Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Navigating Global Troubled Waters With Gold and Silver Safe Haven

Commodities / Gold and Silver 2012 Jun 29, 2012 - 08:48 AM GMT

By: Jeb_Handwerger

Commodities

Best Financial Markets Analysis ArticleWe have climbed the wall of worry for over twenty years as wealth in the ground becomes increasingly desirable in a world that is threatened with the ghosts of depressions past. We observe the doubters who regale us with such headlines as "The Fed's Big Move Is No Solution" or a noted economist writes that he senses the tone of urgency of Fed Governor Janet Yellen's remarks that "the scope remains to provide additional accommodation." Yellen's comments are really repetitions of her boss The Fed Chairman Ben Bernanke.


The world is navigating very troubled waters. For over four years the top Central Banks orchestrated by the Federal Reserve Chief injected a flood of trillions of dollars into an ailing financial system. The result has been extremely volatile upswings as QE1 and QE2 were introduced and gut wrenching declines after QE2 expired. The Venture Exchange has been in a decline since the middle of 2011, while banks have been propped up by an accommodative Fed. This is what they call an economic recovery?

GDX (Market Vectors Gold Miners) NYSE

Gold and silver are building bases, while mining equities are reflecting valuations priced in for a pandemic meltdown. The banks and large resource companies are sitting on cash and treasuries as the media ushers the investment herd from Euros to Dollars. We can look from old posts from 2009 where the opposite occurred and Europe appeared stronger than the United States. The reality is that the main problem is not European Debt, but U.S. debt. A rising trend in value of the U.S. dollar and long term treasuries has been extremely deflationary, but will not last forever. Eventually, the U.S. must devalue the dollar in order to pay off soaring debts. Obamacare is another example of policies which could severely increase our national debt and cause us to possibly default like Greece.

Precious metals, uranium and rare earths appear to be testing key support levels, which should hold. We are forecasting a reversal of the 2011 downtrend in the second half of 2012-2013. We expect China to continue to squeeze the West and a renewed interest from investors and end users to participate in the rare earth sector which will once again hit the mainstream.

Rio Tinto outbidding Cameco for Hathor indicates the bargain basement prices many of Hathor's uranium peers are currently being valued. We expect continued excitement in the vital nuclear sector worldwide.

We may see continued lateral movement due to us being in the summer doldrums before the markets challenge and breaks through old highs. We are also witnessing support levels still holding indicating that despite all the doom and gloom the markets are improving. Listen to what the markets are telling us, not what the media is reporting.

Now we hear the voices of the Cassandra's and the prophets of doom as they inform us that a rally in precious metals and miners is devoid of lasting power. We disagree. The mining sectors and natural resources are in a period of rest now preparing for a new launch as investors realize that the U.S. dollar is far from a safe haven. The underlying quandary in still in need of repair. For now we are in the quiet summer doldrums. The economic cancer continues to metastasize albeit out of sight and out of mind. Come this Fall and Winter our sectors in precious metals, uranium, rare earths and graphite should shine as wealth in the earth is realized as a true hedge against hyper-inflation which is preceded by this current deflation. Remember that during the 1920's the U.S. dollar rose against other currencies. After the crash, the dollar still maintained its value as investors who were on margin had to raise cash. After all of the de-leveraging was finished and the herd entered the dollar, FDR devalued the U.S. dollar and raised the gold price from $20 an ounce to $35 practically overnight. All private ownership of gold became illegal. This history lesson teaches that rallies in the dollar during deflations are often followed by gut wrenching hyper-inflationary environments.

Silver is testing 2011 lows and is extremely oversold with an RSI reading below 30. We believe silver could rebound off of these extreme oversold levels and possibly break resistance to the upside.

SLV (iShares Silver Trust) NYSE

Rising precious metals markets love climbing walls of worry which are in this case spreading malignantly. We do not enjoy being a harbinger of sad tidings. However, the Fed and its European acolytes have failed to address the real issue of the malaise in which the world finds itself. Specifically, the cancer consists of too much reckless spending and dependance on governments whom one suspects doesn't really know what is going on. Watch gold and silver as it finds support at key levels.

The elites of the west possess all they need for the wives, children and grandchildren to live in splendor. They are trying to solve fiscal malignancies with financial dollars. Our leaders are addressing the debt problem with financial band-aids. This is a perilous Keynesian experiment, which has long ago been disproven, but which arises every time capitalism reaches for a solution and comes up with the old pump-priming.

Over a century ago another failed economist wrote that a specter is haunting the Western World. In some respects, the French have a saying that, "the more things change, the more they remain the same".

Who could've dreamt that in 2011, we would see demonstrations in the Tahir Squares of the World that would result in Egypt coming under the control of the Islamists. Perhaps the past is prologue and we are destined to witness the same old scenes of revolt in other countries as well. The masses are not stupid. Everyone has a smart phone with plenty of rare earths, lithium and graphite in it. They all want the good things of life for their families.

In any event, we are reaching a societal point of no return where entitlements such as Obamacare can no longer be afforded. They think we can make everything right by monetizing the debt which is only months away possibly after the election.

In conclusion, what does all this mean? As time goes by the only true repositories of wealth exists in the natural resource area as it has since the days of Athens and Rome. Oddly enough after millennia we have come full circle, the same countries are going broke. History may not repeat, but it recurs and mimics. Be careful of the coming debasement of the dollar and hold on to your precious metals and wealth in the earth. Monitor for a reversal off of these oversold levels at $26 on silver and $1550 gold.

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

By Jeb Handwerger

http://goldstocktrades.com

© 2012 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.


© 2005-2019 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