Universal Historical Services

05/09/2016

Gold Sharply Down On Profit Taking, Bearish Outside Markets

Monday May 09, 2016 13:33
(Kitco News) - Gold prices ended the U.S. day session sharply lower Monday, pressured by profit taking from recent gains, by weak long liquidation in the futures market, and by better risk appetite in the general marketplace to start the trading week. June Comex gold futures were last down $26.60 an ounce at $1,267.40. July Comex silver was last down $0.437 at $17.09 an ounce.

It was a “risk-on” day in the marketplace Monday, as world stock markets were mostly higher.

Nymex crude oil prices were lower Monday afternoon and trading below $44.00 a barrel. A big wildfire in Canada has stopped oil production in that region, which is a near-term bullish factor for the world oil market. However, a big shake-up in the Saudi Arabian government over the weekend saw its oil minister fired. The move was deemed bearish for oil and makes any near-term crude oil production cuts from Saudi Arabia much less likely. OPEC meets in early June to discuss the matter.

The other key outside market on Monday saw the U.S. dollar index firmer. The very recent rebound in the dollar index has put some selling pressure into raw commodity markets. Still, the overall near-term price trend for the dollar index remains down.

Live 24 hours gold chart [Kitco Inc.]

In other overnight news, China’s exports fell 10.9% in April, year-on-year, which was more than expected. Meantime, China’s imports were up 7.6%, year-on-year. China is the world’s second-largest economy and the world’s largest raw commodity importer.

U.S. economic data released Monday was light.

Technically, June gold futures prices closed nearer the session low today. The gold bulls still have the overall near-term technical advantage, but are fading again. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the May of $1,306.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at 1,250.00. First resistance is seen at $1,272.40 and then at 1,280.00. First support is seen at today’s low of $1,263.60 and then at $1,250.00. Wyckoff’s Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures prices closed nearer the session low today and hit a two-week low. The silver market bulls still have the overall near-term technical advantage but are fading. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the May high of $18.06 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.80. First resistance is seen at $17.25 and then at today’s high of $17.505. Next support is seen at today’s low of $16.96 and then at $16.80. Wyckoff's Market Rating: 6.5.

July N.Y. copper closed down 475 points at 210.65 cents today. Prices closed near the session low and hit a four-week low today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 220.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of 207.90 cents. First resistance is seen at 213.70 cents and then at today’s high of 215.55 cents. First support is seen at 210.00 cents and then at 207.90 cents. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff, contributing to Kitco News; [email protected]

05/04/2016

Gold Continues to Back Away from $1,300 on Hawkish Fed Comments
By Mike McGlone, Special Contributor to Kitco News
Wednesday May 04, 2016 08:47
(Kitco News) - The US Dollar Index recovered from its lowest levels in over a year adding to some responsive profit taking in gold in front of the widely watched $1,300/oz. level. Earlier in the week, gold traded above $1,300/oz. for the first time since January 2015. Perhaps responding to the recently strong stock market and risks of excessive risk taking, comments from non-voting Fed governors Dennis Lockhart (Atlanta) and John Williams (San Francisco) suggested a June rate increase could be back on the table. Futures markets place the probability of a 25bps hike at the June 14-15th meeting in the 10-15% area, but the dichotomy between market expectations of limited rate hikes and hawkish Fed comments sparked some reversion in recent US dollar weakness and gold strength.

Today’s focus will likely be on a potential continuation of weak stock markets overnight and the ISM Non-Manufacturing index and durable goods orders. For the week, Friday’s US unemployment number should be the notable economic release, hopefully adding some clarity to Fed rate expectations. If the trend in weaker than expected data continues (notably Q1 GDP and consumer sentiment last week) and Fed rate hike expectations continue to diminish, gold is more likely to recover above $1,300/oz. and the US dollar to trade lower. A worst case scenario for gold would likely be a situation similar to 2015, when the stock market and US dollar continued to rally and Fed rate hike expectations increase.

