Stocks and Bonds Tops, Gold and Silver Bottom Climacterics Now
Stock-Markets / Financial Markets 2014 Jan 18, 2014 - 09:56 AM GMTBy: DeepCaster_LLC
“We view prospective near-term and multi-year returns as strongly unfavorable, and prospective market risk as unusually elevated.”John Hussman, January 2014
Choppy, decidedly Unbullish Equities Market Action thus far in 2014 is one Major Clue the Climacterics we earlier forecast have arrived in Key Markets. They may take a few days to a few weeks to fully develop, but they have arrived.
For example, on Wednesday, January 8, 2014 we forecast Major Reversals in Key sectors. We identified some of the Signals that such Reversals were impending.
Sure enough, two days later those Key Sectors gave us a Foretaste of those moves — a Dramatic Preview of what is coming
Developments since January 8 verified the Reality of what we have been claiming for weeks, a Market Moving Truth denied publically by major governments and much of the Main Stream Media – the fact that the Economy is not recovering.
Indeed, Deepcaster and a few other Independent Analysts have been claiming for months that the Economy is not recovering. (See Note 1)
And Friday, January 10’s shockingly-below-estimates Employment numbers confirmed our claims. Real Retail Sales and Real Weekly Earnings also declined in December.
Predictably, the lousy numbers caused the US$ to swoon on Friday and bonds to strengthen and Gold and Silver to pop up.
Even more significant, when Equities crashed on Monday (01/13), the $US also Fell. This confirms the fact that the $US is decreasingly seen as a Risk Aversion Haven as it would have been in past years. Not a Good Harbinger for the $US going Forward.
Importantly, last Friday’s and the subsequent Monday’s Equities moves and the resulting Moves in other Markets foreshadow Major moves to come in the next very few months, except that when the $US dumping becomes quite severe, US Treasury Bond Strength will weaken dramatically as Sovereign and Major Investors exit U.S. Treasury paper en masse.
However, the $US strengthened again (basis USDX) after the January 10 and 13 Equities Takedown Indeed, Short-term the structural weakness of the Euro and unresolved Eurozone problems and the ostensible Recovery of the US Economy should keep the $US above 78 basis USDX for a while longer, but not for the long term.
Going forward, consider that in order to keep long term interest rates low the Fed will have to continue Bond Buying via QE (i.e., Stop tapering), and eventually increase, QE. Notice how a three-% yield on the ten-year is the “line in the sand” for the Bond Market. Indeed, But in our most recent Alert we noted a stunning repeated correlative Market Move when the US 10Yr Note Yield is threatening to go over 3% on the 10 Year – The Correlated Move provides A Superb Profit Opportunity for sure, going forward.
Longer term, as QE continues, investors will need a refuge from QE-generated Monetary Price Inflation and a Profit and Wealth Preservation Opportunity as well, and thus will have to flee to Tangible Assets.
No surprise then that the CRB Commodity Index was up on the lousy U.S. Economic News in a counterintuitive Move. Commodities Price Strength is in the cards at least until Equities top later this year.
Later, as Equities Crash, Commodities used for building (e.g., Dr. Copper) will swoon too.
However, given World Population Growth of 80 million a year. Food Commodities, as well as Gold & Silver, will be the most profitable and Wealth Protective places to be in the next few years.
In that connection, we note that despite ongoing Cartel (Note 2) Gold Price Capping Attempts, we now have a confirmed Uptrend for Gold stocks. The Market Vectors Gold Miners Fund (CGDX) recently confirmed its break above its 50 DMA! What a welcome development after over two years of declines.
But short term the picture is still mixed for the Gold Market and thus the Great Launch up may be delayed a bit more, as this JBGJ excerpt below demonstrates.
In other words, The Cartel’s Price Capping Attempts continue with some success. But The Cartel’s desperation is reflected in these attempts. Note the BOLD portion of JBGJ
“Indian ex-duty premiums AM $125.41, PM N/A with world gold at $1,241 and $1,236.85. Not one of the 5 importing cities Reuters monitors altered their prices for the PM reading despite material moves in world gold and the rupee, a situation JBGJ has never seen before. Based on the AM reading local gold was $264.84 or 21.34% above world gold (Wednesday 21.59%). If the published price PM premium were taken seriously Indian gold was 21.87% above world gold. The rupee closed little changed at $1= R61.535 (R61.54) and the stock market slipped 0.11%.
“There is no doubt the legal Indian gold trade is in a surly mood. They are being seriously harassed: see Government seeks gold purchase information from jewellers as smuggling rises. JBGJ continues to wonder how viable politically this anti-gold campaign is….
“Shanghai gold closed at a premium of $13.35 to world gold of $1,240.25 on volume equivalent to 13,968 NY contracts (Wednesday $13.50/$1,241.64/14,565 NY). “Delivery Volume” fell to a low 5.554 tonnes (Wednesday 8.524 tonnes). JBGJ wonders if the tightness in London delivery bar noted last night is connected….
“MineWeb’s enterprising reporter Shivom Seth who is usually focused on India has published an upbeat China story Fresh wave of gold buying ahead of Chinese New Year which consolidates many recent positive anecdotes:…
“Last night contemplating the steady rise in world gold JBGJ remarked that the Bears needed to exert themselves again. In the event Feb gold peaked at $1,244.90 (up $6.60) about 1-10 AM and then was swept down almost $8 by 3-30 on quite heavy selling. Estimated CME web site volume as of 8AM was a considerable 57,000 lots: estimated at 9AM was 73,628 NY.
“Subsequently gold has recovered on the NY economic data but volume has faded. The Gartman Letter today takes note of
“a very real, and apparently very powerful seller of gold”
active at the recent highs but so far the objective seems to be to cap gold rather than depress it – unlike last year.”
Capping Continues, John Brimelow
JBGJ, 01/16/2014
Massive Climacterics such as Equities and $US and US T-Bond Tops and Gold and Silver bottoming, are developing. Savvy investors should consider putting on long Gold, Silver and Miners positions such as the ones we have recommended.
Those who recognize and take advantage of these Climacterics are likely to substantially Profit.
Best regards,
www.deepcaster.com
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