell out of many investors, turning them cautious for the time being. But perhaps not for long. What was most encouraging about yesterday’s rally was its calmness, with relatively few of the whoops, feints and dives that characterize nervous markets. In fact, bulls made their ascent the way an experienced rock climber would scale an imposing cliff – i.e., one secure handhold/foothold at a time.
From a technical standpoint, the chart above shows what Comex May Silver must do before we assume that the trauma from Wednesday’s shock-and-awe selloff has mostly worn off. If you happen to trade the metals, we’d recommend setting an alert a tick above the highlighted peak at 36.185; for that is where bulls will once again have the bad guys on the run. The peak may not look like much – in the parlance of our proprietary Hidden Pivot Method, it is known as a “peak along the wall” — but it can be quite useful for purposes of gauging the determination and confidence of buyers. And if they’ve got the guts we think they’ve got, they should be able to push the futures through the resistance today or perhaps Sunday night with little or no evidence of deflection.
Shades of ‘Easy Al’
In effect, they would be saying they don’t give a rat’s ass about “Helicopter Ben” Bernanke’s testimony before Congress the other day. No one is quite sure what the Fed Chairman said, let alone what he meant. But you can hardly blame the guy for using “Easy Al” Greenspan’s tactic of speaking meaningless drivel when the goal is to obfuscate the ugly, inescapable truth that the global financial system is headed for collapse. Wall Street probably cares less about this than you might think, since its denizens are wont to assume that any spectacular move in the markets, be it up or down, represents opportunity. The hubris of this line of thinking was nicely described by one Robert Mockan, posting at the web site of our friend Max Keiser yesterday in response to our commentary. Mockan noticed something that had caught our attention as well – that with currency and bullion futures in a state of hysteria on Wednesday, the stock market barely budged. “The market moved a little,” wrote Mockan, “but not nearly what it should have if there was anything legitimate happening. All the USD base forex currency pairs crashed. And the manipulation was very well executed. Positive feedback was increased and we saw large percentage losses in everything that traders had positions open. Insiders knew the score and they raked it in.” As they probably did. Or didn’t you know that it’s a rigged game?
By Rick Ackerman, Rick's Picks
Precious metals appear to be recovering nicely after Wednesday’s punitive selloff. Although we initially assumed it might take a few weeks for gold and silver to build a base for the next moon shot, yesterday’s price action hinted that bullion quotes could be off and running much sooner. To be sure, the price action yesterday just inches from ground zero was relatively timid, with small gains driving the markets. However, that was to be expected, given the ferocity of the previous day’s plunge. It would have scared hell out of many investors, turning them cautious for the time being. But perhaps not for long. What was most encouraging about yesterday’s rally was its calmness, with relatively few of the whoops, feints and dives that characterize nervous markets. In fact, bulls made their ascent the way an experienced rock climber would scale an imposing cliff – i.e., one secure handhold/foothold at a time.
From a technical standpoint, the chart above shows what Comex May Silver must do before we assume that the trauma from Wednesday’s shock-and-awe selloff has mostly worn off. If you happen to trade the metals, we’d recommend setting an alert a tick above the highlighted peak at 36.185; for that is where bulls will once again have the bad guys on the run. The peak may not look like much – in the parlance of our proprietary Hidden Pivot Method, it is known as a “peak along the wall” — but it can be quite useful for purposes of gauging the determination and confidence of buyers. And if they’ve got the guts we think they’ve got, they should be able to push the futures through the resistance today or perhaps Sunday night with little or no evidence of deflection.
Shades of ‘Easy Al’
In effect, they would be saying they don’t give a rat’s ass about “Helicopter Ben” Bernanke’s testimony before Congress the other day. No one is quite sure what the Fed Chairman said, let alone what he meant. But you can hardly blame the guy for using “Easy Al” Greenspan’s tactic of speaking meaningless drivel when the goal is to obfuscate the ugly, inescapable truth that the global financial system is headed for collapse. Wall Street probably cares less about this than you might think, since its denizens are wont to assume that any spectacular move in the markets, be it up or down, represents opportunity. The hubris of this line of thinking was nicely described by one Robert Mockan, posting at the web site of our friend Max Keiser yesterday in response to our commentary. Mockan noticed something that had caught our attention as well – that with currency and bullion futures in a state of hysteria on Wednesday, the stock market barely budged. “The market moved a little,” wrote Mockan, “but not nearly what it should have if there was anything legitimate happening. All the USD base forex currency pairs crashed. And the manipulation was very well executed. Positive feedback was increased and we saw large percentage losses in everything that traders had positions open. Insiders knew the score and they raked it in.” As they probably did. Or didn’t you know that it’s a rigged game?
Bullion Shakedown Stampedes the Ignorant
By Rick Ackerman, Rick's Picks
Although yesterday’s Congressional testimony by “Helicopter Ben” Bernanke was fundamentally meaningless, it caused gold and silver prices to take a spectacular dive. They got hit after the ‘Nank, prevaricating as usual, said the central bank wasn’t rushing to crank up a QE3 stimulus. While this may be true as far as it goes, it belies the fact that the money spigots have been wide open for years and will remain so, probably, until the financial system collapses. More on that below. Concerning the savaging that precious metals received, they are all but certain to recover, since the forces that have been driving them steeply higher for more than a decade are still very much in place.
Even so, it could take at least a few weeks for gold to build a new base for a shot at $2000, and silver for a push into the mid-$40s. In the throes of yesterday’s brutal, deftly engineered shakeout, Comex gold dropped $104, or nearly six percent, in just a few hours. The April contract hit an intraday low of $1688 after trading as high as $1793 the day before. As for Silver futures, they suffered their worst single-day loss since September, falling $3.76, or 10 percent, from intraday high to low.
