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Well it looks like the rally is starting, growing slowly with a broad base of support for Gold. Keep accumulating while you have the chance. Lots of Companies out there that are looking mighty attractive. Remember accumulate juniors and mid tier producers or those companies at or near production. Remember I am still calling for $1250 gold by year end. The only monkey wrench that could be thrown in is if the big the shorts on the market try to drive it down one more time. Support lies at $950, $928, $910; and resistances are at $970, $987, and then $1000. This rally is very reminiscent of what happened back in July-Aug. 2007 only on a more volatile basis. One other quick note as far as Silver is concerned. I am looking for $25+ Silver by the end of the year and to perform on a percentage basis even better than Gold. Some stocks I really like aggressive buys, (OSKFF) $6.80 OB, (HL) $3.75 OB, (NAK) $7.55 OB, (CDE) $16.00 OB, (NG) $5.00 OB, (FRG) $5.00 OB, and that’s just to mention a few. For Silver, (FRMSF) $2.80 OB, (IVN) $8.50 OB, along with (HL) and (CDE). For Platinum and Palladium, (SWC) $7.50 OB, (PAL) $3.90 OB, (ANO) $1.25. (OB equals or better). Remember due your due diligence, consult your financial advisor’s and read the prospectuses before making any investments. Disclosure: I am Long all of the afore mentioned stocks. Good Investing! -jschulmansr
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- · Who's been driving this record bull-run in gold?
- · What Happens When Inflation Kicks In?
- · Why most investors are WRONG about gold…
- · When and How to buy gold — at low cost with no hassle!
As you can see, from mid-1971 to December 1974, gold rose 471%. It
then fell 50%, from December ’74 to August ’76. After that, it began
its next leg up, exploding 750% higher from August ’76 to January
1980. Now, in its current bull market (2001 to March 2008), gold
rose over 300% from $250 to a little over $1,000. And just like in
the mid-70s, it began showing signs of weakness after its first big
rally up to $1,014 in March ’08. At one point, it even fell to $700, a 30% retraction.
Granted, it wasn’t a full 50% retraction like the one that occurred
from 1974-76. But we are experiencing a financial crisis. And gold
is the most common catastrophe insurance.
If we were to go by the historic pattern of the gold market in the
‘70s, gold should experience upwards resistance for 19 months after
its first peak today. Gold’s recent peak was $1,014 in March ’08
(roughly 17 months ago). If this bull market parallels the last one,
then gold should renew its upward momentum in a very serious way
starting in October 2009. And this next leg up should be a major
one (the biggest gains came during the second rally in gold’s bull
market in the ‘70s).
The chart certainly forecasts a major move.
As you can see, gold has formed a long-term inverse head and
shoulders formation (two smaller collapses book-ending a major
collapse). Typically a head and shoulders predicts a massive
collapse. However, when the head and shoulders is inverse, as is
the case for gold today, this typically predicts a MAJOR leg up.
Indeed, any move above the “neckline” of 1,000 would forecast a
MAJOR move up to $1,300 or so. Going by history, this is precisely
the move we should expect: remember based on historical trends
(the gold bull market of the ‘70s) gold should begin its second
and largest leg up in September or October 2009.
Watch the gold chart closely over the next month or so. If gold
makes a move above $980 perhaps add to your current positions.
If it clears $1,000, hold on tight, cause the next leg up in this
secular bull market has begun.
Good Investing!
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My Note: After watching stocks (DJI) this afternoon and the strange
price behavior before the close, I felt I would add this article too!
-jschulmansr
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Five Reason the Market Could Crash This Fall - Seeking Alpha
By: Graham Summers of Gains, Pains, & Capital
With all this blather about “green shoots” and economic “recovery”
and new “bull market,” I thought I’d inject a little reality into
the collective financial dialogue. The following are ALL true, all
valid, and all horrifying…
Enjoy.
1) High Frequency Trading Programs account for 70% of market
volume
High Frequency Trading Programs (HFTP) collect a ¼ of a penny
rebate for every transaction they make. They’re not interested
in making a gains from a trade, just collecting the rebate.
Let’s say an institutional investor has put in an order to buy
15,000 shares of XYZ company between $10.00 and $10.07. The
institution’s buy program is designed to make this order without
pushing up the stock price, so it buys the shares in chunks of
100 or so (often it also advertises to the index how many shares
are left in the order).
First it buys 100 shares at $10.00. That order clears, so the
program buys another 200 shares at $10.01. That clears, so the
program buys another 500 shares at $10.03. At this point an HFTP
will have recognized that an institutional investor is putting in
a large staggered order.
The HFTP then begins front-running the institutional investor. So
the HFTP puts in an order for 100 shares at $10.04. The broker who
was selling shares to the institutional investor would obviously
rather sell at a higher price (even if it’s just a penny). So the
broker sells his shares to the HFTP at $10.04. The HFTP then turns
around and sells its shares to the institutional investor for
$10.04 (which was the institution’s next price anyway).
In this way, the trading program makes ½ a penny (one ¼ for buying
from the broker and another ¼ for selling to the institution) AND
makes the institutional trader pay a penny more on the shares.
And this kind of nonsense now comprises 70% OF ALL MARKET
TRANSACTIONS. Put another way, the market is now no longer moving
based on REAL orders, it’s moving based on a bunch of HFTPs gaming
each other and REAL orders to earn fractions of a penny.