A key support factor for gold this week has been the decline in US government bond yields, currently near 1.79%, vs. 1.83% (10-year) at the end of last week (and the month of April). Despite the FOMC rate hike on December 16th, US bond yields have declined (from 2.25% at the end of 2015) along with global bond yields, indicating declining inflation expectations, slower growth prospects and perhaps providing a key indicator that the initial hike may be a ‘one and done’. Unemployment is a notorious lagging economic indicator; US government bond yields are leading. At the onset of the last tightening cycle in June of 2004, bond yields and commodities were rallying for some time - the Fed had wind in its sails. Now it is the opposite, commodity prices have collapsed and investments in riskless US government bonds have been among the best investments so far in 2016, along with gold and silver.

Gold investors should keep a close eye on US bond yields this week, if they continue to decline, gold tailwinds should increase. Someday, hopefully, Treasury bond yields will begin a sustained yield rally, on the back of increasing demand pull inflationary forces and we should all be better off. For gold investors, hmm…, isn’t inflation one of the historically best reasons to own gold?!

01/12/2016

It's not often that a major financial institution issues a warning
like the one that RBS (Formerly Royal Bank of Scotland) has issued to
its clients. It speaks for itself...

http://www.telegraph.co.uk/finance/economics/12093807/RBS-cries-sell-everything-as-deflationary-crisis-nears.html


RBS cries 'sell everything' as deflationary crisis nears

Clients told to seek safety of Bunds and Treasuries. 'This is about
return of capital, not return on capital. In a crowded hall, exit
doors are small'

RBS has advised clients to brace for a “cataclysmic year” and a global
deflationary crisis, warning that major stock markets could fall by a
fifth and oil may plummet to $16 a barrel.

The bank’s credit team said markets are flashing stress alerts akin to
the turbulent months before the Lehman crisis in 2008. “Sell
everything except high quality bonds. This is about return of capital,
not return on capital. In a crowded hall, exit doors are small,” it
said in a client note.

Andrew Roberts, the bank’s research chief for European economics and
rates, said that global trade and loans are contracting, a nasty
cocktail for corporate balance sheets and equity earnings. This is
particularly ominous given that global debt ratios have reached record
highs.

“China has set off a major correction and it is going to snowball.
Equities and credit have become very dangerous, and we have hardly
even begun to retrace the 'Goldlocks love-in' of the last two years,”
he said.

Mr Roberts expects Wall Street and European stocks to fall by 10pc to
20pc, with even an deeper slide for the FTSE 100 given its high
weighting of energy and commodities companies. “London is vulnerable
to a negative shock. All these people who are ‘long’ oil and mining
companies thinking that the dividends are safe are going to discover
that they’re not at all safe,” he said.

Brent oil prices will continue to slide after breaking through a key
technical level at $34.40, RBS claimed, with a “bear flag” and
“Fibonacci” signals pointing to a floor of $16, a level last seen
after the East Asia crisis in 1999. The bank said a paralysed OPEC
seems incapable of responding to a deepening slowdown in Asia, now the
swing region for global oil demand.

Morgan Stanley has also slashed its oil forecast, warning that Brent
could fall to $20 if the US dollar keeps rising. It argued that oil is
intensely leveraged to any move in the dollar and is now playing
second fiddle to currency effects.

RBS forecast that yields on 10-year German Bunds would fall time to an
all-time low of 0.16pc in a flight to safety, and may break zero as
deflationary forces tighten their grip. The European Central Bank’s
policy rate will fall to -0.7pc.

US Treasuries will fall to rock-bottom levels in sympathy, hammering
hedge funds that have shorted US bonds in a very crowded “reflation
trade”.

RBS first issued its grim warnings for the global economy in November
but events have moved even faster than feared. It estimates that the
US economy slowed to a growth rate of 0.5pc in the fourth quarter, and
accuses the US Federal Reserve of “playing with fire” by raising rates
into the teeth of the storm. “There has already been severe monetary
tightening in the US from the rising dollar,” it said.

