Gold Recommended As A Buy
Wednesday, 12. December 2007, 18:36:03
I. Jack Chan posts a number of charts on Stockcharts.com free of charge.
A. Here is the Jack Chan chart of oil.
B. Here is the Jack Chan chart of gold
Mr. Chan has not given his buy signal yet on either gold or oil.
II. My commentary on the above charts and today's commodity, stock and economic activity.
Gold usually moves inversely of the U.S. dollar, which today, moved sideways being that the Euro was steady, and the Yen fell.
I conclude that gold rose higher 'free of charge' on oil's coat-tail, so as to speak.
The U.S. Dollar has encountered resistance at its 40 day moving aveage; and has found $76 to be support.
A falling Yen enabled the Japaneses small companies to rise.
Gold, in riding oil's coat-tail, decreased in value to oil.
So like why did oil rise? Well, most suggest that its rise was due to a spot shortgage at a key U.S. refining facility.
Some believe that an Iranian war premium has vanished from the price of oil as the National Intelligence Estimate (NIE) shows that Iran has no nuclear weapons development program.
Yet, I like Chris Hughes of the Philadelphia Inquirer question: Is Bush Stopped in His Tracks on Iran?; and believe that oil could burst oil at any time, taking gold higher with it.
III. I give consideration to a number of things in arriving at a timing signal for a purchase of gold.
I've been concerned that gold could fall, to it's moving average of 78, or even somewhat below.
A timing signal should give consideration of gold relative to other forms of wealth.
Gold relative to oil Today, gold fell some in relation to oil
Gold relative to silver Gold is better than silver
Gold relative to metals Gold is better than metals
Gold relative to precious metal mining stocks Gold is better than the precious metal mining stocks
Gold relative to stocks Gold is better than stocks
Gold relative to bonds Gold is better than government bonds
And a timing decision, should take into consideration gold relative to the Euro and the Yen.
Gold relative to the Euro Gold is better than the Euro
Gold relative to the Yen Gold is better than Yen
So, after reflecting on the above, I recommend that one buy gold for the following seven reasons:
One, the President is very, very likely to issue an 'executive order' directing a preemptive military attack on Iran's nuclear facilities; in other words he is not going to wait for an ok or directive from Congress.
He is the 'Unitary Executive'; and if he sees a security threat he is going to act on it.
The recent bombshell NIE report, destroyed a four-year diplomatic effort by Bush to isolate Iran. "There is no doubt that following this report, Iran will feel more at ease," said Habib Fayyad, a Beirut-based political analyst and expert on Iran. "First, it will drive Moscow and Beijing to disregard calls for sanctions against Iran. There will be more division within the EU regarding Iran's nuclear program," he said.
While, yes, Moscow and Bejing are going to disregard calls for sanctions against Iran; and yes, there will be more divisions withing the EU regarding Iran's nuclear program, the President, in my mind is going to order a military attack against Iran.
When the President acts, gold is going to go up about five to eight percent a day, for three to five days.
Two, I believe that the Chinese are in an unannounced economic war with the Japanese.
The Chinese are currently trying to raise the Yen to destroy the Japanese stock market; and I think that they are going to win; when the Yen rises again, it will push the dollar lower and gold higher.
Three, I am concerned that the banks are not 'going concerns' -- I am concerned that they are insolvent. Mike Mish Shedlock relates such concern in his article Fed Auction Scam saying that "gold is up this morning in response to this “new” plan which is really just a hidden discount rate cut; if the Fed is willing to pervert its balance sheet to this extent, the dollar will fall (eventually); And gold (in dollars) will go up."
Market Watch said the same thing as Mr. Shedlock: "Gold futures in New York rose to a two-week high early on Wednesday, recouping heavy losses in Tuesday's after-hours trade, as the U.S. Federal Reserve and other central banks announced new plans to ease liquidity in the financial markets."
"The Fed on Wednesday announced the creation of a temporary short-term lending facility to ease credit market strains in concert with market-calming actions by several other major central banks, including the European Central Bank and the Bank of England. The Bank of Japan also made a similar statement.
" 'It should help the gold market. They are admitting finally that they are huge troubles out there,' said Jonathan Jossen, an independent COMEX floor trader in New York."
Paul Kasriel, in Safehaven.com article The Fed Is Not Tone-Challenged After All relates some of the lucrative benefits of the 'auction process': banks may be able to get capital by transferring 'questionable loans' to the Fed.
And Barry Gray, in WSWS.org article 'Central banks coordinate actions amid fears of a global financial breakdown' relates something entirely new in the realm of 'interest rate differentials', what I call a 'Dollar carry trade': "foreign-exchange swaps with the European Central Bank, for $20 billion, and the Swiss National Bank, for $4 billion. This will enable these central banks to make dollar loans to banks within their respective jurisdictions, making it easier for European banks to obtain dollar-denominated loans".
