Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

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

Gold and Silver Analysis - Fairweather Friends

Commodities / Gold & Silver Dec 02, 2007 - 08:28 AM GMT

By: Joe_Nicholson

Commodities “ With each passing week, the pressure on the Fed threatens to bubble over, and it's becoming more and more likely the FOMC will again find itself in a position where it's obliged to cut rates or risk a huge selloff in equities markets. Silver may be the first tell for the direction of the next move. $13.50 continues to look like solid support, if we get there, and with what looks like a five-wave move down off the recent highs, silver will some work to do to avoid slipping lower before attempting new highs. Gold… having penetrated the $750-775 support area mentioned in the TTC forums, it's possible the near term bottom is in here, but… making that bet is not a high risk/reward proposition.” ~ Precious Points: Bullion Bouillabaisse, November 17, 2007


This weekly update has not flinched from the view articulated a month ago, and repeated week after week, that the Fed would be cutting rates in December. And now, finally, the debate on the Street has shifted from whether the Fed will cut, to how much of a cut to expect.

Early in November this update suggested monitoring FOMC repo activity, which this week revealed a huge $8 billion Fed purchase of mortgage-backed securities for a staggering 43-day term. These are not subprime mortgages, of course, but, amongst the continued cheap loans at well below the fed funds target rate, given that all structured investment vehicles have been difficult to move, this open market activity takes a large a chunk of MBSs off of bank books through the new year must come as a godsend. Together with the fact that it gives banks cash to move around in its place, probably more than Vice-Chairman Kohn's call for a “nimble” Fed, this is what sparked the rally in financials this week and had the fair-weather friends of gold and silver liquidating the panic premium that made precious metals the talk of the town for some time.

To make matters worse, the dollar rallied against major currencies this week even as economic data and credit spreads continued to paint a bleak outlook. But, contrary to popular belief that this turn in the dollar is attributable to the Fed and its liquidity pumping, this update has been writing for weeks that it would be relative weakness in Europe that would cause exchange rates to tip in the other direction. Members at TTC will also be familiar with the technical reasons for the move. But, with the Fed closer to the end of its accommodations than the stubborn hold outs in London and at the ECB , holders of those currencies have wisely begun to suspect the ride up, for now at least, is ending. Those voices claiming the dollar will rise on a stronger economy are absolutely correct – but the simple facts we don't yet have that bottom in growth, and further rates cut cannot guarantee it, betray their explanation for current appreciation of the dollar as wishful thinking. If a hundred basis point rate cut would stimulate the economy and clear the credit markets, it's still unlikely they'll get it.

Two weeks ago it looked like silver would find support at $14, but last week's update was less optimistic. The 200-day moving average continues to look like good support, but the count in the chart below could stretch out in a more protracted sideways, but less deep consolidation.

A similar count is unfolding in gold, though the decline has probably not extended far enough to be counted complete. With the 50-week sma putting in firm support about $700, an all-out rout in gold is unlikely. Instead, a decline to about $765, or as low as about $750, in the December futures contract would satisfy the conditions for a healthy consolidation in a bull market.

Ultimately, the Fed has shown in its rhetoric this week that it cares more about propping up the stock market and encouraging the credit market than getting a sensational response to its policy statement in December. While the dovish talk contributed to the explosive stock rally this week, bulls will almost certainly be disappointed by the Fed on December 11 if they expect an aggressive enough cut to end the credit crisis outright. In all likelihood, the Fed will probably look to keep the cut light and favor further open market activities including a possible change in the discount rate while Treasury and other government entities come to the aid of the ailing housing market that's the real source of the problem.

In the meantime, it's possible gold and silver will continue to face headwinds and lose their panic premium as investors put money back to work in financials and other stocks. And, the dollar could continue to firm against the euro and the pound, but as both currencies are debased to counter acute ongoing credit crises, neither will be increasing in terms of real purchasing power. In other words, gaining ground against these foreign currencies now is still a bit like playing musical chairs on the titanic. It's highly unlikely that we've seen the end of asset write downs and excess money creation worldwide and it's far too soon to be calling for the end of precious metals as a panic play.

Of course, as many of you know, one sure way to put aside the stresses of tracking the metals markets day to day is putting aside some of the physical metal as a long term investment. Now, whether you already own metals or are now just looking to get involved, there's a new piece of silver bullion on the market, a custom round designed in partnership between Trading the Charts and the Northwest Territorial Mint.

The design pictured above was made courtesy of Northwest Territorial mint. Impressive five-ounce .999 fine silver rounds are being made to serve as prizes for TTC's annual “Pick the Tick” contest. If you're not currently a member or subscriber, click here to participate for free in this unique opportunity to win a beautiful piece of silver bullion with no obligations. Also, if you're thinking about increasing your allocation to physical metals, or considering commissioning a custom piece of your own, visit the mint's online store for a treasure of other valuable metal collectibles and bullion. We will also be selling the above TTC bullion coin in the nearby future.

by Joe Nicholson (oroborean)

www.tradingthecharts.com

This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts,, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual.  Check with your licensed financial advisor or broker prior to taking any action.

Joe Nicholson Archive

© 2005-2019 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

6 Critical Money Making Rules