It is unusual for the Fed to tighten when the ISM manufacturing index
is below the boom-bust line of 50. It is even more surprising to do so
after nominal GDP growth has fallen to 3pc and has been trending down
since early 2014.

RBS said the epicentre of global stress is China, where debt-driven
expansion has reached saturation. The country now faces a surge in
capital flight and needs a “dramatically lower” currency. In their
view, this next leg of the rolling global drama is likely to play out
fast and furiously.

“We are deeply sceptical of the consensus that the authorities can
‘buy time’ by their heavy intervention in cutting reserve ratio
requirements (RRR), rate cuts and easing in fiscal policy,” it said.

Mr Roberts said the tightening cycle by the Anglo-Saxon central banks
is already over. There will be no rate rises by the Bank of England
before the downturn hits, and the next action by the Fed may be a
humiliating volte-face and a rate cut.

RBS is not alone in fearing trouble. UBS issued what it called a
“significant change” to its house view late last week, saying policy
chaos in China had unsettled markets. It cut exposure to equities from
overweight to neutral on a “six-month tactical horizon”. It went
underweight emerging markets.

UBS said it is a precautionary move, insisting that the current global
credit cycle has not yet peaked. Low oil prices should ultimately feed
through to higher consumer spending and boost growth.

Larry Summers, the former US Treasury Secretary, said it would be a
mistake to dismiss the current financial squall as froth. Markets
often sense a gathering storm when policy-makers are still asleep at
the wheel. He has long argued that the world economy is so far out of
kilter that it takes permanent financial bubbles to keep growth going,
an inherently unstable structure.

Yet there is something strange about the latest events. Austerity is
finally over in Europe and fiscal policy in the US this year will be
expansionary.

China’s slowdown hit its bottom in June and a fitful recovery has been
building, driven by extra budget spending and credit growth. While the
composite PMI indicator for manufacturing and services slipped back
last month, it is still higher in the summer.

David Owen, from Jefferies, said there is a “weird disconnect” between
the economic fundamentals and the market malaise.

“There is no evidence of anything rolling over in the US. Europe is
clearly recovering and the M3 money supply in Germany is growing at
almost 10pc, which normally means stronger activity,” he said.

Bank of America said panic selling had triggered its “contrarian buy
signal”, since 88pc of global equity indexes are now trading below
their 200-day and 50-day moving averages. The "Bull & Bear" index is
at an ultra-negative level of 1.3.

It said a “big tradable multi-week rally awaits” but requires
catalysts, above all a stabilisation of the Chinese yuan and oil,
better PMI data and a halt to the rising dollar.

The risk is that this market storm drags on long enough to hit
investment, regardless of what the economic data should imply. At the
end of the day, market psychology can itself become an economic
"fundamental".

Pessimists warn that unless there is a batch of irrefutably good data
from China over the next two or three months, the sell-off could
become self-fulfilling and quickly metamorphose into the next global
crisis.

Clients told to seek safety of Bunds and Treasuries. 'This is about return of capital, not return on capital. In a crowded hall, exit doors are small'

10/29/2015

This article illustrates gold's role as the ultimate form of real money. When an individual's, an institution's or even a nation's finances are in extremis, gold provides the liquidity needed to ward off catastrophe.


http://money.cnn.com/2015/10/29/news/economy/venezuela-selling-gold/index.html

Venezuela's reserves are mostly in gold, and they are declining fast, down to their lowest level in 12 years.

10/28/2015

The title of this article is actually misleading because the reality
is that the Fed no longer has any truly effective means of stimulating
economic growth in the event that the economy falters. And if you read
the article, that conclusion is apparent.

Once again investors must protect their wealth ahead of time. Don't
depend on the US Federal Reserve to save the day. It's more likely
that the Fed will make things worse at this point.

There is a reason why gold has been called the "crisis commodity" for
many decades. It provides protection when things don't go well.