Currently, roughly five billion shares trade per day. Take away
HFTP’s transactions (70%) and you’ve got daily volume of 1.5
billion. That’s roughly the same amount of transactions that
occur during Christmas (see the HUGE drop in late December), a
time when almost every institution and investor is on vacation.
HFTPs were introduced under the auspices of providing liquidity.
But the liquidity they provide isn’t REAL. It’s largely microsecond
trades between computer programs, not REAL buy/sell orders from
someone who has any interest in owning stocks.
In fact, HFTPs are not REQUIRED to trade. They’re entirely “for
profit” enterprises. And the profits are obscene: $21 billion
spread out amongst the 100 or so firms who engage in this
(Goldman Sachs (GS) is the undisputed king controlling an estimated
21% of all High Frequency Trading).
So IF the market collapses (as it well could when the summer ends
and institutional participation returns to the market in full
force). HFTPs can simply stop trading, evaporating 70% of the
market’s trading volume overnight. Indeed, one could very easily
consider HFTPs to be the ULTIMATE market prop as you will soon see.
TAKE AWAY 70% of MARKET VOLUME AND YOU HAVE FINANCIAL ARMAGEDDON.
2) Even counting HFTP volume, market volume has contracted the
most since 1989
Indeed, volume hasn’t contracted like this since the summer of 1989.
For those of you who aren’t history buffs, the S&P 500’s performance
in 1989 offers some clues as what to expect this coming fall. In
1989, the S&P 500 staged a huge rally in March, followed by an even
stronger rally in July. Throughout this time, volume dried up to a
small trickle.
What followed wasn’t pretty.
Anytime stocks explode higher on next to no volume and crap
fundamentals you run the risk of a real collapse. I am officially
going on record now and stating that IF the S&P 500 hits 1,000, we
will see a full-blown Crash like last year.
3) This Latest Market Rally is a Short-Squeeze and Nothing More
To date, the stock market is up 48% since its March lows. This is
truly incredible when you consider the underlying economic picture:
normally when the market rallies 40%+ from a bear market low, the
economy is already nine months into recovery mode. Indeed, assuming
the market is trading based on earnings, the S&P 500 is currently
discounting earnings growth of 40-50% for 2010. The odds of that
happening are about one in one million.
A closer examination of this rally reveals the degree to which
“junk” has triumphed over value. Since July 10th:
- The 50 smallest stocks have outperformed the largest 50
- stocks by 7.5%.
- The 50 most shorted stocks have beaten the 50 least shorted
- stocks by 8.8%.
- Yahoo! (YHOO) will cut 675 jobs.
- Verizon (VZ) just laid off 9,000 employees.
- Motorola (MOT) plans to lay off 7,000 folks this year.
- Shell (RDS.A) has laid off 150 management positions
- (20% of management).
- Microsoft (MSFT) plans to lay off 5,000 people this year.
With the S&P rallying on these already crap results… what do you
think will happen when reality sets in during 3Q09?
5) The $1 QUADRILLION Derivatives Time Bomb
Few commentators care to mention that the total notional value of
derivatives in the financial system is over $1.0 QUADRILLION
(that’s 1,000 TRILLIONS).
US Commercial banks alone own an unbelievable $202 trillion in
derivatives. The top five of them hold 96% of this.
By the way, the chart is in TRILLIONS of dollars:
As you can see, Goldman Sachs alone has $39 trillion in derivatives
outstanding. That’s an amount equal to more than three times total
US GDP. Amazing, but nothing compared to JP Morgan (JPM), which has
a whopping $80 TRILLION in derivatives on its balance sheet.
Bear in mind, these are “notional” values of derivatives, not the
amount of money “at risk” here. However, if even 1% of the $1
Quadrillion is actually at risk, you’re talking about $10 trillion
in “at risk.”
What are the odds that Wall Street, when allowed to trade without
any regulation, oversight, or audits, put a lot of money at risk?
I mean… Wall Street’s track record regarding financial instruments
that were ACTUALLY analyzed and rated by credit ratings agencies
has so far been stellar.
After all, mortgage backed securities, credit default swaps,
collateralized debt obligations… those vehicles all turned out
great what with the ratings agencies, banks risk management systems,
and various other oversight committees reviewing them.
I’m sure that derivatives which have absolutely NO oversight, no
auditing, no regulation, will ALL be fine. There’s NO WAY that the
very same financial institutions that used 30-to-1 leverage or more
on regulated balance sheet investments would put $50+ trillion “at
risk” (only 5% of the $1 quadrillion notional) when they were
trading derivatives.
If Wall Street did put $50 trillion at risk… and 10% of that money
goes bad (quite a low estimate given defaults on regulated
securities) that means $5 trillion in losses: an amount equal to
HALF of the total US stock market.
This of course assumes that Wall Street only put 5% of its notional
value of derivatives at risk… and only 10% of the derivatives “at
risk” go bad.
Do you think those assumptions are a bit… low?
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Claim a gram of FREE GOLD today, plus a special 18-page PDF report;
Exposed! Five Myths of the Gold Market and find out:
- · Who's been driving this record bull-run in gold?
- · What Happens When Inflation Kicks In?
- · Why most investors are WRONG about gold…
- · When and How to buy gold — at low cost with no hassle!
Dare Something Worthy Today Too! 