Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelertoing Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Silver and Contracting U.S. Money Supply Flash Gold Trend Warning

Commodities / Gold and Silver 2010 Jun 06, 2010 - 06:53 AM GMT

By: Ned_W_Schmidt


Best Financial Markets Analysis ArticleHow many nations must experience a traumatic withdrawal from addiction to debt? Repeatedly, now again with Portugal, we have confirmation that one cannot borrow one’s way to prosperity. Keynesian economic dogma must be declared a complete failure. What Texas really needs to purge from its text books is all reference to Keynesian economic dogma, perhaps saving the financial souls of future generations.

Investors seem to be having great difficulty in finding direction as the debt delusion ends. U.S. equity market, now firmly back in a bear market, may provide some clues. We can now acknowledge that the positive movements in so many investment markets this past year were simply the consequence of the massive liquidity injection by Federal Reserve, and other central banks. $Gold too has clearly ridden that liquidity wave. Regrettably, the liquidity wave has peaked, and markets are being choked by the lack of liquidity.

Almost a month has passed since $Gold made a high. Such a time period is not sufficiently long to cause great concern for precious metal investors It is, however, of sufficient length to begin to change the thinking of traders. Of considerable importance may be $Silver’s technical break down on Friday. $Silver is broken, and that may give us a clue to $Gold.

Last we talked was a discussion of the possible parabolic curve evident in a longer term chart of $Gold. In the above chart we have shortened the time frame. Monthly average price of $Gold is used in chart to help prevent trading noise from interfering with the clarity of the picture. A parabolic market move is not an interpretation. It is the manifestation of a mathematical property.

In that chart are drawn several lines to portray the slope of the curve in different periods. Moving to the right, each of those lines has a greater slope than the previous. The black line is steeper than the blue line which is steeper than the line before it. A parabolic move is simply a market move that gets stronger the more price rises. It is unnatural. It defies financial gravity. It is doomed to failure.

While a raving long-term bull on Gold, realization that markets do correct should always temper our enthusiasm. Markets sometime go no where for a period of time. And most often, markets do not do what we want them to do. Markets are not listening to your thoughts. Investors deeming that Gold should go up will not cause it to go up. Only money flowing into the Gold market, or any other market, can cause the price to rise. In the past year a lot of money has flowed into Gold. That money flow is a finite stream, subject to both interruption and an end.

As we wrote last time, we know not wether the end of this particular parabolic move is at hand. We will not know that till well into the correction from it. In the disappointment stage we will come to know if our investment hubris got somewhat out of hand. Risk for $Gold in the disappointment phase, when it comes, could be to US$750-970. Silver, having technically broken down, has downside risk this Summer to US$14-16. If you live in some other currency, apply your forecast for your currency to those values to give them meaning to you.

Our second chart, above, is part of the reason for the present concern. That line of red circles is the growth rate of the inflationary component of U.S. money supply, using M-2, NSA. When that measure is negative and turns positive, buy signals are triggered. Those are marked by the black triangles.

However, as can be observed in the chart, that measure has again turned negative. U.S. money supply is simply not growing. It certainly is not growing in an inflationary manner. It may next year, but it is not at the present time. That means the dollar has been becoming rarer on a relative basis. As a natural consequence, the value of the dollar has been rising. At some point in time that reality may creep into the price of $Gold.

Given the above concerns, investors may want to consider widening their ownership of precious metals. Rhodium(Rh), the rarest of metals, may be a viable addition to the portfolio of precious metals. At the present time, Rhodium(Rh) is deeply over sold relative to $Gold. Fears over the EU’s debt problems have been putting downward pressure on the prices of commodities of all types. This response to what is a transitory event should be used to advantage by investors. To see more on Rhodium(Rh):

By Ned W Schmidt CFA, CEBS

Copyright © 2010 Ned W. Schmidt - All Rights Reserved

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report , monthly, and Trading Thoughts , weekly. To receive copies of recent reports, go to

Ned W Schmidt Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules