Wednesday, March 22, 2017

The Dancing Bears

By Jeff Thomas

In the early 2000s, I recommended to associates that we were in for a major gold boom. Most thought that this was a ridiculous suggestion and didn’t buy a single ounce. I continued to recommend the purchase of gold regularly over the ensuing years, and the price continued to rise. Only in 2011 did they start to buy, at a time when gold was peaking. We were due for a correction and in late 2011, it arrived. For several years, the price has remained in the neighbourhood of $1,200—roughly the price it needs to be to bother removing it from the ground.

During that time, gold has periodically risen a bit, then gotten knocked down again. It’s understandable that this should happen. Central banks have a stake in holding down the gold price, since a rising gold price makes it appear more attractive than storing cash in banks. We’ve reached the point that the central banks have run out of tricks to float the economy and we’re already past due for a crash.

But crashes don’t always occur as soon as they become logical. As long as the public can be fooled into remaining confident in the system, a doomed economy can limp along for a bit before toppling. Statistics on unemployment and inflation can be fudged (and they have been). The stock market can be falsely pumped up (and it has been) in order to create the illusion that all is well. These factors, taken together with knocking down the price of gold periodically, helps to convince people that they should keep their money in cash and their cash in the bank, not in gold.

Just as in 2000, the number of people who understand that gold is not the equivalent of a stock but a store of wealth during dramatically changing times is quite small—certainly less than 1% and more likely less than 1/10th of 1%. Those that possess this understanding tend to hold gold long-term and are relatively unconcerned about fluctuations—even if they’re over $100 in a given month. They’re in it for the long haul and believe that, eventually, gold will rise dramatically and may well be the only safe haven after a crash.

But let’s go back to those speculators that waited until gold had risen dramatically before jumping on board the gold train. During the last four-year period, whenever gold rose as a result of economic and political developments, many of them would buy in once more, after it had risen significantly. Then, when it had been knocked down again, they tended to sell—often at the new bottom.

Of course, this behaviour is not limited just to the purchase of gold. In fact, a very high percentage of investors “play” the stock market in this way. They wait until everyone and his dog is buying in and the price is peaking, often buying on margin in order to maximize their positions. Then, when the bubble pops, they tend to ride the market down, hoping in vain that the price will return at least to what it was when they bought in. In essence, they tend to buy high and sell low almost every time.

The gold bears—those investors who don’t truly understand that gold is a very different animal from stocks—typically dislike gold but buy high when it becomes trendy to do so and sell low after it’s been knocked down. This dance is guaranteed to cause the gold bears to lose money time after time.

The dance is sometimes described as “chasing the market,” or “following the trends.” Brokers keep the dance going by advising their clients of established trends, telling them that they’re “missing out if they don’t get in now.” They serve as the market’s equivalent of a caller in a square dance: “Swing your client to and fro—watch his investment dollars go.”

Just as few investors understand the economic nature of gold, they also tend to overlook the fact that the broker doesn’t benefit from the success of the client—he makes his money when the client buys and sells frequently. So, of course his advice is going to be for the client to keep dancing.

So, will this dance go on as it is, ad infinitum? Well, no. There will be a dramatic change following a crash in the markets. Following any major crash, a panic occurs and whatever money is left on the table scrambles to find a new (hopefully safe) home. Following the coming crash, a portion of that money will head into gold. The price will rise dramatically, very possibly to such a degree that it can no longer be easily knocked down by the central banks.

At first the gold bears will assume that it’s an anomaly. Then, as gold passes $1,500, some will dip their toes in. As it passes $1,800, some will wade in. Beyond $2,000, this trend will strengthen quite a bit. As the crash deepens, stocks will tumble further. The bond bubble may also pop, increasing gold’s shine. At some point, bankers may begin to freeze accounts, create bank holidays, and/or confiscate deposits. At that point, gold will head into its long-predicted mania phase and the bears will be falling over each other, chasing the buying trend.

Gold will rise to a logical price in keeping with its value as a hedge against a collapsing economy. At that point, it would make sense for it to stop, but that’s not what will happen. Those who understand gold will cease their purchases and sit on what they have. But then a new dance will begin. The bears will become decidedly bullish. It’s important to note that, at this point, they will not fully understand why gold is rising so dramatically; they’ll just know that it is. They’ll want to get in on the gold rush and will do whatever they have to in order to keep buying.

