Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast 2024 - 15th June 24
Gold Price Consolidating at High - 15th June 24
NVIDIA Stock Market: Price Prediction for the Future - 15th June 24
When Will the Boom/ Bust Rollercoaster End? - 15th June 24
Stock Market Trouble Lies Ahead. Are You Ready For It? - 15th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Natural Disasters and Political Uncertainty Cause Investors To Flee Paper to Gold and Silver

Commodities / Gold and Silver 2011 Mar 16, 2011 - 02:03 AM GMT

By: Jeb_Handwerger

Commodities

Last week the Japanese earthquake darkened the skies with an unexpected flock of black swans. On top of an act of nature, we have the persisting presence of eurozone debt fears, currency wars, the Middle East unrest, and the near bankruptcy of many states in America. The Wisconsin problem goes far beyond one local state; there are 46 Wisconsins that have accumulated billions of dollars of deficits. States have more than trillions of dollars in pension obligations which they will be unable to pay. Unions are unwilling to budge and have taken to the streets in protest. Sheer survival mandates humongous cuts in spending. This places US states between a rock and a hard place as they will have to incur serious job cuts with an already high unemployment rate.


This litany of woes have been compounded by the news out of Japan. Municipal bonds -- once considered to be a sacrosanct safe haven -- have been abandoned by the largest fixed-income fund, which sold out its holdings. The manager said he didn’t want to stick around as he felt prices would decline. Astute investors are not seeking Treasuries and the dollar as a safe haven asset instead gold and silver are showing significant demand especially on the physical side.

We are witnessing a crisis of accumulated crises. I have recommended precious metals, uranium, and rare earths that can serve as safe havens in these gathering storms as both a hedge against a deteriorating dollar and leverage for an increased demand for clean energy commodities.  All of these have been hedges but we must monitor for a market downturn which may take down paper assets.

The US equity market is at a critical juncture after reaching overbought territory not seen since before the credit crisis. However, we are at an extremely critical juncture on the S&P 500, where we can be on the verge of an equity correction. If one needs to minimize risk, now is an important juncture to monitor as we may be seeing some of the same forces that caused our summer correction to resurface.

It is crucial to monitor this market and minimize risk as the S&P has reached my measured move after the end of August 2010 reversal. One can predict a move or where the next critical juncture will occur by using this technique, and I often use it to force myself to take profits as it reaches a target. I wrote several weeks ago when equities were reaching record overbought territory to be cautious and not to be blinded by market euphoria.

In July of 2009, the S&P bounced through the 50-day moving average moving from approximately 85-120. That is a 35-point move. Then the summer of 2010 we saw a correction down to point C at 100. The measured move is calculated simply.

A to B = 35 so C to D = 35
100+35=135

The measured move is another valuable tool to predict critical areas. It works in up and down markets. The measured move does well in timing potential profits and it is quite amazing to see such a simple symmetrical phenomenon occur so often in a chaotic market.

I believe we could see a movement out of paper into precious metal assets as treasuries and the dollar move into new lows.  Pullbacks in precious metals should provide additional buying opportunities. 

Make sure to try my free trial of my daily intelligence report which follows rapidly developing situations in precious metals, uranium and rare earths by clicking here.

By Jeb Handwerger

http://goldstocktrades.com

© 2011 Copyright Jeb Handwerger- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - 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