Dump Your Gold, Please!
So what else did Helicopter Ben say? Most crucially, as far as the financial sociopaths on Wall Street were concerned, he “stopped short of signaling further bond purchases,” reported Reuters. In Wall Street-speak, this means there will be no “QE3,” at least not in the foreseeable future. Of course, it will not have dawned on his Capitol Hill inquisitors, nor on the morons who purport to interpret economic news, that the Fed is already running the loosest monetary policy in the sordid history of central banking. How else would T-bill yields be running close to zero, even as long-term rates fall toward 2%? Do the aforementioned sociopaths and morons even understand that virtually unlimited quantities of money are being made available by the Fed to the European Central Bank at almost no cost? Evidently not. In any event, gold and silver dove yesterday as though the entire Western world, China and Japan had embraced Greek-style austerity. Yeah, sure. If you are so foolish as to believe the Fed is moving away from stimulus, there are plenty of investors eager to buy your gold and silver at distress prices.
By Rick Ackerman, Rick's Picks
Although yesterday’s Congressional testimony by “Helicopter Ben” Bernanke was fundamentally meaningless, it caused gold and silver prices to take a spectacular dive. They got hit after the ‘Nank, prevaricating as usual, said the central bank wasn’t rushing to crank up a QE3 stimulus. While this may be true as far as it goes, it belies the fact that the money spigots have been wide open for years and will remain so, probably, until the financial system collapses. More on that below. Concerning the savaging that precious metals received, they are all but certain to recover, since the forces that have been driving them steeply higher for more than a decade are still very much in place.
Even so, it could take at least a few weeks for gold to build a new base for a shot at $2000, and silver for a push into the mid-$40s. In the throes of yesterday’s brutal, deftly engineered shakeout, Comex gold dropped $104, or nearly six percent, in just a few hours. The April contract hit an intraday low of $1688 after trading as high as $1793 the day before. As for Silver futures, they suffered their worst single-day loss since September, falling $3.76, or 10 percent, from intraday high to low.
Dump Your Gold, Please!
So what else did Helicopter Ben say? Most crucially, as far as the financial sociopaths on Wall Street were concerned, he “stopped short of signaling further bond purchases,” reported Reuters. In Wall Street-speak, this means there will be no “QE3,” at least not in the foreseeable future. Of course, it will not have dawned on his Capitol Hill inquisitors, nor on the morons who purport to interpret economic news, that the Fed is already running the loosest monetary policy in the sordid history of central banking. How else would T-bill yields be running close to zero, even as long-term rates fall toward 2%? Do the aforementioned sociopaths and morons even understand that virtually unlimited quantities of money are being made available by the Fed to the European Central Bank at almost no cost? Evidently not. In any event, gold and silver dove yesterday as though the entire Western world, China and Japan had embraced Greek-style austerity. Yeah, sure. If you are so foolish as to believe the Fed is moving away from stimulus, there are plenty of investors eager to buy your gold and silver at distress prices.
$2,000 Gold May Wake Sleeping Public
In a recent interview with John Embry, Chief Investment Strategist of the $10 billion Sprott Asset Management, Embry had the following revealing insights.
“I guess I’m never satisfied with gold even though it’s up over $60 this week. I think gold should be up a whole lot more than $60. I thought it would take a Greek settlement to get gold moving because as long as it looked like Greece might fall apart they were suppressing the price like mad. So the suppression is still going on, but now it’s being overpowered by the strength of demand.
Now some of the pressure has come off of the price and the buyers are getting the upper hand here. The fact is the smart money has been buying gold all along. If they start to think the price is getting away here, they will become more aggressive rather than waiting to buy. I don’t think the general public gets in, until gold clears $2,000 and maybe even higher. At some point people will be forced to talk about it.
I was in the gym when I was in New York a couple of days ago and I never watch CNBC because I hate it, but it was on so I couldn’t avoid it. The list of people talking, I mean they were rambling on about all of this garbage. Gold was never mentioned, even though it was the strongest thing on the board.
I think the real grinding fundamental is the necessity of the powers that be, in every major economic entity in the world, to keep creating more and more liquidity to fend off a deflationary collapse. As more and more people realize this reality, they will go to gold and silver.
To get the real sentiment change, gold may have to make new highs, but that’s only $130 away or about 7% higher. Corrections will happen but gold will remain in an upward thrust as it has for the last eleven years.”
In a recent interview with John Embry, Chief Investment Strategist of the $10 billion Sprott Asset Management, Embry had the following revealing insights.
“I guess I’m never satisfied with gold even though it’s up over $60 this week. I think gold should be up a whole lot more than $60. I thought it would take a Greek settlement to get gold moving because as long as it looked like Greece might fall apart they were suppressing the price like mad. So the suppression is still going on, but now it’s being overpowered by the strength of demand.
Now some of the pressure has come off of the price and the buyers are getting the upper hand here. The fact is the smart money has been buying gold all along. If they start to think the price is getting away here, they will become more aggressive rather than waiting to buy. I don’t think the general public gets in, until gold clears $2,000 and maybe even higher. At some point people will be forced to talk about it.
I was in the gym when I was in New York a couple of days ago and I never watch CNBC because I hate it, but it was on so I couldn’t avoid it. The list of people talking, I mean they were rambling on about all of this garbage. Gold was never mentioned, even though it was the strongest thing on the board.
I think the real grinding fundamental is the necessity of the powers that be, in every major economic entity in the world, to keep creating more and more liquidity to fend off a deflationary collapse. As more and more people realize this reality, they will go to gold and silver.
To get the real sentiment change, gold may have to make new highs, but that’s only $130 away or about 7% higher. Corrections will happen but gold will remain in an upward thrust as it has for the last eleven years.”
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