They’ll find that physical gold is in short supply, as traditional holders are unwilling to sell, seemingly at any price. Potential buyers will offer $50 above spot, then $100 above spot, then more. They’ll additionally buy on margin in order to increase their position. It will be at this point that the mania will take hold. Irrationally high prices will become the new norm. How high will it go? $10,000? $20,000? Impossible to say. It will rise as high as desperation makes it rise, and we cannot now determine what that level of desperation will be.

A new bubble will be created, but this time, it won’t be in stocks or bonds. It’ll be in gold and, like all bubbles, it will eventually pop. This will occur when those who understand the nature of gold recognize that the price has far exceeded what’s logical and, as much as they value gold, they’ll sell a portion of their holdings and use the proceeds to invest in whatever assets have already bottomed and have nowhere to go but up.

They’re likely to retain a portion of their gold holdings for the same reason they always have, but will be happy to release a portion when it becomes significantly overvalued. This will cause the gold bubble to pop and the gold bears, who have recently become bulls, will wonder where it all went wrong. At this point, they still won’t understand gold; they’ll simply have chased yet another trend and lost.

So, is there a moral here? Well, if so, it’s simply that an investor should not become involved in a market that he doesn’t understand. Nor should he trust his broker to understand it for him. Ironically, as long as there have been markets, there have been those who go out on the dance floor without first learning the dance. A great deal of profit will be made by some gold investors, but the majority are likely to leave the floor with empty dance cards.

Regards,
Jeff Thomas

Editor’s Note: Gold is crisis insurance. Without it, you’re highly vulnerable. And there’s a good chance the next financial crisis could wipe you out.

New York Times best selling author Doug Casey thinks that crisis is coming soon. He shares all the details in this urgent video. Click here to watch it now.


The article The Dancing Bears was originally published at caseyresearch.com



Stock & ETF Trading Signals

Saturday, March 18, 2017

Mike Seery's Weekly Futures Recap - Crude Oil, Gold, Silver, 10 Year Notes, Sugar and More

Trading for the week of March 13th through March 17th ended with the market indexes closing slightly lower on Friday. The Dow and SP500 Stochastics and RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If these indexes resume the rally off November's low into uncharted territory, upside targets will be very difficult to project.

So no better time than right now to get the a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the this weeks futures markets and give us some insight on where he sees these markets headed. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the April contract settled last Friday New York at 48.49 a barrel while currently trading at 48.75 up slightly for the trading week as I've been sitting on the sidelines, but I do have a bearish bias to the downside as I think lower prices are ahead. The chart structure is relatively poor at present as the 10 day high stands at 53.80 which is way too much risk in my opinion, however I'm certainly not recommending any type of bullish position as I do think prices could retest the contract lows which was hit on November 14th, 2016 around the 45.18 level as the commodity markets look weak at present despite the fact that the U.S dollar ended the week on a negative note. Oil prices are trading right near a 14 week low trading under their 20 & 100 day average telling you that the short term trend is lower as oversupply situations continue to hamper this market and I am looking at a short position if prices rally and the chart structure improves, therefore, lowering monetary risk as we could be short in next week's trade. Trend: Lower
Chart Structure: Poor

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Gold futures in the April contract settled last Friday in New York at 1,201 an ounce while currently trading at 1,229 up about $28 for the trading week all based off of the Federal Reserve raising interest rates. However, stating that they will take precaution down the road sending many commodities higher while sending the U.S dollar sharply lower. At present I'm now recommending a short position from the 1,229 level and if you take that trade place your stop loss above the 10 day high which stands at 1,237 risking around $250 per mini contract or $800 on the large contract plus slippage and commission as the risk/reward are highly in your favor as the chart structure is outstanding. Gold prices hit a 6 week low earlier this week telling you that the short term trend is lower as prices are trading right at their 20 & 100 day moving average with major support around the 1,200 level & if that is broken the bearish trend should continue in my opinion so take a shot at the short side as the monetary risk is low.
Trend: Lower
Chart Structure: Excellent