And Barry Gray comments: "Taken as a whole, the central banks’ measures are a barometer of the seriousness, depth and global scope of the financial crisis. Martin Wolf, the business columnist for the Financial Times, wrote on Wednesday: “The central bank helicopters are planning a coordinated drop of liquidity on troubled market waters. The money to be dropped is not that large. But if this does not work, more will surely follow. The helicopters will fly again and again"; and he Mr. Gray adds: "One point is clear: central banks must be pretty worried to take such a joint action."
Furthermore Mr. Gray remarks: "The emergency measures might fail because the basic problem in the financial markets was not a lack of liquidity, but rather a question of insolvency."
Four, the Ted Spread keeps increasing; the Ted Spread is a measure of both liquidity and solvency; yes I say solvency; the banks may not be solvent -- they may not be 'going concerns'.
I've been concerned about 'tight money' for quite some time. But, just now -- today there was a dramatic rise in the Ted Spread. So now I've become concerned about the solvency of banks; without solvent banks, the stock market could go into meltdown.
From my observations, there are trading program limits in effect: the S&P seems limited to 2.5% and the Russell 2000 seems limited to 3.75%; if talk of bank solvency arises, I think such limits would not be observed.
John Parry, of Reuters, in his Libor article reports that the world banks are working in a coordinated fashion to "hopefully" reduce the Ted Spread by mid January to allay fears of a liquidity crisis and a solvency crisis.
Five, the yield curve is now highly inflationary and recessionary; gold moves higher in inflationary and recessionary times.
Why higher? The answer is simple, the rate on the 30 year will increase at a faster than on the 10 year and than on the two year.
This will be very destructive to the value of the 30 year, since values are inverse of rates.
The Fed rate is simply the rate at which banks get credit; and with the new 'non-transparent' auction process, the banks could be getting there money at 0.25%!
The interest rate dynamic is this: "the Fed controls the rate on the short end; but the market determines the rate on the long end".
Six, real interest rates are rising. Here are the "real interest rates"; these are the "genuine interest rate":
30 Year Interest Rate.
10 Year Interest Rate.
2 Year Interest Rate.
Seven, the remarks of Alf Field who said in his Kitco article 'Point of Recognition' that gold is simply resting in the middle of an Elliott Wave 3 up. He relates, sometimes, Elliot Waves do this, which is something that I have observed in studying Intel's stock price moves.
It's wise to buy gold while it is still resting rather than before it takes off and moves higher.
Here is my research on Intel; it makes me think that gold could 'burst out' rather than 'break out'.
Intel has completed an Elliott 5 up in both daily and weekly charts; note the breaks right in the middle of both Elliot 3 waves up; exceptionally "driven" stocks can do this.
Look at the daily chart of gold again; and then compare it to the weekly; today's close of gold at $800 seems like it is resting, in the middle of what may be a significant move higher.
A. Here is the Jack Chan chart of oil.
B. Here is the Jack Chan chart of gold
Mr. Chan has not given his buy signal yet on either gold or oil.
II. My commentary on the above charts and today's commodity, stock and economic activity.
Gold usually moves inversely of the U.S. dollar, which today, moved sideways being that the Euro was steady, and the Yen fell.
I conclude that gold rose higher 'free of charge' on oil's coat-tail, so as to speak.
The U.S. Dollar has encountered resistance at its 40 day moving aveage; and has found $76 to be support.
A falling Yen enabled the Japaneses small companies to rise.
Gold, in riding oil's coat-tail, decreased in value to oil.
So like why did oil rise? Well, most suggest that its rise was due to a spot shortgage at a key U.S. refining facility.
Some believe that an Iranian war premium has vanished from the price of oil as the National Intelligence Estimate (NIE) shows that Iran has no nuclear weapons development program.
Yet, I like Chris Hughes of the Philadelphia Inquirer question: Is Bush Stopped in His Tracks on Iran?; and believe that oil could burst oil at any time, taking gold higher with it.
III. I give consideration to a number of things in arriving at a timing signal for a purchase of gold.
I've been concerned that gold could fall, to it's moving average of 78, or even somewhat below.
A timing signal should give consideration of gold relative to other forms of wealth.
Gold relative to oil Today, gold fell some in relation to oil
Gold relative to silver Gold is better than silver
Gold relative to metals Gold is better than metals
Gold relative to precious metal mining stocks Gold is better than the precious metal mining stocks
Gold relative to stocks Gold is better than stocks
Gold relative to bonds Gold is better than government bonds
And a timing decision, should take into consideration gold relative to the Euro and the Yen.
Gold relative to the Euro Gold is better than the Euro
Gold relative to the Yen Gold is better than Yen
So, after reflecting on the above, I recommend that one buy gold for the following seven reasons:
One, the President is very, very likely to issue an 'executive order' directing a preemptive military attack on Iran's nuclear facilities; in other words he is not going to wait for an ok or directive from Congress.
He is the 'Unitary Executive'; and if he sees a security threat he is going to act on it.
The recent bombshell NIE report, destroyed a four-year diplomatic effort by Bush to isolate Iran. "There is no doubt that following this report, Iran will feel more at ease," said Habib Fayyad, a Beirut-based political analyst and expert on Iran. "First, it will drive Moscow and Beijing to disregard calls for sanctions against Iran. There will be more division within the EU regarding Iran's nuclear program," he said.