These Are the Fed's Three Weapons If the Economy Falters

http://www.bloomberg.com/news/articles/2015-10-21/these-are-the-fed-s-three-weapons-if-the-economy-falters

Economists say the policy options are weak or dangerous

10/27/2015

Economics transcends politics. It is very important for investors to
understand this.

Our gargantuan national debt is the byproduct of bipartisan mismanagement.

There will be inescapable implications for the US dollar, the US
economy and financial markets. In the short-term, patchwork solutions
in Washington and on Wall Street may delay the inevitable outcome, but
over the long-term the debasement of our currency and the implications
of piling on mountains of debt will come back to haunt us.

Investors must be prepared ahead of time because we cannot know when
the reverberations will hit and our portfolios will be impacted.
Diversification is the key and the key to proper diversification is a
foundation based on physical gold investments, which have a track
record of protecting and building wealth in adverse circumstances.

Boehner-Obama Spending Deals Have Increased Debt $3,970,023,503,348.07

http://www.cnsnews.com/news/article/terence-p-jeffrey/boehner-obama-spending-deals-have-increased-debt-397002350334807

10/19/2015

Here is a sign of trouble in the US economy, despite the rosy
proclamations coming out of the Fed, the Treasury Department and the
White House. Walmart is the largest retailer in the USA. It is putting
the squeeze on its suppliers because its earnings have taken a serious
hit...

Wal-Mart puts the squeeze on suppliers to share its pain as earnings sag

https://ca.news.yahoo.com/wal-mart-puts-squeeze-suppliers-share-pain-earnings-051129723--finance.html

Suppliers of everything from groceries to sports equipment are already being squeezed for price cuts and cost sharing by Wal-Mart Stores . The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consul…

10/19/2015

Interest rates are so low and the prospect of tighter monetary policy
so remote that banks no longer want investors to deposit cash with
them. In fact, some banks are actually contemplating charging fees to
customers for holding their cash. It's time for investors to seek
alternatives. One alternative with a track record going back 5,000
years is gold...

Big Banks: We Don’t Want Your Cash

http://www.wsj.com/articles/big-banks-to-americas-companies-we-dont-want-your-cash-1445161083?mg=id-wsj

Banks are going to new lengths to fend off a surprising threat to their financial well-being: large cash deposits made by financial companies.

10/19/2015

The US Treasury Secretary has expressed concerns about the possibility
of an unforeseen event surrounding raising the debt limit periodically
that could result in a "terrible accident."

Such a circumstance would be very damaging for investor confidence,
the stock market and the banking system. Investors must prepare ahead
of time for such contingencies by diversifying into gold
investments...

Jack Lew: I worry about 'terrible' debt limit accident

http://www.cnbc.com/2015/10/19/lew-i-worry-there-could-be-a-debt-limit-accident-that-could-be-terrible.html

Treasury Secretary Jack Lew tells CNBC he worries that waiting to the last minute to raise the nation's borrowing authority could result in a terrible accident.

10/14/2015

If another tech bubble is forming as this article suggests, the best defense will be hard assets, since hard assets move independently of stocks, and the time to act is now, before the bubble bursts...


http://www.cnbc.com/2015/10/09/tech-bubble-this-is-money-in-your-mattress-time.html

Tech start-up funding is going strong, but there's a looming concern that it could be too strong — strong enough that it's fueled the next tech bubble.

10/08/2015

Bad news for financial assets. Investors must diversify now.


http://www.cnbc.com/2015/10/07/recession-buzz-is-heating-up-on-wall-street.html

Slowing global growth has been one of the predominant investing themes in 2015

10/08/2015

IMF warns of new financial crisis


http://www.telegraph.co.uk/finance/economics/11916485/3-trillion-corporate-credit-crunch-looms-as-debtors-face-day-of-reckoning.html

A poisonous "triad" of global risks is pushing the world to the brink of a new financial crisis, says stark IMF report