Silver futures in the May contract settled last Friday in New York at 16.92 an ounce while currently trading at 17.37 up about $0.45 for the trading week all due to the fact that the Federal Reserve said they might slow down on interest rates hikes later in the year pushing the precious metals sharply higher. At present, I'm not involved in silver as I do have a short position in gold as I will wait for better chart structure to develop in this market as the chart structure is poor and the trend is mixed. Silver prices are trading right at their 20 & 100 day moving average telling you that the trend is sideways with the next major level of support around the 17 level and if that is broken you have to think that we could test the contract lows around the 16 area, but look at other markets that are beginning to trend with a better risk/reward scenario. The U.S dollar fell sharply this week as that's what helped propel the precious metals as I still think interest rates are on the rise as this look like a massive short covering rally in my opinion, however, avoid this market at the current time.
Trend: Lower - Mixed
Chart Structure: Poor

The 10-year notes in the June contract settled last Friday in Chicago at 123-00 while now trading at 123-26 as this market reacted positively to the Federal Reserve announcement which said they will be patient at raising rates sending many sectors higher. I am currently short a position from around the 123-17 level while placing my stop loss above 123.28 on a closing basis only risking around $330 per contract plus slippage and commission as volatility in all of the commodity sectors will certainly be heightened in the coming weeks. The 10 year note is currently yielding about 2.52% hovering right at a 4 month low as the trend is lower as the only interest is in the stock market to the upside as higher interest rates are coming in my opinion so let's keep a close eye on this report.
Trend: Lower
Chart Structure: Excellent

Sugar futures in the May contract settled last Friday in New York at 18.22 a pound while currently trading at 17.62 down about 60 points for the trading week ending on a sour note down over 60 points in today's trading session as I've been sitting on the sidelines as I missed this trade to the downside, however as I've written about in previous blogs I think prices are headed lower. Sugar prices hit lows that we have not seen since June 2016 with the next major level support all the way down at the 16.00 level as there is more room to run to the downside in my opinion as the soft commodities still look weak as I'm certainly not recommending any type of bullish position as this trend is getting stronger to the downside on a weekly basis. The chart structure at present is very poor because prices have dropped rather dramatically over the last several weeks topping out around the 21 level if you are short a futures contract stay short in my opinion & place the stop loss above the 10 day high which now stands at 19.84. However, the chart structure will improve every day in next week's trade, therefore, lowering the monetary risk.
Trend: Lower
Chart Structure: Improving

For more calls on this week's commodity trades like Wheat, Soybean, Cocoa and more....Just Click Here!



Tuesday, March 14, 2017

John Carter's Next Free Webinar "Rapid Account Growth Strategies for 2017"

Our trading partner John Carter of Simpler Options is back with another one of his wildly popular free webinars. John is absolutely killing it again in 2017 and he has put together a 90 day trading plan to share with us.

He is calling this free webinar "How I Almost Doubled My Account in Less than 60 Days".

Claim Your Spot Here 

Limited seats are available and as always this one will fill up fast so get your reserved spot now. This is free training on the rapid account growth strategies that are working right now, not in 2015 or 2016....right now!

So please join us Tuesday, March 21st @ 7:00 pm central time

Here's just some of what he will cover:

  *  John F. Carter will reveal his new 90 day trading plan that will take us into the 2nd quarter of 2017

  *  With the market at all time highs John shows us how to adapt to conditions most traders haven’t seen in years

  *   John will show us how he grew his account by 82% between January and February, 2017.

  *  We'll find out what’s working now because outdated strategies could be dead wrong in current conditions.

 Just Click Here to get your seat now and we'll see you Tuesday March 21st

See you there!

Ray @ The Crude Oil Trader







Saturday, March 11, 2017

Mike Seery's Weekly Futures Recap - Crude Oil, Silver, Sugar, Wheat Futures and More

Trading for the week of March 6th through March 10th ended with the market indexes closing higher on Friday following the latest jobs report, which showed that 235,000 jobs were created in February while January number was revised to show 238,000, pushing the unemployment rate to 4.7%. Hourly pay increased 2.8% from February 2016 to February 2017, up from 2.6% in the prior month.