While, yes, Moscow and Bejing are going to disregard calls for sanctions against Iran; and yes, there will be more divisions withing the EU regarding Iran's nuclear program, the President, in my mind is going to order a military attack against Iran.
When the President acts, gold is going to go up about five to eight percent a day, for three to five days.
Two, I believe that the Chinese are in an unannounced economic war with the Japanese.
The Chinese are currently trying to raise the Yen to destroy the Japanese stock market; and I think that they are going to win; when the Yen rises again, it will push the dollar lower and gold higher.
Three, I am concerned that the banks are not 'going concerns' -- I am concerned that they are insolvent. Mike Mish Shedlock relates such concern in his article Fed Auction Scam saying that "gold is up this morning in response to this “new” plan which is really just a hidden discount rate cut; if the Fed is willing to pervert its balance sheet to this extent, the dollar will fall (eventually); And gold (in dollars) will go up."
Market Watch said the same thing as Mr. Shedlock: "Gold futures in New York rose to a two-week high early on Wednesday, recouping heavy losses in Tuesday's after-hours trade, as the U.S. Federal Reserve and other central banks announced new plans to ease liquidity in the financial markets."
"The Fed on Wednesday announced the creation of a temporary short-term lending facility to ease credit market strains in concert with market-calming actions by several other major central banks, including the European Central Bank and the Bank of England. The Bank of Japan also made a similar statement.
" 'It should help the gold market. They are admitting finally that they are huge troubles out there,' said Jonathan Jossen, an independent COMEX floor trader in New York."
Paul Kasriel, in Safehaven.com article The Fed Is Not Tone-Challenged After All relates some of the lucrative benefits of the 'auction process': banks may be able to get capital by transferring 'questionable loans' to the Fed.
And Barry Gray, in WSWS.org article 'Central banks coordinate actions amid fears of a global financial breakdown' relates something entirely new in the realm of 'interest rate differentials', what I call a 'Dollar carry trade': "foreign-exchange swaps with the European Central Bank, for $20 billion, and the Swiss National Bank, for $4 billion. This will enable these central banks to make dollar loans to banks within their respective jurisdictions, making it easier for European banks to obtain dollar-denominated loans".
And Barry Gray comments: "Taken as a whole, the central banks’ measures are a barometer of the seriousness, depth and global scope of the financial crisis. Martin Wolf, the business columnist for the Financial Times, wrote on Wednesday: “The central bank helicopters are planning a coordinated drop of liquidity on troubled market waters. The money to be dropped is not that large. But if this does not work, more will surely follow. The helicopters will fly again and again"; and he Mr. Gray adds: "One point is clear: central banks must be pretty worried to take such a joint action."
Furthermore Mr. Gray remarks: "The emergency measures might fail because the basic problem in the financial markets was not a lack of liquidity, but rather a question of insolvency."
Four, the Ted Spread keeps increasing; the Ted Spread is a measure of both liquidity and solvency; yes I say solvency; the banks may not be solvent -- they may not be 'going concerns'.
I've been concerned about 'tight money' for quite some time. But, just now -- today there was a dramatic rise in the Ted Spread. So now I've become concerned about the solvency of banks; without solvent banks, the stock market could go into meltdown.
From my observations, there are trading program limits in effect: the S&P seems limited to 2.5% and the Russell 2000 seems limited to 3.75%; if talk of bank solvency arises, I think such limits would not be observed.
John Parry, of Reuters, in his Libor article reports that the world banks are working in a coordinated fashion to "hopefully" reduce the Ted Spread by mid January to allay fears of a liquidity crisis and a solvency crisis.
Five, the yield curve is now highly inflationary and recessionary; gold moves higher in inflationary and recessionary times.
Why higher? The answer is simple, the rate on the 30 year will increase at a faster than on the 10 year and than on the two year.
This will be very destructive to the value of the 30 year, since values are inverse of rates.
The Fed rate is simply the rate at which banks get credit; and with the new 'non-transparent' auction process, the banks could be getting there money at 0.25%!
The interest rate dynamic is this: "the Fed controls the rate on the short end; but the market determines the rate on the long end".
Six, real interest rates are rising. Here are the "real interest rates"; these are the "genuine interest rate":
30 Year Interest Rate.
10 Year Interest Rate.
2 Year Interest Rate.
Seven, the remarks of Alf Field who said in his Kitco article 'Point of Recognition' that gold is simply resting in the middle of an Elliott Wave 3 up. He relates, sometimes, Elliot Waves do this, which is something that I have observed in studying Intel's stock price moves.
It's wise to buy gold while it is still resting rather than before it takes off and moves higher.
Here is my research on Intel; it makes me think that gold could 'burst out' rather than 'break out'.
Intel has completed an Elliott 5 up in both daily and weekly charts; note the breaks right in the middle of both Elliot 3 waves up; exceptionally "driven" stocks can do this.
Look at the daily chart of gold again; and then compare it to the weekly; today's close of gold at $800 seems like it is resting, in the middle of what may be a significant move higher.
WIDGETIZE