Time to get the a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the this weeks futures markets and give us some insight on where he sees these markets headed. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the April contract are currently trading at 49.50 a barrel after settling last Friday in New York at 53.33 down nearly $4 for the trading week near a 14 week low as the true breakout was below 51.86. However, I am not involved in this market as I'm waiting for some type of price rally to enter into a short position, therefore, lowering the monetary risk. If you are short this market I would place my stop loss above the 10 day high which stands at 54.44 as the chart structure is very poor because prices absolutely collapsed over the last several days having its worst one day performance in over 11 months. Prices are now trading below their 20 and 100 day moving average telling you that the short term trend is lower as massive supplies continue to put a lid on this market coupled with the fact of a strong U.S dollar as the commodities, in general, look weak across the board, but wait for some type of price rally before entering, but I'm certainly not recommending any type of bullish position as I think lower prices are ahead.
Trend: Lower
Chart Structure: Poor

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Gold futures in the April contract settled last Friday in New York at 1,226 an ounce while currently trading at 1,204 continuing its bearish momentum right near a 6 week low as the precious metals continue to move lower on a daily basis due to a strong U.S dollar. At the current time I have no trade recommendations in the precious metal sector as it looks to me that gold might even possibly retest the contract low around 1,150, but avoid this market at present & look at other trades that are beginning to trend with a better risk/reward scenario. Gold prices are now trading under their 20 and 100 day moving average telling you that the short term trend is lower as crude oil prices have also broken out of a tight consolidation which is another negative towards all commodity prices in my opinion. The U.S stock market is higher across the board today as the monthly unemployment number came in as the United States added around 235,000 new jobs as all the interest lies in the S&P 500 & not in gold at the current time.
Trend: Lower
Chart Structure: Poor

Silver futures in the May contract settled last Friday in New York at 17.74 an ounce while currently trading at 17.02 down over $0.70 for the trading week as prices have hit a 6 week low trading lower for the 4th straight day. I was recommending a bullish position in silver for around two months getting stopped out in last week's trade which I considered very disappointing. However, prices have dropped much further as that is why you must have an exit strategy because you don't know how high or low prices can go as the precious metals, in general, have fallen out of bed. Silver prices are now trading under their 20 & 100 day moving average telling you the short term trend is lower as the contract low is around the $16 mark which was hit in December 2016 and it looks to me that prices might head down to that level, however, avoid this market at present as the chart structure is terrible therefore the monetary risk is too high. At present, I do not have any trade recommendations in the precious metals as my main focus is in the grain market to the downside as the commodities look weak in my opinion due to a strong U.S dollar.
Trend: Lower
Chart Structure: Poor

Sugar futures in the May contract settled last Friday in New York at 19.52 a pound while currently trading at 18.13 looking to retest the contract low which was hit in December 2016 and if that is broken you could head all the way down to the February 2016 low around 12.50 as this market remains very bearish. At present I am not involved as the chart structure did not meet my criteria when the original breakout occurred, however I do think lower prices are ahead and if you do have a short position place your stop loss above the 10 day high which now stands at 19.80 and will not improve for another 5 trading sessions, so you will have to accept the monetary risk. The commodity markets, in general, look very weak as the U.S dollar despite selling off this Friday afternoon continues to hamper commodity prices and especially the agricultural markets as I'm certainly not recommending any type of bullish position in sugar as the momentum is getting stronger on a daily basis. Sugar prices are trading below their 20 and 100 day moving average is telling you that the short term trend is lower and expect to see stop some stops below that level as the large funds will add to their short positions in my opinion.
Trend: Lower
Chart Structure: Poor

Wheat futures in the May contract settled last Friday in Chicago at 4.53 a bushel while currently trading at 4.45 down about 8 cents for the trading week reacting pretty neutral to yesterday's USDA crop report lowering carryover levels by about 10 million bushels as the grain market still looks weak in my opinion. At present, I'm not involved in wheat as I am short oats, corn, and soybeans as I do think the whole complex is headed lower. However, wheat prices are still near a 4 week low with poor chart structure, so I probably will not be involved in this market for some time. The next major level of support is 4.38, and if that is broken, I think we will join the rest of the grains to the downside as we are now trading under the 20 and 100 day moving average telling you that short-term trend is lower. The U.S dollar is still hovering right near a 7 week high around the 102 level as that has finally put some pressure on many of the commodity sectors which have been rallying until the last week or so, but wheat has remained choppy for months so avoid this market & look at other trades with better potential.
Trend: Mixed - Lower
Chart Structure: Poor

For more calls on this week's commodity trades like Lean Hogs, Soybean, Cocoa and more....Just Click Here!



Monday, March 6, 2017

The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later

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The Human Genome Project took eleven years and $2.7 billion dollars to complete. Today, it would take two days to finish, and cost less than getting a pizza delivered. It’s estimated that forty percent of the current Fortune 500 companies will no longer exist by 2025. In 2005, half a billion devices were connected to the Internet. By 2030, that number will reach one trillion.

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